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

|   | OR |
|--------|----|

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

|   | Commission      file number 333-124138 |
|--------|----------------------------------------|

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

----

|                                                                                                        |   | Quarters      Ended |    |   | Six      Months Ended |   |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------|---------|--------|-----------------------|--------|
|                                                                                                        |   | June      28,       |    |   | June      30,         |   |   | June      28, |   |   | June      30, |   |
|                                                                                                        |   | 2008                |    |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
|                                                                                                        |   |                |    |   |                  |   |   |   |   |   |   |   |
| Net      sales                                                                                              |   | $                   | 267,683 |   |                  | $      | 277,871 |   |   | $ | 544,564 |   |   | $ | 545,277 |   |
| Cost      of products sold                                                                                  |   |                | 166,473 |   |                  |   | 171,787 |   |   |   | 333,680 |   |   |   | 331,002 |   |
| Gross      profit                                                                                           |   |                | 101,210 |   |                  |   | 106,084 |   |   |   | 210,884 |   |   |   | 214,275 |   |
|                                                                                                        |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                                                                                    |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                                           |   |                | 82,559  |   |                  |   | 86,109 |   |   |   | 171,110 |   |   |   | 170,817 |   |
| Amortization      of intangibles                                                                            |   |                | 1,587   |   |                  |   | 1,493 |   |   |   | 3,176 |   |   |   | 2,972 |   |
| Licensing      revenues                                                                                     |   |                | (2,460  | )      |                  |   | (2,121 | ) |   |   | (5,028 | ) |   |   | (5,314 | ) |
|                                                                                                        |   |                | 81,686  |   |                  |   | 85,481 |   |   |   | 169,258 |   |   |   | 168,475 |   |
|                                                                                                        |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                                                                       |   |                | 19,524  |   |                  |   | 20,603 |   |   |   | 41,626 |   |   |   | 45,800 |   |
|                                                                                                        |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense, net                                                                                  |   |                | 17,487  |   |                  |   | 19,258 |   |   |   | 35,302 |   |   |   | 37,647 |   |
| Income      before income taxes                                                                             |   |                | 2,037   |   |                  |   | 1,345 |   |   |   | 6,324 |   |   |   | 8,153 |   |
| Income      tax expense                                                                                     |   |                | 856     |   |                  |   | 361 |   |   |   | 2,628 |   |   |   | 2,756 |   |
| Net      income                                                                                             |   |                | 1,181   |   |                  |   | 984 |   |   |   | 3,696 |   |   |   | 5,397 |   |
|                                                                                                        |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss):                                                                     |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Foreign      currency translation adjustment                                                                |   |                | 765     |   |                  |   | 9,981 |   |   |   | (4,599 | ) |   |   | 11,235 |   |
| Change      in pension liability, net of tax                                                                |   |                | 77      |   |                  |   | - |   |   |   | 77 |   |   |   | - |   |
| Comprehensive      income (loss)                                                                            |   | $                   | 2,023   |   |                  | $      | 10,965 |   |   | $ | (826 | ) |   | $ | 16,632 |   |
|                                                                                                        |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                        |   |                |    |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements. |   |                |    |   |                  |

----

|                                                                                                            |   | June      28, |      |   | December      29, |   |
|-----------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
|                                                                                                            |   | 2008          |      |   |              | 2007*  |   |
|                                                                                                            |   | (Unaudited)   |      |   |              |   |   |
|                                                                                                            |   |          |      |   |              |   |   |
| ASSETS                                                                                                          |   |          |      |   |              |   |   |
| Current      assets:                                                                                            |   |          |      |   |              |   |   |
| Cash      and cash equivalents                                                                                  |   | $             | 25,296    |   |              | $      | 27,520 |   |
| Accounts      receivable, less allowances for doubtful receivables,                                             |   |          |      |   |              |   |   |   |
| discounts      and returns of $4,215 and $4,550                                                                 |   |          | 128,263   |   |              |   | 119,984 |   |
| Inventories                                                                                                     |   |          | 39,389    |   |              |   | 35,207 |   |
| Deferred      income taxes                                                                                      |   |          | 6,116     |   |              |   | 5,953 |   |
| Prepaid      expenses                                                                                           |   |          | 8,994     |   |              |   | 11,167 |   |
| Other      current assets                                                                                       |   |          | 8,855     |   |              |   | 8,161 |   |
| Total      current assets                                                                                       |   |          | 216,913   |   |              |   | 207,992 |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
| Property,      plant and equipment, net                                                                         |   |          | 94,126    |   |              |   | 87,449 |   |
| Goodwill                                                                                                        |   |          | 538,783   |   |              |   | 540,126 |   |
| Intangible      assets, net                                                                                     |   |          | 598,970   |   |              |   | 604,547 |   |
| Other      assets                                                                                               |   |          | 36,714    |   |              |   | 37,539 |   |
| Total      assets                                                                                               |   | $             | 1,485,506 |   |              | $      | 1,477,653 |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
| *      Derived from the Company's 2007 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.     |   |          |      |   |              |

----

|                                                                                                            |   | June      28, |      |   | December      29, |   |
|-----------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
|                                                                                                            |   | 2008          |      |   |              | 2007*  |   |
|                                                                                                            |   | (Unaudited)   |      |   |              |   |   |
|                                                                                                            |   |          |      |   |              |   |   |
| LIABILITIES      AND STOCKHOLDER'S EQUITY                                                                       |   |          |      |   |              |   |   |
| Current      liabilities:                                                                                       |   |          |      |   |              |   |   |
| Current      maturities of long-term debt                                                                       |   | $             | 587       |   |              | $      | 772 |   |
| Accounts      payable                                                                                           |   |          | 69,230    |   |              |   | 72,484 |   |
| Accrued      liabilities                                                                                        |   |          | 86,879    |   |              |   | 96,366 |   |
| Total      current liabilities                                                                                  |   |          | 156,696   |   |              |   | 169,622 |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
| Long-term      debt                                                                                             |   |          | 935,795   |   |              |   | 900,716 |   |
| Deferred      income taxes                                                                                      |   |          | 191,415   |   |              |   | 190,321 |   |
| Other                                                                                                           |   |          | 30,796    |   |              |   | 28,842 |   |
| Total      liabilities                                                                                          |   |          | 1,314,702 |   |              |   | 1,289,501 |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
| Commitments      and contingencies                                                                              |   |          |      |   |              |   |   |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
| Stockholder's      equity:                                                                                      |   |          |      |   |              |   |   |   |
| Common      stock, $0.01 par value: authorized - 1,000 shares; issued - 100      shares                         |   |          | 1         |   |              |   | 1 |   |
| Additional      paid-in capital                                                                                 |   |          | 100,610   |   |              |   | 100,613 |   |
| Retained      earnings                                                                                          |   |          | 55,891    |   |              |   | 68,714 |   |
| Accumulated      other comprehensive income                                                                     |   |          | 14,302    |   |              |   | 18,824 |   |
| Total      stockholder's equity                                                                                 |   |          | 170,804   |   |              |   | 188,152 |   |
| Total      liabilities and stockholder's equity                                                                 |   | $             | 1,485,506 |   |              | $      | 1,477,653 |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
|                                                                                                            |   |          |      |   |              |   |   |   |
| *      Derived from the Company's 2007 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.     |   |          |      |   |              |

----

|                                                                                                        |   | Six      Months Ended |    |
|-------------------------------------------------------------------------------------------------------------|--------|-----------------------|---------|
|                                                                                                        |   | June      28,         |    |   | June      30, |   |
|                                                                                                        |   | 2008                  |    |   | 2007 |   |
| Cash      flows from operating activities:                                                                  |   |                  |    |   |   |   |
| Net      income                                                                                             |   | $                     | 3,696   |   |   | $ | 5,397 |   |
| Adjustments      to reconcile net income to net cash                                                        |   |                  |    |   |   |   |   |   |
| used      in operating activities:                                                                          |   |                  |    |   |   |   |   |   |
| Depreciation      and amortization                                                                          |   |                  | 18,664  |   |   |   | 14,691 |   |
| Provision      for bad debts                                                                                |   |                  | 326     |   |   |   | 1,584 |   |
| Provision      for deferred income taxes                                                                    |   |                  | 1,277   |   |   |   | 1,714 |   |
| Non-cash      interest expense                                                                              |   |                  | 12,234  |   |   |   | 11,197 |   |
| Non-cash      stock compensation expense                                                                    |   |                  | (3      | ) |   |   | 186 |   |
| Net      changes in operating assets and liabilities:                                                       |   |                  |    |   |   |   |   |   |
| Accounts      receivable                                                                                    |   |                  | (9,411  | ) |   |   | (31,532 | ) |
| Inventories                                                                                                 |   |                  | (4,337  | ) |   |   | (5,922 | ) |
| Other      current assets                                                                                   |   |                  | 1,430   |   |   |   | (137 | ) |
| Accounts      payable                                                                                       |   |                  | (3,068  | ) |   |   | 16,484 |   |
| Accrued      liabilities                                                                                    |   |                  | (11,111 | ) |   |   | 4,567 |   |
| Other,      net                                                                                             |   |                  | (5,957  | ) |   |   | (12,293 | ) |
| Net      cash provided by operating activities                                                              |   |                  | 3,740   |   |   |   | 5,936 |   |
|                                                                                                        |   |                  |    |   |   |   |   |   |
| Cash      flows from investing activities:                                                                  |   |                  |    |   |   |   |   |   |
| Purchases      of property, plant and equipment                                                             |   |                  | (12,634 | ) |   |   | (10,571 | ) |
| Acquisition      of certain assets of Comfor Products, Inc.                                                 |   |                  | -       |   |   |   | (12,817 | ) |
| Net      cash used in investing activities                                                                  |   |                  | (12,634 | ) |   |   | (23,388 | ) |
|                                                                                                        |   |                  |    |   |   |   |   |   |
| Cash      flows from financing activities:                                                                  |   |                  |    |   |   |   |   |   |
| Borrowings      on revolving loan                                                                           |   |                  | 24,000  |   |   |   | 13,500 |   |
| Payments      of other debt                                                                                 |   |                  | (285    | ) |   |   | (300 | ) |
| Dividend      to Simmons Holdco, Inc.                                                                       |   |                  | (16,519 | ) |   |   | - |   |
| Purchase      of common stock                                                                               |   |                  | -       |   |   |   | (1 | ) |
| Net      cash provided by financing activities                                                              |   |                  | 7,196   |   |   |   | 13,199 |   |
|                                                                                                        |   |                  |    |   |   |   |   |   |
| Net      effect of exchange rate changes on cash                                                            |   |                  | (526    | ) |   |   | 720 |   |
| Decrease      in cash and cash equivalents                                                                  |   |                  | (2,224  | ) |   |   | (3,533 | ) |
| Cash      and cash equivalents, beginning of period                                                         |   |                  | 27,520  |   |   |   | 20,784 |   |
| Cash      and cash equivalents, end of period                                                               |   | $                     | 25,296  |   |   | $ | 17,251 |   |
|                                                                                                        |   |                  |    |   |   |   |   |   |
|                                                                                                        |   |                  |    |   |   |   |   |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements. |   |                  |    |   |   |

----

|                                                                                                        |   |   |   |   |       |   |   |    |   |   |                                 |   |   | Accumulated      Other Comprehensive Income (Loss) |    |   |    |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|---------|--------|--------|--------------------------------------|--------|--------|----------------------------------------------------|---------|--------|---------|--------|
|                                                                                                        |   |   |   |   | Additional |   |   |    |   |   | Net      Unrealized Gain (Loss) From |   |   | Total                                              |    |
|                                                                                                        |   | Common |   |   | Common     |   |   | Paid-In |   |   | Retained                             |   |   | Currency                                           |    |   | Benefit |   |   | Stockholder's |   |
|                                                                                                        |   | Shares |   |   | Stock      |   |   | Capital |   |   | Earnings                             |   |   | Translation                                        |    |   | Plans   |   |   | Equity |   |
| December      29, 2007 (audited)                                                                            |   |   | 100    |   |       | $      | 1      |    |   | $      | 100,613                              |   |   | $                                                  | 68,714  |   |    | $      | 19,179 |   |   | $ | (355 | ) |   | $ | 188,152 |   |
| Net      income                                                                                             |   |   | -      |   |       |   | -      |    |   |   | -                                    |   |   |                                               | 3,696   |   |    |   | - |   |   |   | - |   |   |   | 3,696 |   |
| Foreign      currency translation                                                                           |   |   | -      |   |       |   | -      |    |   |   | -                                    |   |   |                                               | -       |   |    |   | (4,599 | ) |   |   | - |   |   |   | (4,599 | ) |
| Change      in pension liability, net of tax                                                                |   |   | -      |   |       |   | -      |    |   |   | -                                    |   |   |                                               | -       |   |    |   | - |   |   |   | 77 |   |   |   | 77 |   |
| Comprehensive      income (loss)                                                                            |   |   |   |   |       |   |   |    |   |   |                                 |   |   |                                               | 3,696   |   |    |   | (4,599 | ) |   |   | 77 |   |   |   | (826 | ) |
| Stock      compensation expense                                                                             |   |   | -      |   |       |   | -      |    |   |   | (3                                   | )      |   |                                               | -       |   |    |   | - |   |   |   | - |   |   |   | (3 | ) |
| Dividend      to Simmons Holdco, Inc.                                                                       |   |   | -      |   |       |   | -      |    |   |   | -                                    |   |   |                                               | (16,519 | )      |    |   | - |   |   |   | - |   |   |   | (16,519 | ) |
| June      28, 2008 (unaudited)                                                                              |   |   | 100    |   |       | $      | 1      |    |   | $      | 100,610                              |   |   | $                                                  | 55,891  |   |    | $      | 14,580 |   |   | $ | (278 | ) |   | $ | 170,804 |   |
|                                                                                                        |   |   |   |   |       |   |   |    |   |   |                                 |   |   |                                               |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |       |   |   |    |   |   |                                 |   |   |                                               |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these condensed consolidated      financial statements. |   |   |   |   |       |   |   |    |   |

----

| A. | Basis      of Presentation |
|----|----------------------------|

|                |   | June      28, |   |   | December      29, |   |
|---------------------|--------|---------------|--------|--------|-------------------|--------|
|                |   | 2008          |   |   | 2007              |   |
| Raw      materials  |   | $             | 27,194 |   |              | $      | 22,669 |   |
| Work-in-progress    |   |          | 937    |   |              |   | 1,122 |   |
| Finished      goods |   |          | 11,258 |   |              |   | 11,416 |   |
|                |   | $             | 39,389 |   |              | $      | 35,207 |   |
|                |   |          |   |   |              |   |   |   |

----

|                                         |   | Domestic |    |   | Canada |   |   | Consolidated |   |
|----------------------------------------------|--------|----------|---------|--------|--------|--------|--------|--------------|--------|
| Balances      as of December 29, 2007        |   | $        | 500,221 |   |   | $      | 39,905 |         |   | $ | 540,126 |   |
| Foreign      currency translation adjustment |   |     | -       |   |   |   | (1,335 | )            |   |   | (1,335 | ) |
| Other                                        |   |     | (8      | )      |   |   | -      |         |   |   | (8 | ) |
| Balances      as of June 28, 2008            |   | $        | 500,213 |   |   | $      | 38,570 |         |   | $ | 538,783 |   |
|                                         |   |     |    |   |   |   |   |         |   |   |   |   |

|                                                                                 |   | Quarters      Ended |   |   | Six      Months Ended |   |
|--------------------------------------------------------------------------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                                                                                 |   | June      28,       |   |   | June      30,         |   |   | June      28, |   |   | June      30, |   |
|                                                                                 |   | 2008                |   |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
| Balance      at beginning of period                                                  |   | $                   | 4,576  |   |                  | $      | 3,853 |   |   | $ | 4,291 |   |   | $ | 3,668 |   |
| Additional      warranties issued                                                    |   |                | 895    |   |                  |   | 739 |   |   |   | 1,665 |   |   |   | 1,278 |   |
| Warranty      settlements                                                            |   |                | (806   | )      |                  |   | (499 | ) |   |   | (1,352 | ) |   |   | (948 | ) |
| Accruals      related to pre-existing warranties (including change in      estimate) |   |                | 79     |   |                  |   | (85 | ) |   |   | 140 |   |   |   | 10 |   |
| Balance      at end of period                                                        |   | $                   | 4,744  |   |                  | $      | 4,008 |   |   | $ | 4,744 |   |   | $ | 4,008 |   |
|                                                                                 |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |

----

| E. | Long-Term      Debt |
|----|---------------------|

|                                                           |   | June      28, |    |   | December      29, |   |
|----------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                           |   | 2008          |    |   | 2007              |   |
| Senior      credit facility:                                   |   |          |    |   |              |   |
| Revolving      loan                                            |   | $             | 24,000  |   |              | $      | - |   |
| Tranche      D term loan                                       |   |          | 465,000 |   |              |   | 465,000 |   |
| Total      senior credit facility                              |   |          | 489,000 |   |              |   | 465,000 |   |
| 7.875%      senior subordinated notes due 2014                 |   |          | 200,000 |   |              |   | 200,000 |   |
| 10.0%      senior discount notes, due 2014, net of discount of |   |          |    |   |              |   |   |   |
| $35,647      and $46,835, respectively                         |   |          | 233,353 |   |              |   | 222,165 |   |
| Other,      including capital lease obligations                |   |          | 14,029  |   |              |   | 14,323 |   |
|                                                           |   |          | 936,382 |   |              |   | 901,488 |   |
| Less      current portion                                      |   |          | (587    | )      |              |   | (772 | ) |
|                                                           |   | $             | 935,795 |   |              | $      | 900,716 |   |
|                                                           |   |          |    |   |              |   |   |   |

----

| 1)   | A      minimum cash interest coverage ratio, with compliance levels ranging from      cash interest coverage of no less than 2.75:1.00 from June 28, 2008      through December 27, 2008; and 3.00:1.00 from March 28, 2009 through each      fiscal quarter ending thereafter. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | A      maximum leverage ratio, with compliance levels ranging from total leverage      of no greater than 4.50:1.00 from June 28, 2008 through December 27, 2008;      and 4.00:1.00 from March 28, 2009 through each fiscal quarter ending      thereafter. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Quarter      Ended June 28, 2008                                      |   |
|-----------------------------------------------------------------------|--------|
| (In      thousands)                                                   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Domestic |   |   | Canada |   |   | Eliminations |   |   | Totals |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales to external customers                                  |   | $ | 229,112 |   |   | $ | 38,571 |   |   | $ | - |   |   | $ | 267,683 |   |
| Intersegment      net sales                                           |   |   | 143 |   |   |   | - |   |   |   | (143 | ) |   |   | - |   |
| Adjusted      EBITDA                                                  |   |   | 28,963 |   |   |   | 4,372 |   |   |   | - |   |   |   | 33,335 |   |
| Depreciation      and amortization expense                            |   |   | 9,049 |   |   |   | 1,399 |   |   |   | - |   |   |   | 10,448 |   |
| Expenditures      for long-lived assets                               |   |   | 6,435 |   |   |   | 907 |   |   |   | - |   |   |   | 7,342 |   |
| Segment      assets                                                   |   |   | 1,443,340 |   |   |   | 180,504 |   |   |   | (138,338 | ) |   |   | 1,485,506 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income to Adjusted EBITDA:                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                       |   | $ | 75 |   |   | $ | 1,106 |   |   | $ | - |   |   | $ | 1,181 |   |
| Depreciation      and amortization                                    |   |   | 9,049 |   |   |   | 1,399 |   |   |   | - |   |   |   | 10,448 |   |
| Income      taxes                                                     |   |   | 1,299 |   |   |   | (443 | ) |   |   | - |   |   |   | 856 |   |
| Interest      expense, net                                            |   |   | 15,484 |   |   |   | 2,003 |   |   |   | - |   |   |   | 17,487 |   |
| Interest      income                                                  |   |   | 15 |   |   |   | 88 |   |   |   | - |   |   |   | 103 |   |
| Transaction      expenses including integration costs                 |   |   | 84 |   |   |   | - |   |   |   | - |   |   |   | 84 |   |
| Relocation      of U.S. manufacturing and Canada corporate facilities |   |   | 329 |   |   |   | 116 |   |   |   | - |   |   |   | 445 |   |
| Reorganization      expense including management severance            |   |   | 1,476 |   |   |   | - |   |   |   | - |   |   |   | 1,476 |   |
| Management      fees                                                  |   |   | (143 | ) |   |   | 520 |   |   |   | - |   |   |   | 377 |   |
| ERP      system implementation costs                                  |   |   | 603 |   |   |   | - |   |   |   | - |   |   |   | 603 |   |
| Gain      on foreign currency                                         |   |   | (50 | ) |   |   | (278 | ) |   |   | - |   |   |   | (328 | ) |
| State      taxes in lieu of income taxes                              |   |   | 191 |   |   |   | - |   |   |   | - |   |   |   | 191 |   |
| Other                                                                 |   |   | 551 |   |   |   | (139 | ) |   |   | - |   |   |   | 412 |   |
| Adjusted      EBITDA                                                  |   | $ | 28,963 |   |   | $ | 4,372 |   |   | $ | - |   |   | $ | 33,335 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Quarter      Ended June 30, 2007                                        |   |
|-------------------------------------------------------------------------|--------|
| (In      thousands)                                                     |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | Domestic |   |   | Canada |   |   | Eliminations |   |   | Totals |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales to external customers                                    |   | $ | 245,070 |   |   | $ | 32,801 |   |   | $ | - |   |   | $ | 277,871 |   |
| Intersegment      net sales                                             |   |   | 207 |   |   |   | - |   |   |   | (207 | ) |   |   | - |   |
| Adjusted      EBITDA                                                    |   |   | 27,056 |   |   |   | 6,098 |   |   |   | - |   |   |   | 33,154 |   |
| Depreciation      and amortization expense                              |   |   | 6,166 |   |   |   | 1,177 |   |   |   | - |   |   |   | 7,343 |   |
| Expenditures      for long-lived assets                                 |   |   | 6,197 |   |   |   | 147 |   |   |   | - |   |   |   | 6,344 |   |
| Segment      assets                                                     |   |   | 1,416,674 |   |   |   | 162,891 |   |   |   | (124,397 | ) |   |   | 1,455,168 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income (loss) to Adjusted EBITDA:            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                  |   | $ | (826 | ) |   | $ | 1,810 |   |   | $ | - |   |   | $ | 984 |   |
| Depreciation      and amortization                                      |   |   | 6,166 |   |   |   | 1,177 |   |   |   | - |   |   |   | 7,343 |   |
| Income      taxes                                                       |   |   | (319 | ) |   |   | 680 |   |   |   | - |   |   |   | 361 |   |
| Interest      expense, net                                              |   |   | 17,369 |   |   |   | 1,889 |   |   |   | - |   |   |   | 19,258 |   |
| Interest      income                                                    |   |   | 45 |   |   |   | 52 |   |   |   | - |   |   |   | 97 |   |
| Reorganization      expense including management severance              |   |   | 1,338 |   |   |   | - |   |   |   | - |   |   |   | 1,338 |   |
| Conversion      costs associated with meeting new flammability standard |   |   | 1,069 |   |   |   | - |   |   |   | - |   |   |   | 1,069 |   |
| Transaction      related expenses                                       |   |   | 1,054 |   |   |   | - |   |   |   | - |   |   |   | 1,054 |   |
| Loss      on foreign currency                                           |   |   | - |   |   |   | 490 |   |   |   | - |   |   |   | 490 |   |
| Management      fees                                                    |   |   | 488 |   |   |   | - |   |   |   | - |   |   |   | 488 |   |
| State      taxes in lieu of income taxes                                |   |   | 150 |   |   |   | - |   |   |   | - |   |   |   | 150 |   |
| Other                                                                   |   |   | 522 |   |   |   | - |   |   |   | - |   |   |   | 522 |   |
| Adjusted      EBITDA                                                    |   | $ | 27,056 |   |   | $ | 6,098 |   |   | $ | - |   |   | $ | 33,154 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Six      Months Ended June 28, 2008                                   |   |
|-----------------------------------------------------------------------|--------|
| (In      thousands)                                                   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | Domestic |   |   | Canada |   |   | Eliminations |   |   | Totals |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales to external customers                                  |   | $ | 474,114 |   |   | $ | 70,450 |   |   | $ | - |   |   | $ | 544,564 |   |
| Intersegment      net sales                                           |   |   | 206 |   |   |   | - |   |   |   | (206 | ) |   |   | - |   |
| Adjusted      EBITDA                                                  |   |   | 59,254 |   |   |   | 7,062 |   |   |   | - |   |   |   | 66,316 |   |
| Depreciation      and amortization expense                            |   |   | 15,930 |   |   |   | 2,734 |   |   |   | - |   |   |   | 18,664 |   |
| Expenditures      for long-lived assets                               |   |   | 10,848 |   |   |   | 1,786 |   |   |   | - |   |   |   | 12,634 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income to Adjusted EBITDA:                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                       |   | $ | 3,493 |   |   | $ | 203 |   |   | $ | - |   |   | $ | 3,696 |   |
| Depreciation      and amortization                                    |   |   | 15,930 |   |   |   | 2,734 |   |   |   | - |   |   |   | 18,664 |   |
| Income      taxes                                                     |   |   | 3,551 |   |   |   | (923 | ) |   |   | - |   |   |   | 2,628 |   |
| Interest      expense, net                                            |   |   | 31,298 |   |   |   | 4,004 |   |   |   | - |   |   |   | 35,302 |   |
| Interest      income                                                  |   |   | 32 |   |   |   | 202 |   |   |   | - |   |   |   | 234 |   |
| Transaction      expenses including integration costs                 |   |   | 191 |   |   |   | - |   |   |   | - |   |   |   | 191 |   |
| Non-recurring      professional service fees                          |   |   | 439 |   |   |   | - |   |   |   | - |   |   |   | 439 |   |
| Relocation      of U.S. manufacturing and Canada corporate facilities |   |   | 814 |   |   |   | 189 |   |   |   | - |   |   |   | 1,003 |   |
| Reorganization      expense including management severance            |   |   | 1,751 |   |   |   | - |   |   |   | - |   |   |   | 1,751 |   |
| Management      fees                                                  |   |   | (178 | ) |   |   | 1,043 |   |   |   | - |   |   |   | 865 |   |
| ERP      system implementation costs                                  |   |   | 1,085 |   |   |   | - |   |   |   | - |   |   |   | 1,085 |   |
| (Gain)      loss on foreign currency                                  |   |   | 354 |   |   |   | (883 | ) |   |   | - |   |   |   | (529 | ) |
| State      taxes in lieu of income taxes                              |   |   | 297 |   |   |   | - |   |   |   | - |   |   |   | 297 |   |
| Other                                                                 |   |   | 197 |   |   |   | 493 |   |   |   | - |   |   |   | 690 |   |
| Adjusted      EBITDA                                                  |   | $ | 59,254 |   |   | $ | 7,062 |   |   | $ | - |   |   | $ | 66,316 |   |
|                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Six      Months Ended June 30, 2007                                     |   |
|-------------------------------------------------------------------------|--------|
| (In      thousands)                                                     |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | Domestic |   |   | Canada |   |   | Eliminations |   |   | Totals |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales to external customers                                    |   | $ | 483,072 |   |   | $ | 62,205 |   |   | $ | - |   |   | $ | 545,277 |   |
| Intersegment      net sales                                             |   |   | 432 |   |   |   | - |   |   |   | (432 | ) |   |   | - |   |
| Adjusted      EBITDA                                                    |   |   | 60,119 |   |   |   | 9,136 |   |   |   | - |   |   |   | 69,255 |   |
| Depreciation      and amortization expense                              |   |   | 12,453 |   |   |   | 2,238 |   |   |   | - |   |   |   | 14,691 |   |
| Expenditures      for long-lived assets                                 |   |   | 10,013 |   |   |   | 558 |   |   |   | - |   |   |   | 10,571 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reconciliation      of net income to Adjusted EBITDA:                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                         |   | $ | 3,613 |   |   | $ | 1,784 |   |   | $ | - |   |   | $ | 5,397 |   |
| Depreciation      and amortization                                      |   |   | 12,453 |   |   |   | 2,238 |   |   |   | - |   |   |   | 14,691 |   |
| Income      taxes                                                       |   |   | 2,110 |   |   |   | 646 |   |   |   | - |   |   |   | 2,756 |   |
| Interest      expense, net                                              |   |   | 33,972 |   |   |   | 3,675 |   |   |   | - |   |   |   | 37,647 |   |
| Interest      income                                                    |   |   | 379 |   |   |   | 85 |   |   |   | - |   |   |   | 464 |   |
| Reorganization      expense including management severance              |   |   | 1,835 |   |   |   | 123 |   |   |   | - |   |   |   | 1,958 |   |
| Conversion      costs associated with meeting new flammability standard |   |   | 1,982 |   |   |   | - |   |   |   | - |   |   |   | 1,982 |   |
| Transaction      related expenses                                       |   |   | 1,639 |   |   |   | - |   |   |   | - |   |   |   | 1,639 |   |
| Management      fees                                                    |   |   | 953 |   |   |   | - |   |   |   | - |   |   |   | 953 |   |
| Non-cash      loss on foreign currency                                  |   |   | - |   |   |   | 585 |   |   |   | - |   |   |   | 585 |   |
| State      taxes in lieu of income taxes                                |   |   | 280 |   |   |   | - |   |   |   | - |   |   |   | 280 |   |
| Non-cash      stock compensation expense                                |   |   | 186 |   |   |   | - |   |   |   | - |   |   |   | 186 |   |
| Other                                                                   |   |   | 717 |   |   |   | - |   |   |   | - |   |   |   | 717 |   |
| Adjusted      EBITDA                                                    |   | $ | 60,119 |   |   | $ | 9,136 |   |   | $ | - |   |   | $ | 69,255 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

| J. | Guarantor      / Non-Guarantor Statements |
|----|-------------------------------------------|

|                                              |   |       |   |   | Issuer      and Guarantors |   |    |         |   |   |          |   |   |         |   |
|---------------------------------------------------|--------|------------|--------|--------|----------------------------|--------|---------|--------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                              |   |       |   |   | Simmons                    |   |    |         |   |   |          |   |   |         |   |   |   |   |
|                                              |   | Parent     |   |   | Bedding                    |   |    | Guarantor    |   |   | Non-Guarantor |   |   |         |   |   |   |   |
|                                              |   | Guarantors |   |   | Company                    |   |    | Subsidiaries |   |   | Subsidiaries  |   |   | Eliminations |   |   | Consolidated |   |
|                                              |   |       |   |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |
| Net      sales                                    |   | $          | -      |   |                       | $      | (24,569 | )            |   | $      | 251,681       |   |   | $            | 40,714 |   |   | $ | (143 | ) |   | $ | 267,683 |   |
| Cost      of products sold                        |   |       | -      |   |                       |   | 809     |         |   |   | 135,593       |   |   |         | 30,214 |   |   |   | (143 | ) |   |   | 166,473 |   |
| Gross      profit                                 |   |       | -      |   |                       |   | (25,378 | )            |   |   | 116,088       |   |   |         | 10,500 |   |   |   | - |   |   |   | 101,210 |   |
| Operating      expenses:                          |   |       |   |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses |   |       | -      |   |                       |   | 52,921  |         |   |   | 22,489        |   |   |         | 7,149  |   |   |   | - |   |   |   | 82,559 |   |
| Amortization      of intangibles                  |   |       | -      |   |                       |   | 738     |         |   |   | 600           |   |   |         | 249    |   |   |   | - |   |   |   | 1,587 |   |
| Intercompany      fees                            |   |       | -      |   |                       |   | (77,884 | )            |   |   | 77,348        |   |   |         | 536    |   |   |   | - |   |   |   | - |   |
| Licensing      revenues                           |   |       | -      |   |                       |   | (381    | )            |   |   | (1,891        | )      |   |         | (188   | ) |   |   | - |   |   |   | (2,460 | ) |
|                                              |   |       | -      |   |                       |   | (24,606 | )            |   |   | 98,546        |   |   |         | 7,746  |   |   |   | - |   |   |   | 81,686 |   |
| Operating      income (loss)                      |   |       | -      |   |                       |   | (772    | )            |   |   | 17,542        |   |   |         | 2,754  |   |   |   | - |   |   |   | 19,524 |   |
| Interest      expense, net                        |   |       | 5,693  |   |                       |   | 9,583   |         |   |   | 184           |   |   |         | 2,027  |   |   |   | - |   |   |   | 17,487 |   |
| Income      from subsidiaries                     |   |       | 5,454  |   |                       |   | 14,145  |         |   |   | -             |   |   |         | -      |   |   |   | (19,599 | ) |   |   | - |   |
| Income      (loss) before income taxes            |   |       | (239   | )      |                       |   | 3,790   |         |   |   | 17,358        |   |   |         | 727    |   |   |   | (19,599 | ) |   |   | 2,037 |   |
| Income      tax expense (benefit)                 |   |       | (1,420 | )      |                       |   | (1,664  | )            |   |   | 4,382         |   |   |         | (442   | ) |   |   | - |   |   |   | 856 |   |
| Net      income                                   |   | $          | 1,181  |   |                       | $      | 5,454   |         |   | $      | 12,976        |   |   | $            | 1,169  |   |   | $ | (19,599 | ) |   | $ | 1,181 |   |
|                                              |   |       |   |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |

----

|                                              |   |       |   |   | Issuer      and Guarantors |   |    |         |   |   |          |   |   |         |   |
|---------------------------------------------------|--------|------------|--------|--------|----------------------------|--------|---------|--------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                              |   |       |   |   | Simmons                    |   |    |         |   |   |          |   |   |         |   |   |   |   |
|                                              |   | Parent     |   |   | Bedding                    |   |    | Guarantor    |   |   | Non-Guarantor |   |   |         |   |   |   |   |
|                                              |   | Guarantors |   |   | Company                    |   |    | Subsidiaries |   |   | Subsidiaries  |   |   | Eliminations |   |   | Consolidated |   |
|                                              |   |       |   |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |
| Net      sales                                    |   | $          | -      |   |                       | $      | (32,671 | )            |   | $      | 275,592       |   |   | $            | 35,157 |   |   | $ | (207 | ) |   | $ | 277,871 |   |
| Cost      of products sold                        |   |       | -      |   |                       |   | 699     |         |   |   | 147,562       |   |   |         | 23,733 |   |   |   | (207 | ) |   |   | 171,787 |   |
| Gross      profit                                 |   |       | -      |   |                       |   | (33,370 | )            |   |   | 128,030       |   |   |         | 11,424 |   |   |   | - |   |   |   | 106,084 |   |
| Operating      expenses:                          |   |       |   |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses |   |       | 4      |   |                       |   | 59,170  |         |   |   | 20,769        |   |   |         | 6,166  |   |   |   | - |   |   |   | 86,109 |   |
| Amortization      of intangibles                  |   |       | -      |   |                       |   | 738     |         |   |   | 526           |   |   |         | 229    |   |   |   | - |   |   |   | 1,493 |   |
| Intercompany      fees                            |   |       | -      |   |                       |   | (98,804 | )            |   |   | 98,046        |   |   |         | 758    |   |   |   | - |   |   |   | - |   |
| Licensing      revenues                           |   |       | -      |   |                       |   | (298    | )            |   |   | (1,634        | )      |   |         | (189   | ) |   |   | - |   |   |   | (2,121 | ) |
|                                              |   |       | 4      |   |                       |   | (39,194 | )            |   |   | 117,707       |   |   |         | 6,964  |   |   |   | - |   |   |   | 85,481 |   |
| Operating      income (loss)                      |   |       | (4     | )      |                       |   | 5,824   |         |   |   | 10,323        |   |   |         | 4,460  |   |   |   | - |   |   |   | 20,603 |   |
| Interest      expense, net                        |   |       | 5,220  |   |                       |   | 11,895  |         |   |   | 211           |   |   |         | 1,932  |   |   |   | - |   |   |   | 19,258 |   |
| Income      from subsidiaries                     |   |       | 6,076  |   |                       |   | 10,683  |         |   |   | -             |   |   |         | -      |   |   |   | (16,759 | ) |   |   | - |   |
| Income      before income taxes                   |   |       | 852    |   |                       |   | 4,612   |         |   |   | 10,112        |   |   |         | 2,528  |   |   |   | (16,759 | ) |   |   | 1,345 |   |
| Income      tax expense (benefit)                 |   |       | (132   | )      |                       |   | (1,464  | )            |   |   | 1,278         |   |   |         | 679    |   |   |   | - |   |   |   | 361 |   |
| Net      income                                   |   | $          | 984    |   |                       | $      | 6,076   |         |   | $      | 8,834         |   |   | $            | 1,849  |   |   | $ | (16,759 | ) |   | $ | 984 |   |
|                                              |   |       |   |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |

----

|                                              |   |       |   |   | Issuer      and Guarantors |   |     |         |   |   |          |   |   |         |   |
|---------------------------------------------------|--------|------------|--------|--------|----------------------------|--------|----------|--------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                              |   |       |   |   | Simmons                    |   |     |         |   |   |          |   |   |         |   |   |   |   |
|                                              |   | Parent     |   |   | Bedding                    |   |     | Guarantor    |   |   | Non-Guarantor |   |   |         |   |   |   |   |
|                                              |   | Guarantors |   |   | Company                    |   |     | Subsidiaries |   |   | Subsidiaries  |   |   | Eliminations |   |   | Consolidated |   |
|                                              |   |       |   |   |                       |   |     |         |   |   |          |   |   |         |   |   |   |   |
| Net      sales                                    |   | $          | -      |   |                       | $      | (46,721  | )            |   | $      | 516,962       |   |   | $            | 74,529 |   |   | $ | (206 | ) |   | $ | 544,564 |   |
| Cost      of products sold                        |   |       | -      |   |                       |   | 1,611    |         |   |   | 277,510       |   |   |         | 54,765 |   |   |   | (206 | ) |   |   | 333,680 |   |
| Gross      profit                                 |   |       | -      |   |                       |   | (48,332  | )            |   |   | 239,452       |   |   |         | 19,764 |   |   |   | - |   |   |   | 210,884 |   |
| Operating      expenses:                          |   |       |   |   |                       |   |     |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses |   |       | -      |   |                       |   | 111,745  |         |   |   | 44,902        |   |   |         | 14,463 |   |   |   | - |   |   |   | 171,110 |   |
| Amortization      of intangibles                  |   |       | -      |   |                       |   | 1,477    |         |   |   | 1,200         |   |   |         | 499    |   |   |   | - |   |   |   | 3,176 |   |
| Intercompany      fees                            |   |       | -      |   |                       |   | (161,882 | )            |   |   | 160,048       |   |   |         | 1,834  |   |   |   | - |   |   |   | - |   |
| Licensing      revenues                           |   |       | -      |   |                       |   | (782     | )            |   |   | (3,824        | )      |   |         | (422   | ) |   |   | - |   |   |   | (5,028 | ) |
|                                              |   |       | -      |   |                       |   | (49,442  | )            |   |   | 202,326       |   |   |         | 16,374 |   |   |   | - |   |   |   | 169,258 |   |
| Operating      income                             |   |       | -      |   |                       |   | 1,110    |         |   |   | 37,126        |   |   |         | 3,390  |   |   |   | - |   |   |   | 41,626 |   |
| Interest      expense, net                        |   |       | 11,336 |   |                       |   | 19,506   |         |   |   | 394           |   |   |         | 4,066  |   |   |   | - |   |   |   | 35,302 |   |
| Income      from subsidiaries                     |   |       | 11,749 |   |                       |   | 27,817   |         |   |   | -             |   |   |         | -      |   |   |   | (39,566 | ) |   |   | - |   |
| Income      (loss) before income taxes            |   |       | 413    |   |                       |   | 9,421    |         |   |   | 36,732        |   |   |         | (676   | ) |   |   | (39,566 | ) |   |   | 6,324 |   |
| Income      tax expense (benefit)                 |   |       | (3,283 | )      |                       |   | (2,328   | )            |   |   | 9,163         |   |   |         | (924   | ) |   |   | - |   |   |   | 2,628 |   |
| Net      income                                   |   | $          | 3,696  |   |                       | $      | 11,749   |         |   | $      | 27,569        |   |   | $            | 248    |   |   | $ | (39,566 | ) |   | $ | 3,696 |   |
|                                              |   |       |   |   |                       |   |     |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |

----

|                                              |   |       |   |   | Issuer      and Guarantors |   |     |         |   |   |          |   |   |         |   |
|---------------------------------------------------|--------|------------|--------|--------|----------------------------|--------|----------|--------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                              |   |       |   |   | Simmons                    |   |     |         |   |   |          |   |   |         |   |   |   |   |
|                                              |   | Parent     |   |   | Bedding                    |   |     | Guarantor    |   |   | Non-Guarantor |   |   |         |   |   |   |   |
|                                              |   | Guarantors |   |   | Company                    |   |     | Subsidiaries |   |   | Subsidiaries  |   |   | Eliminations |   |   | Consolidated |   |
|                                              |   |       |   |   |                       |   |     |         |   |   |          |   |   |         |   |   |   |   |
| Net      sales                                    |   | $          | -      |   |                       | $      | (57,239  | )            |   | $      | 535,814       |   |   | $            | 67,134 |   |   | $ | (432 | ) |   | $ | 545,277 |   |
| Cost      of products sold                        |   |       | -      |   |                       |   | 1,327    |         |   |   | 284,220       |   |   |         | 45,887 |   |   |   | (432 | ) |   |   | 331,002 |   |
| Gross      profit                                 |   |       | -      |   |                       |   | (58,566  | )            |   |   | 251,594       |   |   |         | 21,247 |   |   |   | - |   |   |   | 214,275 |   |
| Operating      expenses:                          |   |       |   |   |                       |   |     |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses |   |       | (6     | )      |                       |   | 115,047  |         |   |   | 42,562        |   |   |         | 13,214 |   |   |   | - |   |   |   | 170,817 |   |
| Amortization      of intangibles                  |   |       | -      |   |                       |   | 1,477    |         |   |   | 1,052         |   |   |         | 443    |   |   |   | - |   |   |   | 2,972 |   |
| Intercompany      fees                            |   |       | -      |   |                       |   | (188,450 | )            |   |   | 186,932       |   |   |         | 1,518  |   |   |   | - |   |   |   | - |   |
| Licensing      revenues                           |   |       | -      |   |                       |   | (595     | )            |   |   | (4,365        | )      |   |         | (354   | ) |   |   | - |   |   |   | (5,314 | ) |
|                                              |   |       | (6     | )      |                       |   | (72,521  | )            |   |   | 226,181       |   |   |         | 14,821 |   |   |   | - |   |   |   | 168,475 |   |
| Operating      income                             |   |       | 6      |   |                       |   | 13,955   |         |   |   | 25,413        |   |   |         | 6,426  |   |   |   | - |   |   |   | 45,800 |   |
| Interest      expense, net                        |   |       | 10,361 |   |                       |   | 23,430   |         |   |   | 114           |   |   |         | 3,742  |   |   |   | - |   |   |   | 37,647 |   |
| Income      from subsidiaries                     |   |       | 13,867 |   |                       |   | 19,004   |         |   |   | -             |   |   |         | -      |   |   |   | (32,871 | ) |   |   | - |   |
| Income      before income taxes                   |   |       | 3,512  |   |                       |   | 9,529    |         |   |   | 25,299        |   |   |         | 2,684  |   |   |   | (32,871 | ) |   |   | 8,153 |   |
| Income      tax expense (benefit)                 |   |       | (1,885 | )      |                       |   | (4,338   | )            |   |   | 8,307         |   |   |         | 672    |   |   |   | - |   |   |   | 2,756 |   |
| Net      income                                   |   | $          | 5,397  |   |                       | $      | 13,867   |         |   | $      | 16,992        |   |   | $            | 2,012  |   |   | $ | (32,871 | ) |   | $ | 5,397 |   |
|                                              |   |       |   |   |                       |   |     |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |

----

|                                                     |   |       |    |   | Issuer      and Guarantors |   |      |       |   |   |          |   |   |         |    |
|----------------------------------------------------------|--------|------------|---------|--------|----------------------------|--------|-----------|------------|--------|--------|---------------|--------|--------|--------------|---------|
|                                                     |   |       |    |   | Simmons                    |   |      |       |   |   |          |   |   |         |    |   |   |   |
|                                                     |   | Parent     |    |   | Bedding                    |   |      | Subsidiary |   |   | Non-Guarantor |   |   |         |    |   |   |   |
|                                                     |   | Guarantors |    |   | Company                    |   |      | Guarantors |   |   | Subsidiaries  |   |   | Eliminations |    |   | Consolidated |   |
| ASSETS                                                   |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |
| Current      assets:                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |
| Cash      and cash equivalents                           |   | $          | -       |   |                       | $      | 3,922     |       |   | $      | 3,574         |   |   | $            | 17,800  |   |   | $ | - |   |   | $ | 25,296 |   |
| Accounts      receivable                                 |   |       | -       |   |                       |   | -         |       |   |   | 99,862        |   |   |         | 28,596  |   |   |   | (195 | ) |   |   | 128,263 |   |
| Inventories                                              |   |       | -       |   |                       |   | 37        |       |   |   | 33,748        |   |   |         | 5,604   |   |   |   | - |   |   |   | 39,389 |   |
| Other                                                    |   |       | -       |   |                       |   | 7,204     |       |   |   | 14,061        |   |   |         | 2,700   |   |   |   | - |   |   |   | 23,965 |   |
| Total      current assets                                |   |       | -       |   |                       |   | 11,163    |       |   |   | 151,245       |   |   |         | 54,700  |   |   |   | (195 | ) |   |   | 216,913 |   |
| Property,      plant and equipment, net                  |   |       | -       |   |                       |   | 26,128    |       |   |   | 44,322        |   |   |         | 23,676  |   |   |   | - |   |   |   | 94,126 |   |
| Goodwill      and other intangibles, net                 |   |       | -       |   |                       |   | 69,857    |       |   |   | 960,345       |   |   |         | 107,551 |   |   |   | - |   |   |   | 1,137,753 |   |
| Other      assets                                        |   |       | 32,643  |   |                       |   | 127,656   |       |   |   | 549           |   |   |         | 3,316   |   |   |   | (127,450 | ) |   |   | 36,714 |   |
| Net      investment in and advances to (from) affiliates |   |       | 371,654 |   |                       |   | 911,146   |       |   |   | 287,179       |   |   |         | (2,149  | ) |   |   | (1,567,830 | ) |   |   | - |   |
| Total      assets                                        |   | $          | 404,297 |   |                       | $      | 1,145,950 |       |   | $      | 1,443,640     |   |   | $            | 187,094 |   |   | $ | (1,695,475 | ) |   | $ | 1,485,506 |   |
|                                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDER'S EQUITY                |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |
| Current      liabilities:                                |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| Current      maturities of long-term debt                |   | $          | -       |   |                       | $      | -         |       |   | $      | 300           |   |   | $            | 287     |   |   | $ | - |   |   | $ | 587 |   |
| Accounts      payable and accrued liabilities            |   |       | 140     |   |                       |   | 49,453    |       |   |   | 88,050        |   |   |         | 32,270  |   |   |   | (13,804 | ) |   |   | 156,109 |   |
| Total      current liabilities                           |   |       | 140     |   |                       |   | 49,453    |       |   |   | 88,350        |   |   |         | 32,557  |   |   |   | (13,804 | ) |   |   | 156,696 |   |
| Long-term      debt                                      |   |       | 233,353 |   |                       |   | 689,000   |       |   |   | 12,500        |   |   |         | 84,905  |   |   |   | (83,963 | ) |   |   | 935,795 |   |
| Deferred      income taxes                               |   |       | -       |   |                       |   | 29,343    |       |   |   | 180,650       |   |   |         | 11,300  |   |   |   | (29,878 | ) |   |   | 191,415 |   |
| Other      non-current liabilities                       |   |       | -       |   |                       |   | 21,109    |       |   |   | 6,387         |   |   |         | 3,300   |   |   |   | - |   |   |   | 30,796 |   |
| Total      liabilities                                   |   |       | 233,493 |   |                       |   | 788,905   |       |   |   | 287,887       |   |   |         | 132,062 |   |   |   | (127,645 | ) |   |   | 1,314,702 |   |
| Stockholder's      equity                                |   |       | 170,804 |   |                       |   | 357,045   |       |   |   | 1,155,753     |   |   |         | 55,032  |   |   |   | (1,567,830 | ) |   |   | 170,804 |   |
| Total      liabilities and stockholder's equity          |   | $          | 404,297 |   |                       | $      | 1,145,950 |       |   | $      | 1,443,640     |   |   | $            | 187,094 |   |   | $ | (1,695,475 | ) |   | $ | 1,485,506 |   |
|                                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |

----

|                                                     |   |       |    |   | Issuer      and Guarantors |   |      |       |   |   |          |   |   |         |    |
|----------------------------------------------------------|--------|------------|---------|--------|----------------------------|--------|-----------|------------|--------|--------|---------------|--------|--------|--------------|---------|
|                                                     |   |       |    |   | Simmons                    |   |      |       |   |   |          |   |   |         |    |   |   |   |
|                                                     |   | Parent     |    |   | Bedding                    |   |      | Subsidiary |   |   | Non-Guarantor |   |   |         |    |   |   |   |
|                                                     |   | Guarantors |    |   | Company                    |   |      | Guarantors |   |   | Subsidiaries  |   |   | Eliminations |    |   | Consolidated |   |
| ASSETS                                                   |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |
| Current      assets:                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |
| Cash      and cash equivalents                           |   | $          | -       |   |                       | $      | 8,241     |       |   | $      | 4,087         |   |   | $            | 15,192  |   |   | $ | - |   |   | $ | 27,520 |   |
| Accounts      receivable                                 |   |       | -       |   |                       |   | -         |       |   |   | 93,399        |   |   |         | 26,726  |   |   |   | (141 | ) |   |   | 119,984 |   |
| Inventories                                              |   |       | -       |   |                       |   | 37        |       |   |   | 30,041        |   |   |         | 5,129   |   |   |   | - |   |   |   | 35,207 |   |
| Other                                                    |   |       | -       |   |                       |   | 9,859     |       |   |   | 13,008        |   |   |         | 2,414   |   |   |   | - |   |   |   | 25,281 |   |
| Total      current assets                                |   |       | -       |   |                       |   | 18,137    |       |   |   | 140,535       |   |   |         | 49,461  |   |   |   | (141 | ) |   |   | 207,992 |   |
|                                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| Property,      plant and equipment, net                  |   |       | -       |   |                       |   | 24,818    |       |   |   | 38,423        |   |   |         | 24,208  |   |   |   | - |   |   |   | 87,449 |   |
| Goodwill      and other intangibles, net                 |   |       | -       |   |                       |   | 71,335    |       |   |   | 961,552       |   |   |         | 111,786 |   |   |   | - |   |   |   | 1,144,673 |   |
| Other      assets                                        |   |       | 29,508  |   |                       |   | 126,973   |       |   |   | 586           |   |   |         | 3,695   |   |   |   | (123,223 | ) |   |   | 37,539 |   |
| Net      investment in and advances to (from) affiliates |   |       | 380,949 |   |                       |   | 910,379   |       |   |   | 287,881       |   |   |         | (2,219  | ) |   |   | (1,576,990 | ) |   |   | - |   |
| Total      assets                                        |   | $          | 410,457 |   |                       | $      | 1,151,642 |       |   | $      | 1,428,977     |   |   | $            | 186,931 |   |   | $ | (1,700,354 | ) |   | $ | 1,477,653 |   |
|                                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   | - |   |
| LIABILITIES      AND STOCKHOLDER'S EQUITY                |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| Current      liabilities:                                |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| Current      maturities of long-term debt                |   | $          | -       |   |                       | $      | -         |       |   | $      | 300           |   |   | $            | 472     |   |   | $ | - |   |   | $ | 772 |   |
| Accounts      payable and accrued liabilities            |   |       | 140     |   |                       |   | 66,681    |       |   |   | 86,762        |   |   |         | 25,168  |   |   |   | (9,901 | ) |   |   | 168,850 |   |
| Total      current liabilities                           |   |       | 140     |   |                       |   | 66,681    |       |   |   | 87,062        |   |   |         | 25,640  |   |   |   | (9,901 | ) |   |   | 169,622 |   |
|                                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| Long-term      debt                                      |   |       | 222,165 |   |                       |   | 665,000   |       |   |   | 12,500        |   |   |         | 87,919  |   |   |   | (86,868 | ) |   |   | 900,716 |   |
| Deferred      income taxes                               |   |       | -       |   |                       |   | 32,859    |       |   |   | 171,284       |   |   |         | 12,773  |   |   |   | (26,595 | ) |   |   | 190,321 |   |
| Other      non-current liabilities                       |   |       | -       |   |                       |   | 20,754    |       |   |   | 3,867         |   |   |         | 4,221   |   |   |   | - |   |   |   | 28,842 |   |
| Total      liabilities                                   |   |       | 222,305 |   |                       |   | 785,294   |       |   |   | 274,713       |   |   |         | 130,553 |   |   |   | (123,364 | ) |   |   | 1,289,501 |   |
| Stockholder's      equity                                |   |       | 188,152 |   |                       |   | 366,348   |       |   |   | 1,154,264     |   |   |         | 56,378  |   |   |   | (1,576,990 | ) |   |   | 188,152 |   |
| Total      liabilities and stockholder's equity          |   | $          | 410,457 |   |                       | $      | 1,151,642 |       |   | $      | 1,428,977     |   |   | $            | 186,931 |   |   | $ | (1,700,354 | ) |   | $ | 1,477,653 |   |
|                                                     |   |       |    |   |                       |   |      |       |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |

----

|                                                     |   |       |    |   | Issuer      and Guarantors |   |    |         |   |   |          |   |   |         |   |
|----------------------------------------------------------|--------|------------|---------|--------|----------------------------|--------|---------|--------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                                     |   |       |    |   | Simmons                    |   |    |         |   |   |          |   |   |         |   |   |   |   |
|                                                     |   | Parent     |    |   | Bedding                    |   |    | Guarantor    |   |   | Non-Guarantor |   |   |         |   |   |   |   |
|                                                     |   | Guarantors |    |   | Company                    |   |    | Subsidiaries |   |   | Subsidiaries  |   |   | Eliminations |   |   | Consolidated |   |
|                                                     |   |       |    |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |
| Net      cash provided by (used in) operating activities |   | $          | (3      | )      |                       | $      | (33,425 | )            |   | $      | 31,877        |   |   | $            | 5,291  |   |   |   |   |   | $ | 3,740 |   |
| Cash      flows from investing activities:               |   |       |    |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |
| Purchase      of property, plant and equipment, net      |   |       | -       |   |                       |   | (3,820  | )            |   |   | (7,012        | )      |   |         | (1,802 | ) |   |   |   |   |   | (12,634 | ) |
| Net      cash used in investing activities               |   |       | -       |   |                       |   | (3,820  | )            |   |   | (7,012        | )      |   |         | (1,802 | ) |   |   | - |   |   |   | (12,634 | ) |
| Cash      flows from financing activities:               |   |       |    |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Dividend      to Simmons Holdco, Inc.                    |   |       | (16,519 | )      |                       |   | -       |         |   |   | -             |   |   |         | -      |   |   |   |   |   |   |   | (16,519 | ) |
| Borrowings      on revolving loan                        |   |       | -       |   |                       |   | 24,000  |         |   |   | -             |   |   |         | -      |   |   |   |   |   |   |   | 24,000 |   |
| Repayment      of long-term obligations                  |   |       | -       |   |                       |   | -       |         |   |   | -             |   |   |         | (285   | ) |   |   |   |   |   |   | (285 | ) |
| Receipt      from (distribution to) affiliates           |   |       | 16,522  |   |                       |   | 8,926   |         |   |   | (25,378       | )      |   |         | (70    | ) |   |   |   |   |   |   | - |   |
| Net      cash provided by (used in) financing activities |   |       | 3       |   |                       |   | 32,926  |         |   |   | (25,378       | )      |   |         | (355   | ) |   |   | - |   |   |   | 7,196 |   |
| Net      effect of exchange rate changes                 |   |       | -       |   |                       |   | -       |         |   |   | -             |   |   |         | (526   | ) |   |   |   |   |   |   | (526 | ) |
| Change      in cash and cash equivalents                 |   |       | -       |   |                       |   | (4,319  | )            |   |   | (513          | )      |   |         | 2,608  |   |   |   | - |   |   |   | (2,224 | ) |
| Cash      and cash equivalents:                          |   |       |    |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Beginning      of period                                 |   |       | -       |   |                       |   | 8,241   |         |   |   | 4,087         |   |   |         | 15,192 |   |   |   | - |   |   |   | 27,520 |   |
| End      of period                                       |   | $          | -       |   |                       | $      | 3,922   |         |   | $      | 3,574         |   |   | $            | 17,800 |   |   | $ | - |   |   | $ | 25,296 |   |
|                                                     |   |       |    |   |                       |   |    |         |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |

----

|                                                     |   |       |   |   | Issuer      and Guarantors |   |    |       |   |   |          |   |   |         |   |
|----------------------------------------------------------|--------|------------|--------|--------|----------------------------|--------|---------|------------|--------|--------|---------------|--------|--------|--------------|--------|
|                                                     |   |       |   |   | Simmons                    |   |    |       |   |   |          |   |   |         |   |   |   |   |
|                                                     |   | Parent     |   |   | Bedding                    |   |    | Subsidiary |   |   | Non-Guarantor |   |   |         |   |   |   |   |
|                                                     |   | Guarantors |   |   | Company                    |   |    | Guarantors |   |   | Subsidiaries  |   |   | Eliminations |   |   | Consolidated |   |
|                                                     |   |       |   |   |                       |   |    |       |   |   |          |   |   |         |   |   |   |   |
| Net      cash provided by (used in) operating activities |   | $          | 298    |   |                       | $      | (13,454 | )          |   | $      | 14,441        |   |   | $            | 4,651  |   |   | $ | - |   |   | $ | 5,936 |   |
| Cash      flows from investing activities:               |   |       |   |   |                       |   |    |       |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Purchase      of certain assets of Comfor Products       |   |       | -      |   |                       |   | (12,817 | )          |   |   | -             |   |   |         | -      |   |   |   | - |   |   |   | (12,817 | ) |
| Purchase      of property, plant and equipment, net      |   |       | -      |   |                       |   | (7,154  | )          |   |   | (2,710        | )      |   |         | (707   | ) |   |   | - |   |   |   | (10,571 | ) |
| Net      cash used in investing activities               |   |       | -      |   |                       |   | (19,971 | )          |   |   | (2,710        | )      |   |         | (707   | ) |   |   | - |   |   |   | (23,388 | ) |
| Cash      flows from financing activities:               |   |       |   |   |                       |   |    |       |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Borrowings      on revolving loan                        |   |       | -      |   |                       |   | 13,500  |       |   |   | -             |   |   |         | -      |   |   |   | - |   |   |   | 13,500 |   |
| Payment      of other long-term obligations              |   |       | -      |   |                       |   | -       |       |   |   | -             |   |   |         | (300   | ) |   |   | - |   |   |   | (300 | ) |
| Purchase      of treasury stock                          |   |       | (1     | )      |                       |   | -       |       |   |   | -             |   |   |         | -      |   |   |   | - |   |   |   | (1 | ) |
| Receipt      from (distribution to) affiliates           |   |       | (297   | )      |                       |   | 11,835  |       |   |   | (13,185       | )      |   |         | 1,647  |   |   |   | - |   |   |   | - |   |
| Net      cash provided by (used in) financing activities |   |       | (298   | )      |                       |   | 25,335  |       |   |   | (13,185       | )      |   |         | 1,347  |   |   |   | - |   |   |   | 13,199 |   |
| Net      effect of exchange rate changes                 |   |       | -      |   |                       |   | -       |       |   |   | -             |   |   |         | 720    |   |   |   | - |   |   |   | 720 |   |
| Change      in cash and cash equivalents                 |   |       | -      |   |                       |   | (8,090  | )          |   |   | (1,454        | )      |   |         | 6,011  |   |   |   | - |   |   |   | (3,533 | ) |
| Cash      and cash equivalents:                          |   |       |   |   |                       |   |    |       |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Beginning      of period                                 |   |       | -      |   |                       |   | 9,841   |       |   |   | 5,606         |   |   |         | 5,337  |   |   |   | - |   |   |   | 20,784 |   |
| End      of period                                       |   | $          | -      |   |                       | $      | 1,751   |       |   | $      | 4,152         |   |   | $            | 11,348 |   |   | $ | - |   |   | $ | 17,251 |   |
|                                                     |   |       |   |   |                       |   |    |       |   |   |          |   |   |         |   |   |   |   |   |   |   |   |   |   |

----

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

|                                              |   | Quarters      Ended |   |   | Six      Months Ended |   |
|---------------------------------------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                                              |   | June      28,       |   |   | June      30,         |   |   | June      28, |   |   | June      30, |   |
|                                              |   | 2008                |   |   | 2007                  |   |   | 2008 |   |   | 2007 |   |
|                                              |   |                |   |   |                  |   |   |   |   |   |   |   |
| Net      sales                                    |   |                | 100.0  | %      |                  |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |
| Cost      of products sold                        |   |                | 62.2   | %      |                  |   | 61.8 | % |   |   | 61.3 | % |   |   | 60.7 | % |
| Gross      margin                                 |   |                | 37.8   | %      |                  |   | 38.2 | % |   |   | 38.7 | % |   |   | 39.3 | % |
|                                              |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses:                          |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses |   |                | 30.8   | %      |                  |   | 31.0 | % |   |   | 31.4 | % |   |   | 31.3 | % |
| Amortization      of intangibles                  |   |                | 0.6    | %      |                  |   | 0.5 | % |   |   | 0.6 | % |   |   | 0.5 | % |
| Licensing      revenues                           |   |                | -0.9   | %      |                  |   | -0.8 | % |   |   | -0.9 | % |   |   | -1.0 | % |
|                                              |   |                | 30.5   | %      |                  |   | 30.8 | % |   |   | 31.1 | % |   |   | 30.9 | % |
|                                              |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                             |   |                | 7.3    | %      |                  |   | 7.4 | % |   |   | 7.6 | % |   |   | 8.4 | % |
|                                              |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense, net                        |   |                | 6.5    | %      |                  |   | 6.9 | % |   |   | 6.5 | % |   |   | 6.9 | % |
| Income      before income taxes                   |   |                | 0.8    | %      |                  |   | 0.5 | % |   |   | 1.2 | % |   |   | 1.5 | % |
| Income      tax expense                           |   |                | 0.3    | %      |                  |   | 0.1 | % |   |   | 0.5 | % |   |   | 0.5 | % |
| Net      income                                   |   |                | 0.4    | %      |                  |   | 0.4 | % |   |   | 0.7 | % |   |   | 1.0 | % |
|                                              |   |                |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |

----

----

----

----

|                                         |   | Six      Months Ended |   |
|----------------------------------------------|--------|-----------------------|--------|
|                                         |   | June      28,         |   |   | June      30, |   |
|                                         |   | 2008                  |   |   | 2007 |   |
| Statement      of Cash Flow Data:            |   |                  |   |   |   |   |
| Cash      flows provided by (used in):       |   |                  |   |   |   |   |
| Operating      activities                    |   | $                     | 3.7    |   |   | $ | 5.9 |   |
| Investing      activities                    |   |                  | (12.6  | ) |   |   | (23.4 | ) |
| Financing      activities                    |   |                  | 7.2    |   |   |   | 13.2 |   |
| Effect      of exchange rate changes on cash |   |                  | (0.5   | ) |   |   | 0.7 |   |
| Decrease      in cash and cash equivalents   |   |                  | (2.2   | ) |   |   | (3.5 | ) |
| Cash      and cash equivalents:              |   |                  |   |   |   |   |   |   |
| Beginning      of period                     |   |                  | 27.5   |   |   |   | 20.8 |   |
| End      of period                           |   | $                     | 25.3   |   |   | $ | 17.3 |   |
|                                         |   |                  |   |   |   |   |   |   |

----

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

----

| 3)   | A      minimum cash interest coverage ratio, with compliance levels ranging from      cash interest coverage of no less than 2.75:1.00 from June 28, 2008      through December 27, 2008; and 3.00:1.00 from March 28, 2009 through each      fiscal quarter ending thereafter. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4)   | A      maximum leverage ratio, with compliance levels ranging from total leverage      of no greater than 4.50:1.00 from June 28, 2008 through December 27, 2008;      and 4.00:1.00 from March 28, 2009 through each fiscal quarter ending      thereafter. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Calculation      of minimum cash interest coverage ratio:       |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|
| Simmons      Bedding Adjusted EBITDA(1)                         |   | $      | 154.0  |   |
| Simmons      Bedding cash interest expense(2)                   |   | $      | 50.8   |   |
| Actual      interest coverage ratio(3)                          |   |   | 3.03   | x |
| Minimum      permitted interest coverage ratio                  |   |   | 2.75   | x |
|                                                            |   |   |   |   |
| Calculation      of maximum leverage ratio:                     |   |   |   |   |
| Simmons      Bedding debt(4)                                    |   | $      | 703.0  |   |
| Less:  Simmons      Bedding cash and cash equivalents |   |   | (25.3  | ) |
| Net      Simmons Bedding debt                                   |   | $      | 677.7  |   |
| Adjusted      EBITDA(1)                                         |   | $      | 154.0  |   |
| Actual      leverage ratio(5)                                   |   |   | 4.40   | x |
| Maximum      permitted leverage ratio                           |   |   | 4.50   | x |

----

| Net      income                                                         |   | $      | 22.2   |   |
|-------------------------------------------------------------------------|--------|--------|--------|--------|
| Depreciation      and amortization                                      |   |   | 34.6   |   |
| Income      taxes                                                       |   |   | 8.5    |   |
| Interest      expense, net                                              |   |   | 73.3   |   |
| Interest      income                                                    |   |   | 0.3    |   |
| EBITDA                                                                  |   | $      | 139.0  |   |
|                                                                    |   |   |   |   |
| Reorganization      expenses including management severance             |   |   | 2.2    |   |
| Management      fees                                                    |   |   | 1.6    |   |
| Transaction      related expenses                                       |   |   | 3.2    |   |
| Conversion      costs associated with meeting new flammability standard |   |   | 0.3    |   |
| ERP      system implementation costs                                    |   |   | 2.7    |   |
| Relocation      of U.S. manufacturing and Canada corporate facilities   |   |   | 1.0    |   |
| Non-recurring      professional service fees                            |   |   | 3.5    |   |
| Other,      including expenses at Holdings                              |   |   | 0.6    |   |
| Adjusted      EBITDA                                                    |   | $      | 154.0  |   |
|                                                                    |   |   |   |   |

| Simmons      Company consolidated interest expense, net         |   | $      | 73.3   |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|
| Less:  Simmons      Company non-cash interest expense |   |   | (21.8  | )      |
| Simmons      Bedding interest expense, net                      |   |   | 51.5   |   |
| Add:  Simmons      Bedding interest income            |   |   | 0.3    |   |
| Add:  Simmons      Bedding interest capitalized       |   |   | 0.8    |   |
| Simmons      Bedding gross interest expense                     |   |   | 52.6   |   |
| Less:  Simmons      Bedding non-cash interest expense |   |   | (1.8   | )      |
| Simmons      Bedding cash interest expense                      |   | $      | 50.8   |   |
|                                                            |   |   |   |   |

| Simmons      Company consolidated debt     |   | $      | 936.4  |   |
|--------------------------------------------|--------|--------|--------|--------|
| Less:  Simmons      Company debt |   |   | (233.4 | )      |
| Simmons      Bedding debt                  |   | $      | 703.0  |   |
|                                       |   |   |   |   |

----

| ·   | general      economic and industry conditions; |
|--------------------|------------------------------------------------|

| ·   | competitive      pricing pressures in the beddingindustry; |
|--------------------|------------------------------------------------------------|

| ·   | 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 and energyprices; |
|--------------------|-------------------------------------------------------------------|

| ·   | our      relationship with and viability of 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; |
|--------------------|---------------------------|

| ·   | foreign      currency exchange rate risks; |
|--------------------|--------------------------------------------|

| ·   | compliance      with covenants in our debtagreements; |
|--------------------|-------------------------------------------------------|

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

| ·   | 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”). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| PART      II      -                                           OTHER      INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
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| Item      1.                        Legal      Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| See paragraph 1 of Note G to the      Unaudited Condensed Consolidated Financial Statements, Part 1, Item 1      included herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
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| Item      1A.  Risk Factors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|  In addition to the other      information set forth in this report, you should carefully consider the      risk factors discussed in Part I, “Item 1A. Risk Factors” in our      Annual Report on Form 10-K for the year ended December 31, 2007,      which could materially affect our business, financial condition or future      results.  To the extent that the risk factors set forth below      appear in our Annual Report on Form 10-K, the risk factors set forth below      amend and supplement those risk factors with the same titles contained in      such previously filed reports.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| We face a risk of      non-compliance with certain financial covenants related to our senior      credit facility, and we may need to obtain an equity contribution or a      waiver of all covenant defaults under our senior credit      facility. As      of the end of the June 28, 2008, we were in full compliance with all our      financial covenants in our senior credit facility.  However, given      current macroeconomic conditions in the United States, including in the      retail sector, as well as rising costs of raw materials and diesel fuel,      we may not be able to meet our maximum leverage ratio covenant as required      by our senior credit facility in the third quarter of 2008 or in future      periods.  If we are not in compliance with the maximum leverage      covenant or other covenants in future periods, we would need to seek (i)      an equity contribution to THL-SC Bedding Company of up to the lesser of      (x) the amount necessary to cure the failure to comply with all financial      covenants and (y) $20.0 million, and such equity contribution would be      contributed to the capital of Simmons Bedding and included in Adjusted      EBITDA for purposes of calculating the financial covenants; or (ii) a      waiver of all covenant defaults under our senior credit facility.  We      may not be able to obtain such equity contribution or waiver on acceptable      terms, on a timely basis or at all.  In addition, any waiver may      require us to have to pay a fee to our senior lenders or amend the terms      of our senior credit facility which could increase our cost of credit and      adversely impact our results of operations.  Non-compliance with our      covenants could require us to immediately repay all amounts outstanding      under such facility, which would have a material adverse effect on our      liquidity, business, financial condition and results of operations.       In addition, if there is a payment acceleration under our senior      credit facility, then we would be in default under our Subordinated Notes      and Discount Notes and Simmons Holdco would be in default under its Toggle      Loan.  We do not have adequate liquidity to repay such indebtedness      if there is a payment acceleration under such indebtedness.  In      the event we are not in compliance with our covenants under our senior      credit facility, the failure to obtain an equity contribution or an      amendment of the credit agreement would have a material adverse effect on      our liquidity and on our ability to conduct our  business. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Item      2.                        Unregistered      Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
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| None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| Item      3.  Defaults Upon Senior Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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| None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| Item      4.                        Submission      of Matters to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| Item      5.                        Other      Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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|                   None                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
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| Item      6.                        Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| 10.1       Second      Amendment dated June 30, 2008 to the Amended and Restated Restricted Stock      Agreement dated April 17, 2006 among LLLP Eitel Investments and Simmons      Holdco, Inc. |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                  |
| 10.2       Second      Amendment dated June 30, 2008 to the Amended and Restated Restricted Stock      Agreement dated April 17, 2006 among William S. Creekmuir and Simmons      Holdco, Inc.   |
|                                                                                                                                                                                                  |
| 10.3       Second      Amendment dated June 30, 2008 to the Amended and Restated Restricted Stock      Agreement dated April 17, 2006 among Robert P. Burch and Simmons Holdco,      Inc.        |
|                                                                                                                                                                                                  |
| 10.4       Second      Amendment dated June 30, 2008 to the Amended and Restated Restricted Stock      Agreement dated April 17, 2006 among Timothy F. Oakhill and Simmons      Holdco, Inc.     |
|                                                                                                                                                                                                  |
| 10.5       Second      Amendment dated June 30, 2008 to the Amended and Restated Restricted Stock      Agreement dated April 17, 2006 among Timothy F. Oakhill and Simmons      Holdco, Inc.     |
|                                                                                                                                                                                                  |
| 10.6       Second      Amendment dated June 30, 2008 to the Restricted Stock Agreement dated      September 29, 2006 among Timothy F. Oakhill and Simmons Holdco,    Inc.                        |
|                                                                                                                                                                                                  |
| 10.7       First      Amendment dated June 30, 2008 to the Stock Option Agreement dated January      16, 2008 among Stephen G. Fendrich and Simmons Holdco, Inc.                                 |
|                                                                                                                                                                                                  |
| 10.8       Second      Amendment dated June 30, 2008 to the Restricted Stock Agreement dated      March 31, 2006 among Stephen G. Fendrich and Simmons Holdco,  Inc.                             |
|                                                                                                                                                                                                  |
| 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)                                                                            |

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