<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[ x ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended March 25, 2000

                                       OR

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

         For the transition period from __________ to __________

         Commission file number   333-76723
                                  ---------

                                 SIMMONS COMPANY
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          DELAWARE                                      06-1007444
----------------------------                     ----------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

ONE CONCOURSE PARKWAY, SUITE 600, ATLANTA, GEORGIA           30328
--------------------------------------------------   --------------------
     (Address of principal executive offices)             (Zip Code)

         Registrant's telephone number, including area code    (770) 512-7700
                                                           ------------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [ X ] Yes [ ] No

         The number of shares of the registrant's common stock outstanding as of
May 9, 2000 was 31,964,452.



                                       1
<PAGE>   2


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                        Simmons Company and Subsidiaries
                 Condensed Consolidated Statements of Operations
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                          Quarter Ended
                                                                          --------------------------------------------
                                                                                  March 25,              March 27,
                                                                                     2000                  1999
                                                                                  ---------              --------

<S>                                                                                <C>                   <C>
Net sales                                                                          $144,636              $146,348
     Cost of products sold                                                           83,843                85,586
                                                                                  ---------              --------
Gross margin                                                                         60,793                60,762

Operating expenses:
     Selling, general and administrative expenses                                    56,088                55,192
     ESOP expense                                                                     1,990                 1,792
     Management compensation-severance related                                        3,777                     -
     Amortization of intangibles                                                      1,908                 1,906
                                                                                  ---------              --------
                                                                                     63,763                58,890
                                                                                  ---------              --------
Operating (loss) income                                                              (2,970)                1,872

     Interest expense, net                                                            8,399                 7,941
     Other expense, net                                                                 889                   521
                                                                                  ---------              --------
          Income (loss) before income taxes and
               extraordinary item                                                   (12,258)               (6,590)
Benefit for income taxes                                                              8,212                 2,110
                                                                                  ---------              --------
     Loss before extraordinary item                                                  (4,046)               (4,480)
Extraordinary loss from early extinguishment
     of debt, net of income tax benefit of $1,095                                         -                 2,173
                                                                                  ---------              --------
Net loss                                                                             (4,046)               (6,653)
                                                                                  ---------              --------

Other comprehensive loss:
     Foreign currency translation adjustment                                              1                    20
                                                                                  ---------              --------
Comprehensive loss                                                                $  (4,045)             $ (6,633)
                                                                                  =========              ========
</TABLE>





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



                                       2
<PAGE>   3


                        Simmons Company and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
                                   (Unaudited)

                                                       March 25,    December 25,
                                                         2000         1999*
                                                         ----         -----

ASSETS
Current assets:
     Cash and cash equivalents                         $  2,305     $  4,533
     Accounts receivable, less allowance for
           doubtful accounts of $4,256 and $3,449        75,286       74,326
     Inventories                                         20,151       19,164
     Deferred income taxes                                8,825        8,713
     Other current assets                                19,292       10,394
                                                       --------     --------
          Total current assets                          125,859      117,130
                                                       --------     --------

Property, plant and equipment, net                       51,317       52,863
Patents, net                                              5,871        6,570
Goodwill, net                                           173,976      175,185
Deferred income taxes                                    19,831       18,778
Long-term receivables                                    11,038       22,220
Assets of acquired business                              15,180            -
Other assets                                             12,974       13,354
                                                       --------     --------
                                                       $416,046     $406,100
                                                       ========     ========













* Derived from the Company's 1999 audited Consolidated Financial Statements.







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



                                       3
<PAGE>   4


                        Simmons Company and Subsidiaries
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                         March 25,     December 25,
                                                            2000          1999*
                                                            ----          -----

<S>                                                      <C>            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Current maturities of long-term debt                $     799      $     799
     Accounts payable                                       18,692         15,984
     Accrued advertising and incentives                     26,603         15,413
     Accrued interest                                        2,187          7,098
     Other accrued expenses                                 24,476         20,205
                                                         ---------      ---------
          Total current liabilities                         72,757         59,499

Noncurrent liabilities:
     Long-term debt                                        333,101        333,184
     Other noncurrent liabilities                           20,535         19,445
                                                         ---------      ---------
          Total liabilities                                426,393        412,128
                                                         ---------      ---------

Commitments and contingencies
Redemption Obligation--ESOP, net of related unearned
     compensation of $4,731 and $6,180                      18,753         17,304
Common stockholders' deficit:
     Common stock, $.01 par value; 50,000 shares
          authorized; 31,964 issued and outstanding            320            320
     Accumulated deficit                                   (29,377)       (23,608)
     Accumulated other comprehensive loss                      (43)           (44)
                                                         ---------      ---------
          Total common stockholders' deficit               (29,100)       (23,332)
                                                         ---------      ---------
                                                         $ 416,046      $ 406,100
                                                         =========      =========
</TABLE>





* Derived from the Company's 1999 audited Consolidated Financial Statements.






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


                                       4
<PAGE>   5


                        Simmons Company and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                        Quarter Ended
                                                                  ------------------------
                                                                  March 25,      March 27,
                                                                     2000           1999
                                                                  ---------      ---------
<S>                                                               <C>            <C>
Cash flows from operating activities:
Net loss                                                          $  (4,046)     $  (6,653)
Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
          Depreciation and amortization                               4,555          4,396
          ESOP expense                                                1,990          1,792
          Extraordinary loss                                              -          1,961
          Provision for bad debts                                       650            649
          Provision for deferred income taxes                        (1,165)        (1,334)
          Other, net                                                    483            566
Net changes in operating assets and liabilities:
          Accounts receivable                                        (4,124)        (4,840)
          Inventories                                                  (987)          (668)
          Other assets                                              (10,389)          (418)
          Accounts payable                                            2,708        (13,668)
          Accrued liabilities                                        11,640          6,481
                                                                  ---------      ---------
          Net cash provided by (used in) operating activities         1,315        (11,736)
                                                                  ---------      ---------

Cash flows from investing activities:
          Purchases of property, plant and equipment, net            (1,101)        (1,374)
                                                                  ---------      ---------
Net cash used in investing activities                                (1,101)        (1,374)
                                                                  ---------      ---------

Cash flows from financing activities:
     Distribution to Simmons Holdings                                (2,264)             -
     Payments on Senior Credit Facility                                   -        (23,972)
     Proceeds of 10.25% Senior Subordinated
          Notes due 2009                                                  -        150,000
     Payments on Senior Bridge Loans                                      -        (75,000)
     Payments on Junior Simmons Notes                                     -        (30,391)
     Payments on other long-term debt                                   (83)           (57)
     Payments of financing costs                                        (96)        (4,788)
                                                                  ---------      ---------
          Net cash provided by financing activities                  (2,443)        15,792
                                                                  ---------      ---------

Net effect of exchange rate changes on cash                               1             20
                                                                  ---------      ---------

Change in cash and cash equivalents                                  (2,228)         2,702
Cash and cash equivalents, beginning of period                        4,533          6,004
                                                                  ---------      ---------
Cash and cash equivalents, end of period                          $   2,305      $   8,706
                                                                  =========      =========

Supplemental cash flow information:
     Acquisition of business in exchange for receivables          $  15,449      $       -
                                                                  =========      =========
</TABLE>


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


                                       5
<PAGE>   6



                        Simmons Company and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

1.       Basis of Presentation

         For purposes of this report the "Company" refers to Simmons Company and
its subsidiaries, collectively. The Condensed Consolidated Financial Statements
of the Company have been prepared in accordance with generally accepted
accounting principles for interim financial information and the rules and
regulations of the Securities and Exchange Commission (the "SEC"). The
accompanying unaudited condensed consolidated financial statements contain all
adjustments, which, in the opinion of management, are necessary to present
fairly the financial position of the Company at March 25, 2000, and its results
of operations and cash flows for the periods presented herein. All adjustments
in the periods presented herein are normal and recurring in nature unless
otherwise disclosed. These condensed consolidated financial statements should be
read in conjunction with the year-end consolidated financial statements and
accompanying notes. Operating results for the period ended March 25, 2000, are
not necessarily indicative of future results that may be expected for the year
ending December 30, 2000.

2.       Inventories

         A summary of inventory follows (amounts in thousands):

                                                  March 25,      December 25,
                                                    2000           1999
                                                  -------         -------

            Raw materials                         $13,114         $11,664
            Work in progress                        1,330           1,357
            Finished goods                          5,707           6,143
                                                  -------         -------
                                                  $20,151         $19,164
                                                  =======         =======




                                       6
<PAGE>   7


                        Simmons Company and Subsidiaries
        Notes to Condensed Consolidated Financial Statements - Continued
                                   (Unaudited)
--------------------------------------------------------------------------------

3.       Long-Term Debt

         A summary of long-term debt follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                            March 25,      December 25,
                                                               2000           1999
                                                            ---------      ---------

<S>                                                         <C>            <C>
             Senior Credit Agreement:
                  Revolving Loan Facility                   $       -      $       -
                  Tranche A Term Loan                          48,607         48,607
                  Tranche B Term Loan                          68,657         68,657
                  Tranche C Term Loan                          48,764         48,764
             Industrial Revenue Bonds, 7.00%, due 2017          9,700          9,700
             Industrial Revenue Bonds, 3.95%, due 2016          4,800          4,800
             Banco Santander Loan, 8.09%                        2,915          2,969
             10.25% Series Subordinated Notes due 2009        150,000        150,000
             Other, including capital lease obligations           457            486
                                                            ---------      ---------
                                                              333,900        333,983
             Less current portion                                (799)          (799)
                                                            ---------      ---------
                                                            $ 333,101      $ 333,184
                                                            =========      =========
</TABLE>


         The Senior Credit Agreement provides for loans of up to $270.0 million,
consisting of a Term Loan Facility of $190.0 million and a Revolving Loan
Facility of $80.0 million. Following the prepayments made from the proceeds of a
private offering of 10.25% Series B Senior Subordinated Notes due 2009, the Term
Loan Facility was reduced to approximately $166.0 million. Our indebtedness
under the Senior Credit Agreement bears interest at a floating rate, generally
based on LIBOR, is guaranteed by Simmons Holdings and one of our current
domestic subsidiaries and is collateralized by substantially all of our assets.

         The interest rates per annum in effect at March 25, 2000 for the
Tranche A term, Tranche B term and Tranche C term loans were 8.75%, 9.25% and
9.50%, respectively.

         The use of interest rate risk management instruments, such as collars,
is required under the terms of the Senior Credit Facility. The Company has
developed and implemented a policy to maintain the percentage of fixed and
variable debt within certain parameters. Through the use of collars the Company
limits its exposure to and benefits from interest rate fluctuations on variable
rate debt to within a certain range of rates. At March 25, 2000, the amount
covered by collars was $95.0 million, with effective interest rates between
5.75% and 9.50%. The estimated fair value of these collars at March 25, 2000 was
approximately $1.3 million. While collars represent an integral part of the
Company's interest rate risk management program, their impact on interest
expense for the quarter ended March 25, 2000 was not significant.

         At March 25, 2000, the amount under the Revolving Credit Facility that
was available to be drawn was $79.8 million, after giving effect to $0.2 million
that was reserved for the


                                       7
<PAGE>   8
                        Simmons Company and Subsidiaries
        Notes to Condensed Consolidated Financial Statements - Continued
                                   (Unaudited)
--------------------------------------------------------------------------------

Company's reimbursement obligations with respect to outstanding letters of
credit. The remaining availability under the Revolving Credit Facility may be
utilized to meet the Company's current working capital requirements, including
issuance of stand-by and trade letters of credit. The Company also may utilize
the remaining availability under the Revolving Credit Facility to fund
acquisitions and capital expenditures.

         On March 16, 1999, we completed a refinancing, which consisted of the
sale of $150.0 million of 10.25% Senior Subordinated Notes due 2009 (the
"Notes") pursuant to a private offering. We used the net proceeds from this
offering to:

         (1)   repay the indebtedness under the senior bridge loan agreement and
               the junior subordinated notes issued by us and accrued interest;
         (2)   repay the amounts outstanding under our Revolving Credit Facility
               and accrued interest; and
         (3)   prepay a portion of the amounts outstanding under our Term Loan
               Facility and accrued interest.

         The Senior Credit Facility requires the Company to maintain certain
financial ratios including fixed-charge, cash interest coverage and leverage
ratios. The Senior Credit Facility also contains covenants which, among other
things, limit capital expenditures, the incurrence of additional indebtedness,
investments, dividends, transactions with affiliates, asset sales, mergers and
consolidations, prepayments of other indebtedness, liens and encumbrances and
other matters customarily restricted in such agreements. At March 25, 2000, the
Company was in compliance with these financial covenants.

         On September 9, 1999, we issued 10.25% Series B Senior Subordinated
Notes due 2009 (the "New Notes") in exchange for all Notes, pursuant to an
exchange offer whereby holders of the Notes received New Notes which have been
registered under the Securities Act of 1933, as amended, but are otherwise
identical to the Notes.

         Future maturities of long-term obligations as of March 25, 2000 are as
follows:

                 2000...............................         $    716
                 2001...............................            1,617
                 2002...............................           15,472
                 2003...............................           16,779
                 2004...............................           21,713
                 Thereafter.........................          277,603
                                                             --------
                                                             $333,900
                                                             ========

         The fair value of the Company's long-term debt is estimated based on
the current rates offered to the Company for debt of similar terms and
maturities except for the 10.25% Series B Senior Subordinated Notes due 2009
which are at quoted market values. The fair value of the Company's 10.25% Series
B Senior Subordinated Notes due 2009 was $131,625 at March 25, 2000. All other
long-term debt approximates the carrying value at March 25, 2000.


                                       8
<PAGE>   9
                        Simmons Company and Subsidiaries
        Notes to Condensed Consolidated Financial Statements - Continued
                                   (Unaudited)
--------------------------------------------------------------------------------

4.       Recent Developments

         On January 21, 2000, one of our wholly-owned subsidiaries, Gallery
Corp. ("Gallery"), acquired substantially all of the retail store locations and
other assets of H&H Sleep Centers, Inc. ("H&H") and CBMC Corp. ("CBMC"). H&H and
CBMC had previously operated retail stores in the Los Angeles, Orange County and
San Diego, California areas, selling primarily mattresses and related bedding
products. Through Gallery, we acquired the H&H and CBMC assets in resolution of
those companies' outstanding debt obligations to us, and our assumption of
certain other liabilities of H&H and CBMC for a purchase price of $15.5 million
including transaction expenses. As a result of these transactions, Gallery is
currently operating approximately 40 retail locations in Southern California
previously owned by H&H and CBMC.

         The results of operations of Gallery totaled a loss of $0.3 million for
the period from the acquisition date to March 25, 2000. Such loss is included in
other expense, net in the Condensed Consolidated Statement of Operations. Pro
forma results had Gallery been acquired at the beginning of the quarter did not
differ significantly from actual results. Pro forma results had the business
been acquired at the beginning of 1999 are not determinable.

         Management has announced its intention to dispose of Gallery and any
other retail operations subsequently acquired to a third party entity. We are
currently formulating our plan of disposition.

         The eventual recovery of our investment in this business or other
retail businesses subsequently acquired is dependent upon the ability of the
operations to achieve improvements sufficient to generate profitable operations
and positive cash flows. We currently believe that such improvements are
achievable, based upon our expertise in bedding manufacturing and distribution,
our knowledge of this business' markets, and its established presence in its
market.

Pending Customer Transaction

         A customer is indebted to us in an amount approximating $5.8 million,
relating to notes and trade receivables. We have included in long-term
receivables at March 25, 2000 and December 25, 1999, amounts of $5.8 million and
$4.2 million, respectively, related to this customer. We are currently pursuing
an acquisition of this customer at an amount equal to the fair market value of
the business less obligations owed to us. We believe the collateral value of
this customer's business exceeds the net amount of the receivable; however, the
results and timing of any eventual transaction is uncertain. We have received a
preliminary independent third party appraisal of the value of this customer. The
appraisal indicates a value that exceeds the net amount of obligations owed to
us. The eventual recovery of our investment in this business is dependent upon
the ability of the operations to achieve improvements sufficient to generate
profitable operations and positive cash flows. We currently believe that such
improvements are achievable, based upon our expertise in bedding manufacturing
and distribution, our knowledge of this business' markets, and its established
presence in its market.


                                       9
<PAGE>   10
                        Simmons Company and Subsidiaries
        Notes to Condensed Consolidated Financial Statements - Continued
                                   (Unaudited)
--------------------------------------------------------------------------------

Acquisition - United Sleep Products

         Effective April 19, 2000 we have terminated negotiations with United
Sleep Products and have no current plans to pursue the acquisition. We will
continue to consider other available options.

Organizational Changes - Severance Arrangements

         During January 2000, Charles R. Eitel, our new Chairman and Chief
Executive Officer, completed an assessment of the effectiveness of the Company's
organizational structure and in early February 2000, we undertook an
enterprise-wide management reorganization to reflect a new management structure
going forward. The management reorganization resulted in the termination of 14
management employees. During February 2000, we recorded non-recurring severance
expense of $3.8 million, including compensation expense related to vested stock
option cancellations. In addition, in connection with Simmons Holding's
repurchase of Simmons Holdings common stock from former management employees, we
have accrued $2.3 million in distributions payable to Simmons Holdings.

5.       Accounting Pronouncements

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 standardizes the accounting
for derivative instruments, including derivative instruments embedded in other
contracts, by requiring that an entity recognize those items as assets or
liabilities in the statement of financial position and measure them at fair
value. This statement, as amended by SFAS No. 137, is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. Financial statements for
prior periods need not be restated. We are currently reviewing the provisions of
SFAS No. 133 and do not believe that our financial statements will be materially
impacted by the adoption of this provision.

6.       Contingencies

         On April 3, 1998, Serta, Inc. filed a complaint against Simmons in the
United States District Court for the Northern District of Illinois, Eastern
Division, alleging that some Simmons products--including those sold in
connection with the trademarks Connoisseur(R) collection, Crescendo(TM), and
some World Class Beautyrest(R) and Back Care(R) Ultimate models--infringe one of
their U.S. patents and that our use of the term "Crescendo" infringes their
alleged common-law trademark, "Crescendo". Serta seeks compensatory damages in
an unspecified amount, interest, an accounting and disgorgement of profits
derived from allegedly infringing acts, treble damages, an order enjoining
further alleged infringement and requiring destruction of allegedly infringing
items, costs, expenses and attorney's fees. We have denied the material
allegations of the complaint. We also have asserted affirmative defenses and/or
counterclaims against Serta alleging non-infringement, invalidity and
unenforceability of the patent-in-suit, and alleging infringement by Serta of
our rights in the term "Crescendo" in various geographic areas to the extent
usage of the term by both Serta and us would be confusingly similar. Serta


                                       10
<PAGE>   11
                  Simmons Company and Subsidiaries
   Notes to Condensed Consolidated Financial Statements - Continued
                             (Unaudited)
--------------------------------------------------------------------------------

requested the Patent and Trademark Office, the PTO, to reexamine the
patent-in-suit. Pending the outcome of the reexamination, and by agreement of
the parties, the pending lawsuit was stayed. In April 1999, the PTO reinstated
Serta's patent and the stay in the action was lifted.

         In October 1999, Serta amended its complaint to join 14 U.S.
licensee/shareholders as plaintiffs and to add a claim for false advertising
under the Lanham Act as well as seek damages and injunctive relief in connection
with that claim. We again have denied the material allegations of the amended
complaint and asserted additional affirmative defenses and an additional
counterclaim seeking a declaratory judgment for unenforceability of the
patent-in-suit due to fraud on the PTO. Serta moved to dismiss this counterclaim
and we have filed a response. The court has not yet ruled on the motion. While
we deny that Serta is entitled to any relief and intend to defend the action
vigorously, a settlement could be material and we cannot assure you that we will
prevail in this action.

         From time to time, we have been involved in various legal proceedings.
We believe that all other litigation is routine in nature and incidental to the
conduct of our business, and that none of this other litigation, if determined
adversely to us, would have a material adverse effect on our financial condition
or results of our operations.




                                       11
<PAGE>   12
      Management's Discussion and Analysis of Financial Condition and
                     Results of Operations - Continued
--------------------------------------------------------------------------------

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Quarter Ended March 25, 2000 as Compared to Quarter Ended March 27, 1999

         Net Sales. Net sales for the quarter ended March 25, 2000 declined
1.2%, or $1.7 million, to $144.6 million in 2000 from $146.3 million in 1999.
The decline was due primarily to a 5.6%, or $8.2 million, decline in bedding
unit sales volume, offset, in part, by a 5.3%, or $7.1 million, increase in
bedding average unit selling price. The decline in unit shipments is primarily
attributable to a shift in product mix toward higher price point products and
closeout of the old Beautyrest(R) product lines. The increase in bedding average
unit selling price is primarily attributable to sales of higher price products,
particularly in the rollout of the new 2000 Beautyrest(R) line.

         The successful rollout of the Beautyrest 2000 product line continued
in April 2000 as evidenced by a 20.7% increase in total orders and a 12.2%
increase in total shipments compared to April 1999.

         Cost of Products Sold. As a percentage of net sales, cost of products
sold for the quarter ended March 25, 2000 decreased 0.5 percentage points to
58.0% in 2000 from 58.5% in 1999. Our gross margin improvement for the quarter
reflects the shift in product mix toward higher price point products and raw
material cost efficiencies.

         Selling, General and Administrative Expenses. As a percentage of net
sales, selling, general and administrative expenses for the quarter ended March
25, 2000 increased 1.1 percentage points to 38.8% in 2000 from 37.7% in 1999. We
attribute this increase to an increase in cooperative advertising and promotion
costs as we rollout the new 2000 Beautyrest(R) product line and higher
distribution expenses due to higher fuel costs.

         ESOP Expense. ESOP expense increased to $2.0 million for the quarter
ended March 25, 2000 from $1.8 million for the quarter ended March 25, 1999. We
attribute this increase to an increase in the estimated value of the shares
subject to the Simmons ESOP in 2000.

         Management Compensation--Severance Related. In connection with the
termination of certain senior executives, we incurred costs in 2000 of $3.8
million consisting of:

         (1)   $2.4 million related to the severance provisions contained in
               certain executive employment agreements and other severance
               agreements; and
         (2)   $1.4 million related to the cancellation of vested compensatory
               incentive stock options.

         Amortization of Intangibles. Amortization of intangibles for the
quarter remained relatively stable at approximately $1.9 million.

         Interest Expense, Net. Interest expense, net increased $0.5 million to
$8.4 million for the quarter ended March 25, 2000 from $7.9 million for the
quarter ended March 27, 1999 due primarily to increased amortization of deferred
financing costs and higher interest rates on our senior debt obligations.


                                       12
<PAGE>   13
        Management's Discussion and Analysis of Financial Condition and
                     Results of Operations - Continued
--------------------------------------------------------------------------------

         Other Expense, Net. Other expense, net increased to $0.9 million for
the quarter ended March 25, 2000 from $0.5 million for the quarter ended March
27, 1999. This increase was attributable to a $0.3 million operating loss from a
retail business acquired and $0.1 million from an increase in management
advisory service fees paid to Fenway Partners.

         Benefit for Income Taxes. Our effective tax rates of 67.0% and 32.0%
for the quarters ended March 25, 2000 and March 27, 1999 differ from the federal
statutory rate primarily because of non tax-deductible amortization of goodwill.
During the first quarter ended March 25, 2000, we recorded a current tax benefit
of $7.1 million included in other current assets. We expect this current tax
asset to be utilized as we recognize tax expense during the remainder of 2000.

         Net Income. For the reasons set forth above, we incurred a net loss of
$4.0 million for the quarter ended March 25, 2000 compared to $6.7 million for
the quarter ended March 27, 1999.

LIQUIDITY AND CAPITAL RESOURCES

         Our principal source of cash to fund liquidity needs is net cash
provided by operating activities and availability under our senior credit
facility. Our primary use of funds consists of payments of principal and
interest, capital expenditures, severance and equity related repurchases.

         Our operating activities provided cash of $1.3 million in the first
three months of 2000 compared to $11.7 million used in the first three months of
1999. The difference is due primarily to the timing of payments of accounts
payable and accrued liabilities, offset, in part, by the timing of accounts
receivable collections.

         Our capital expenditures totaled $1.2 million for the three months
ended March 25, 2000. These capital expenditures consisted primarily of normal
recurring capital expenditures. We expect to spend an aggregate of approximately
$12.5 million for capital expenditures in 2000. We believe that annual capital
expenditure limitations in our Senior Credit Facility and the indenture related
to our 10.25% Series B Senior Subordinated Notes due 2009 will not significantly
inhibit us from meeting our ongoing capital expenditure needs.

Effective March 22, 2000, the Company amended its Senior Credit Facility as
follows:

         (1)   for purposes of calculating Adjusted EBITDA, to permit the
               add-back of $13.5 million and $3.8 million to 1999 and 2000,
               respectively, as severance charges and certain one-time charges;

         (2)   to delay the step-ups in Minimum Cash Interest Coverage and
               Minimum Fixed Charge Coverage ratios by one year;

         (3)   to increase Permitted Capital Expenditures; and

         (4)   to permit the Company to add up to $50 million in additional Term
               Loan C capacity.


                                       13
<PAGE>   14
       Management's Discussion and Analysis of Financial Condition and
                     Results of Operations - Continued
--------------------------------------------------------------------------------

         As of March 25, 2000, we had no borrowings and $79.8 million available
under our revolving credit facility. As of March 25, 2000, we were in compliance
with the financial covenants contained in all of our credit facilities.

RECENT DEVELOPMENTS

         Acquisition

         On January 21, 2000, one of our wholly-owned subsidiaries, Gallery
Corp. ("Gallery"), acquired substantially all of the retail store locations and
other assets of H&H Sleep Centers, Inc. ("H&H") and CBMC Corp. ("CBMC"). H&H and
CBMC had previously operated retail stores in the Los Angeles, Orange County and
San Diego, California areas, selling primarily mattresses and related bedding
products. Through Gallery, we acquired the H&H and CBMC assets in resolution of
those companies' outstanding debt obligations to us, and our assumption of
certain other liabilities of H&H and CBMC for a purchase price of $15.5 million
including transaction expenses. As a result of these transactions, Gallery is
currently operating approximately 40 retail locations in Southern California
previously owned by H&H and CBMC.

         The results of operations of Gallery totaled a loss of $0.3 million for
the period from the acquisition date to March 25, 2000. Such loss is included in
other expense, net in the Condensed Consolidated Statement of Operations. Pro
forma results had Gallery been acquired at the beginning of the quarter did not
differ significantly from actual results. Pro forma results had the business
been acquired at the beginning of 1999 are not determinable.

         Management has announced its intention to dispose of Gallery and any
other retail operations subsequently acquired to a third party entity. We are
currently formulating our plan of disposition.

         The eventual recovery of our investment in this business or other
retail businesses subsequently acquired is dependent upon the ability of the
operations to achieve improvements sufficient to generate profitable operations
and positive cash flows. We currently believe that such improvements are
achievable, based upon our expertise in bedding manufacturing and distribution,
our knowledge of this business' markets, and its established presence in its
market.

Pending Customer Transaction

         A customer is indebted to us in an amount approximating $5.8 million,
relating to notes and trade receivables. We have included in long-term
receivables at March 25, 2000 and December 25, 1999, amounts of $5.8 million and
$4.2 million, respectively, related to this customer. We are currently pursuing
an acquisition of this customer at an amount equal to the fair market value of
the business less obligations owed to us. We believe the collateral value of
this customer's business exceeds the net amount of the receivable; however, the
results and timing of any eventual transaction are uncertain. We have received a
preliminary independent third party appraisal of the value of this customer. The
appraisal indicates a value that exceeds the net amount of obligations owed to
us. The eventual recovery of our investment in this business is dependent upon
the ability of the operations to achieve improvements sufficient to


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<PAGE>   15
       Management's Discussion and Analysis of Financial Condition and
                      Results of Operations - Continued
--------------------------------------------------------------------------------

generate profitable operations and positive cash flows. We currently believe
that such improvements are achievable, based upon our expertise in bedding
manufacturing and distribution, our knowledge of this business' markets, and its
established presence in its market.

Acquisition - United Sleep Products

         Effective April 19, 2000 we have terminated negotiations with United
Sleep Products and have no current plans to pursue the acquisition. We will
continue to consider other available options.

Organizational Changes - Severance Arrangements

         During January 2000, Charles R. Eitel, our new Chairman and Chief
Executive Officer, completed an assessment of the effectiveness of the Company's
organizational structure and in early February 2000, we undertook an
enterprise-wide management reorganization to reflect a new management structure
going forward. The management reorganization resulted in the termination of 14
management employees. During February 2000, we recorded non-recurring severance
expense of $3.8 million, including compensation expense related to vested stock
option cancellations. In addition, in connection with Simmons Holding's
repurchase of Simmons Holdings common stock from former management employees, we
have accrued $2.3 million in distributions payable to Simmons Holdings.

SEASONALITY

         Our volume of sales is somewhat seasonal, with sales generally lower
during the first quarter of each year than in the remaining three quarters of
the year. Historically, our working capital borrowings have increased during the
first half of each year and have decreased in the second half of each year. We
also experience a seasonal fluctuation in profitability, with our gross profit
percentage during the first quarter of each year slightly lower than the gross
profit percentages obtained in the remaining part of the year. We believe that
seasonality of profitability is a factor that affects the conventional bedding
industry generally and that it is primarily due to retailers' emphasis in the
first quarter on price reductions and promotional bedding and manufacturers'
emphasis on close-outs of the prior year's product lines. These two factors
together result in lower profit margins.

ACCOUNTING PRONOUNCEMENTS

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 standardizes the accounting
for derivative instruments, including derivative instruments embedded in other
contracts, by requiring that an entity recognize those items as assets or
liabilities in the statement of financial position and measure them at fair
value. This statement, as amended by SFAS No. 137, is effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. Financial statements for
prior periods need not be restated. We are currently reviewing the provisions of
SFAS No. 133 and do not believe that our financial statements will be materially
impacted by the adoption of this provision.


                                       15
<PAGE>   16
        Management's Discussion and Analysis of Financial Condition and
                      Results of Operations - Continued
--------------------------------------------------------------------------------

FORWARD LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q contains forward-looking statements.
The words "intend," "believe," "plan," "expect," "anticipate," and similar
expressions identify forward-looking statements. Such forward-looking statements
are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements include, but are not limited to,
those contained under the headings "Management's Discussion and Analysis of
Financial Condition and Results of Operations", "Recent Developments" and
"Liquidity and Capital Resources" and may relate to anticipated revenues, income
or loss, expenses, capital expenditures, plans for future operations, financing
needs or plans and plans relating to products and services of the Company.

         Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Several factors
could cause actual results to differ materially from those anticipated by the
forward-looking statements, such as those detailed in connection with the
specific forward-looking statement, as well as, generally, consumer spending and
debt levels, continuity of relationships with and purchases by major customers,
product mix, competitive pressure on sales and pricing, and increases in
material or production cost which cannot be recouped in product pricing. Other
factors are set forth herein and in other materials filed by the Company from
time to time with the Securities and Exchange Commission.



                                       16
<PAGE>   17
        Management's Discussion and Analysis of Financial Condition and
                       Results of Operations - Continued
--------------------------------------------------------------------------------

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         Information relative to our market risk sensitive instruments by major
category at December 25, 1999 is presented under Item 7a of our Annual Report on
Form 10-K for the fiscal year ended December 25, 1999. During the first quarter
ended March 25, 2000 there has been no material change to this disclosure.

Interest Rate Risk

         Since our obligations under the Senior Credit Facility bear interest at
floating rates, we are sensitive to changes in prevailing interest rates. We use
derivative instruments to manage our long-term debt interest rate exposure,
rather than for trading purposes. A 10% increase or decrease in market interest
rates that effect our interest rate derivative instruments would not have a
material impact on earnings during the next fiscal year.


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<PAGE>   18



PART II  -    OTHER INFORMATION

Item 1.       Legal Proceedings.

              See Note 5 to the Condensed Consolidated Financial Statements,
              Part I, Item 1 included herein.

Item 5.       Other Information.

              None.

Item 6.       Exhibits and Reports on Form 8-K

              (a)   Exhibits

                    27.0  Financial Data Schedule

              (b)   Reports on Form 8-K

                    On January 5, 2000, the Company filed with the Commission a
                    Form 8-K dated January 4, 2000 which reported under Item 5
                    the Press Release dated January 4, 2000 announcing Charles
                    R. Eitel succeeding Zenon S. Nie as Chairman and Chief
                    Executive Officer.

                    On February 4, 2000, the Company filed with the Commission a
                    Form 8-K dated February 4, 2000 which reported under Item 2
                    the Press Release dated January 21, 2000 announcing the
                    Company's acquisition of substantially all the retail store
                    locations and other assets of H&H Sleep Centers, Inc. and
                    CBMC Corporation.





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<PAGE>   19


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, Simmons Company has duly caused this report to be signed on its behalf by
the undersigned thereto duly authorized.

                                 SIMMONS COMPANY

By:       /s/ WILLIAM S. CREEKMUIR
      ---------------------------------------------
              William S. Creekmuir
      Executive Vice President-Chief Financial Officer

Date: May 9, 2000




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