<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-Q/A


[x]      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934. For the quarter ended June 30, 2000.

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934. For the transition from _________ to _________.


                        Commission file number 333-81987

                               SLEEPMASTER L.L.C.
             (Exact name of registrant as it appears in its charter)



                New Jersey                              22-3341313
     (State or other jurisdiction of             (IRS Employer ID Number)
      incorporation or organization)

   2001 Lower Road, Linden, New Jersey                  07036-6520
 (Address of principal executive offices)               (Zip Code)


                                 (732) 381-5000
              (Registrant's telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:            NONE
Securities registered pursuant to Section 12(g) of the Act:            NONE



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. Yes [x] No [ ]

All of the registrant's  voting and nonvoting  membership  interests are held by
affiliates of the registrant.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practical date:

Class A common  units,  no par value - 8,000 units as of August 14, 2000
Class B common units, no par value - 0 units as of August 14, 2000


<PAGE>   2



                               SLEEPMASTER L.L.C.

                FORM 10-Q/A FOR THE QUARTER ENDED JUNE 30, 2000

                                      INDEX




<TABLE>
<CAPTION>
                                                                                               Page
<S>                                                                                     <C>
PART I - Financial Information (unaudited)

         Item 1 - Financial Statements

                  Condensed Consolidated Statements of Income for the
                     Three and Six Months Ended June 30, 2000 and 1999..................      3

                  Condensed Consolidated Balance Sheets as of June 30, 2000
                     and December 31, 1999 .............................................      4

                  Condensed Consolidated Statements of Cash Flows for
                     the Six Months Ended June 30, 2000 and 1999........................      5

                  Notes to Condensed Consolidated Financial Statements..................   6-16

         Item 2 - Management's Discussion and Analysis of Financial
                  Condition and Results of Operations ..................................  17-20

         Item 3 - Quantitative and Qualitative Disclosures about
                  Market Risk...........................................................     20

PART II - Other Information

         Item 1 - Legal Proceedings.....................................................     21

         Item 6 - Exhibits and Reports on Form 8-K......................................     21

             Signatures.................................................................     22
</TABLE>


                                        2



<PAGE>   3



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                               SLEEPMASTER L.L.C.

                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                               For the Three Months      For the Six Months
                                                 Ended June 30,            Ended June 30,
                                            ------------------------   -----------------------
                                              2000*          1999        2000*          1999
                                            ---------      ---------   ---------      --------
<S>                                     <C>             <C>          <C>            <C>
Net sales                                   $ 63,921       $ 39,759    $ 120,022      $ 73,986

Costs and expenses:
     Cost of sales                            39,564         24,807       74,403        46,068
     Selling, general and administrative
         expenses                             16,534          9,829       30,789        18,214
     Amortization of intangibles               1,063            458        1,905           836
     Interest expense, net                     5,796          2,848       10,333         4,878
     Other expense (income), net                  22             43           54          (43)
                                            ---------      ---------   ---------      --------

        Income before income taxes and
           extraordinary items                   942          1,774        2,538         4,033

Provision for income taxes                       404            833        1,028         1,748
                                            ---------      ---------   ---------      --------
        Income before extraordinary items   $    538       $    941    $   1,510      $  2,285

Extraordinary items, net of income taxes        (208)        (3,167)        (208)       (3,167)
                                            ---------      ---------   ---------      --------
         Net income (loss)                  $    330       $ (2,226)   $   1,302      $   (882)
                                            ========       ========    =========      ========
</TABLE>

* Restated Refer to note 9

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


                                       3



<PAGE>   4


                               SLEEPMASTER L.L.C.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     June 30, 2000*     December 31, 1999
<S>                                                                   <C>                   <C>
ASSETS
Current assets:
   Cash and cash equivalents                                            $  13,437             $   2,842
   Accounts receivable, less allowance for doubtful accounts
     of $3,562 and $2,360                                                  39,480                24,217
   Accounts receivable--other                                               1,985                 1,691
   Inventories                                                             14,584                 7,531
   Other current assets                                                     5,695                   613
   Deferred income taxes                                                      549                   720
                                                                        ---------             ---------
     Total current assets                                                  75,730                37,614
                                                                        ---------             ---------
Property, plant and equipment, net                                         46,344                20,967
Intangible assets, net                                                    306,414               130,824
Other assets                                                               13,203                 7,290
Deferred income taxes                                                          --                12,292
                                                                        ---------             ---------
     Total assets                                                       $ 441,691             $ 208,987
                                                                        =========             =========

LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
   Accounts payable                                                     $  25,883             $  14,264
   Accrued advertising and sales allowances                                 8,165                 5,755
   Accrued interest                                                         1,878                 2,077
   Payable to sellers in connection
     with purchase of Crescent                                             11,293                    --
   Other current liabilities                                               12,240                 6,472
   Current portion of long-term debt                                        9,889                 5,010
                                                                        ---------             ---------
     Total current liabilities                                             69,348                33,578
                                                                        ---------             ---------
Long-term debt                                                            283,569               161,603
Other liabilities                                                           1,426                 1,463
Deferred income taxes                                                      32,109                    --
                                                                        ---------             ---------
     Total long-term liabilities                                          317,104               163,066
                                                                        ---------             ---------
Commitments and contingencies
Redeemable cumulative preferred interests                                  21,644                20,423
Members' Equity (Deficit):
   Class A common interests                                                53,854                12,229
   Class B common interests                                                    --                    --
   Accumulated deficit                                                    (20,391)              (20,472)
   Foreign currency translation adjustment                                    132                   163
                                                                        ---------             ---------
     Total members' equity (deficit)                                       33,595                (8,080)
                                                                        ---------             ---------
     Total liabilities and members' equity (deficit)                    $ 441,691             $ 208,987
                                                                        =========             =========
</TABLE>

* Restated Refer to note 9

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

                                       4



<PAGE>   5



                               SLEEPMASTER L.L.C.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                         For the Six Months Ended
                                                                                 June 30
                                                                     ---------------------------------
                                                                        2000*                1999
                                                                     ------------       --------------
<S>                                                                <C>                  <C>
Net cash provided by operating activities                            $  19,849            $  4,161

Cash flows from investing activities:
   Purchases of property, plant and equipment, net                      (1,966)             (1,971)
   Proceeds from sale of asset                                              --                  11
   Acquisitions, net of cash acquired                                 (160,960)            (41,470)
                                                                     ---------            ---------
     Net cash used in investing activities                            (162,926)            (43,430)
                                                                     ---------            ---------

Cash flows from financing activities:
   Proceeds from issuance of senior subordinated notes                  25,000             115,000
   Proceeds from long-term debt                                        175,861                  --
   Payments on long-term debt                                          (72,255)            (64,281)
   Loan origination fees/bond issuance costs                            (5,898)             (5,787)
   Penalties on early extinguishment of debt                                --              (3,645)
   Borrowings under revolving line of credit                            16,700                  --
   Payments on revolving line of credit                                (27,361)                 --
   Capital contributions                                                41,625                  --
   Distributions                                                            --                (748)
                                                                     ---------            ---------
     Net cash provided by financing activities.                        153,672              40,539
                                                                     ---------            ---------

Net increase in cash and cash equivalents                               10,595               1,270
Cash and cash equivalents, beginning of period                           2,842                 162
                                                                     ---------            ---------
Cash and cash equivalents, end of period                             $  13,437            $  1,432
                                                                     =========            =========
</TABLE>

* Restated Refer to note 9

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

                                       5



<PAGE>   6




                               SLEEPMASTER L.L.C.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.  BASIS OF PRESENTATION

         The accompanying condensed consolidated financial statements include
the accounts of Sleepmaster L.L.C. ("Sleepmaster") and all majority-owned
domestic and foreign subsidiaries (the "Company"). All material intercompany
transactions and balances have been eliminated. The interim statements are
unaudited and, in the opinion of management, include all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation of the Company's financial position as of June 30, 2000 and the
results of its operations and cash flows for the interim periods presented. The
condensed consolidated balance sheet data at December 31, 1999 is derived from
the audited financial statements which are included in the Company's Form 10-K/A
for the year ended December 31, 1999 and which should be read in connection with
these financial statements. In accordance with the rules of the Securities and
Exchange Commission, these financial statements do not include all disclosures
required by generally accepted accounting principles.

         Operating results for the three and six months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for any other
interim period or for the year ending December 31, 2000.

         Certain reclassifications of previously reported financial information
were made to conform to the 2000 presentation.

2. ACQUISITIONS

         On April 28, 2000, Sleepmaster acquired all the capital stock of Simon
Mattress Manufacturing Co. ("Simon ")for approximately $42,623,000 in cash.
Sleepmaster financed the acquisition using proceeds from a second amended and
restated credit facility.

         On June 30, 2000, Sleepmaster acquired all the capital stock of
Crescent Sleep Products Company ("Crescent") for approximately $118,277,000 in
cash. Sleepmaster financed the acquisition using proceeds from a third amended
and restated credit facility, the issuance of an additional $25,000,000 of
senior subordinated notes, and $41,500,000 of equity from a group of investors
and certain members of Crescent's management. Sleepmaster remitted $11,293,000
of the proceeds from the amended credit facility to the sellers of Crescent on
July 5, 2000, which is classified as a current payable at June 30, 2000.

         These acquisitions were accounted for under the purchase method and,
accordingly, Simon's and Crescent's results are included in the consolidated
financial statements since their respective dates of acquisition. The assets
acquired and liabilities assumed have been recorded at their estimated fair
values at the dates of acquisition. The excess of the purchase price over the
estimated fair values of the net assets acquired has been recorded as goodwill
and is being amortized over 40 years.

         A summary of the purchase price allocations (in thousands) is as
follows:

<TABLE>
<CAPTION>
                                                                       Simon             Crescent
                                                                       -----             --------
<S>                                                               <C>                 <C>
                  Current assets...................................$   11,850           $    12,476
                  Property, plant and equipment...................      8,756                15,970
                  Other assets....................................        787                 5,956
                  Goodwill........................................     14,627                40,370
                  License.........................................     20,495                96,004
                  Current liabilities.............................     (5,779)               (8,376)
                  Long-term debt..................................         --                (8,900)
                  Other liabilities...............................     (8,113)              (35,223)
                                                                       ------               --------
                           Total..................................  $  42,623           $   118,277
</TABLE>

                                       6


<PAGE>   7
         The following summarized unaudited pro forma financial information (in
thousands) for the six month periods ended June 30, 2000 and 1999 assumes that
the acquisitions of Simon and Crescent were consummated on January 1, 1999. This
information is not necessarily indicative of the results that the Company would
have achieved had these events actually occurred on such dates or of the
Company's actual or future results.

<TABLE>
<CAPTION>
                                                              June 30,        June 30,
                                                                2000            1999
                                                                ----            ----
<S>                                                          <C>             <C>
            Net sales....................................    $ 176,685       $ 172,424
            (Loss) income before extraordinary items.....         (179)          2,533

</TABLE>


         The unaudited pro forma (loss) income before extraordinary items, for
the six months ended June 30, 2000, includes one- time transaction related
expenses for legal and investment banker fees of approximately $2,837,000.

3.  INVENTORIES

         Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                               June 30, 2000       December 31, 1999
<S>                                                                          <C>                  <C>
         Raw materials....................................................    $         10,339      $          5,402
         Work-in-process..................................................               1,039                   476
         Finished goods...................................................               3,206                 1,653
                                                                              ----------------      ----------------
                  Total inventories.......................................    $         14,584      $          7,531
                                                                              ================      ================
</TABLE>


4.  INTANGIBLE ASSETS

         Intangible assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                               June 30, 2000       December 31, 1999
<S>                                                                         <C>                   <C>
         Goodwill.........................................................    $         96,301      $         35,176
         Licenses.........................................................             216,748               100,249
                                                                              ----------------      ----------------
                                                                                       313,049               135,425
         Less: accumulated amortization...................................               6,635                 4,601
                                                                              ----------------      ----------------
                                                                              $        306,414      $        130,824
                                                                              ================      ================
</TABLE>

5.  DEBT

         On April 28, 2000, the Company expanded and restated its existing
credit facility to provide for an aggregate amount of borrowings of up to
$103,875,000, comprising a $33,000,000 revolving credit facility, a $35,875,000
amortizing term loan facility and a $35,000,000 incremental amortizing term
loan facility (the "Second Amended and Restated Credit Facility"). The terms of
the Second Amended and Restated Credit Facility were substantially equivalent
to those of the prior facility. Borrowings under the Second Amended and
Restated Credit Facility were used to finance the acquisition of Simon.

         On June 30, 2000, in connection with the acquisition of Crescent, the
Company issued an additional $25,000,000 of 13.4% senior subordinated notes due
November, 2009. Also on June 30, 2000, the Company entered into a third amended
and

                                       7
<PAGE>   8
restated credit agreement to provide for an aggregate amount of borrowings of up
to $172,500,000, comprising a $40,000,000 5.5 year revolving credit facility, a
5.5 year Tranche A term loan of $57,500,000 and a 6.5 year Tranche B term loan
of $75,000,000 (the "Third Amended and Restated Credit Facility"). This new
facility includes a letter of credit sublimit of $25,000,000. Similar to the
prior credit facility entered into on November 5, 1999, borrowings under this
credit facility bear interest at floating rates based on LIBOR or applicable
alternative base rates. Sleepmaster financed the acquisition of Crescent using
proceeds from the Third Amended and Restated Credit Facility, the issuance of
the $25,000,000 of senior subordinated notes, and $41,500,000 of equity from a
group of investors and certain members of Crescent's management.

         In connection with the Third Amended and Restated Credit Facility, the
Company wrote-off unamortized debt issuance costs. One bank included in the
syndication of banks which were part of the Second Amended and Restated Credit
Facility did not continue in the syndication of banks in connection with the
Third Amended and Restated Credit Facility and its debt was extinguished. An
extraordinary loss of $208,000, net of the associated income tax benefit, was
recorded in connection with this extinguishment.  In accordance with the
Emerging Issues Task Force No. 98-14, for banks which continued with the
syndication of banks in connection with the Third Amended and Restated Credit
Facility, a charge to interest expense of $564,000 to write-off unamortized debt
issuance costs was recorded.

         At June 30, 2000, the Company was not in compliance with two financial
covenants contained in the Third Amended and Restated Credit Facility (1) the
Interest Coverage Ratio and (2) the Minimum Consolidated EBITDA. The failure to
comply with these covenants constituted an event of default. On September 19,
2000 the lenders granted a waiver for the debt covenant violations and an
amendment to the Third Amended and Restated Credit Facility (the "Waiver and
First Amendment to the Third Amended and Restated Credit Facility" or the
"Waiver and Amendment"). The Waiver and Amendment also modified various
financial covenants going forward including the two identified above.


6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In December 1999, the staff of the Securities and Exchange Commission
issued SAB 101, "Revenue Recognition in Financial Statements," which addressed
some of the staff's concerns over the application of Generally Accepted
Accounting Principles for revenue recognition. The Company is currently
evaluating the impact, if any, of SAB 101, as amended, on its results of
operations.

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133, as amended, is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. The Company presently does not have any derivative
instruments or hedging activities and, consequently, SFAS No. 133 is not
expected to have a material impact on the Company's results of operations,
financial position or cash flow.

7. SUPPLEMENTAL CASH FLOW INFORMATION

         The Company recorded a charge to retained earnings (deficit)
of $1,221,000 and $1,111,000 for the six months ended June 30, 2000 and
1999, respectively, representing the accretion of redeemable cumulative
preferred interests at a compounded annual rate of 12%.


                                       8

<PAGE>   9
8. GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION

         As of May 18, 1999 and June 30, 2000, Sleepmaster and each of its
domestic  wholly owned subsidiaries ("Guarantor Subsidiaries") fully and
unconditionally guaranteed, on a joint and several basis, the obligation to pay
principal  and interest with respect to the $115,000,000 of 11% senior
subordinated notes due 2009 and the $25,000,000 of 13.4% senior subordinated
notes  due 2009 (the "Notes"), respectively. The Company generates funds
necessary to satisfy its debt service obligations from either its own operations
or by distributions or advances from its subsidiaries. There are no contractual
or legal restrictions that could limit the Company's ability to obtain cash from
its  subsidiaries for the purpose of meeting its debt service obligations,
including the payment of principal and interest on the Notes. Although holders
of the  Notes will be direct creditors of Sleepmaster's principal direct
subsidiaries by virtue of the guarantees, Sleepmaster has a foreign subsidiary
("Non-Guarantor Subsidiary") that is not included among the Guarantor
Subsidiaries and such subsidiary will not be obligated with respect to the
Notes. As a consequence, the claims of creditors of the Non-Guarantor Subsidiary
will  effectively have priority with respect to the assets and earnings of this
subsidiary over the claims of creditors of Sleepmaster, including the holders of
the Notes.


         The following supplemental condensed consolidating financial statements
present:

         1. Condensed consolidating statements of income for the three and six
         months ended June 30, 2000 and 1999, respectively; condensed
         consolidating balance sheets as of June 30, 2000 and December 31, 1999
         condensed consolidating statements of cash flows for the six months
         ended June 30, 2000 and 1999.

         2. Sleepmaster, combined Guarantor Subsidiaries and Non-Guarantor
         Subsidiary with their investments in subsidiaries accounted for using
         the equity method.

         3. Elimination entries necessary to consolidate Sleepmaster and all of
         its subsidiaries.


9. RESTATEMENT

         Subsequent to filing its Form 10Q for the quarter ended June 30, 2000,
the Company discovered an error in its provision for income taxes, and the
goodwill and deferred income taxes liabilities recorded in the acquisition of
Simon and Crescent for the three and six month periods ended. The impact of the
correction of these errors was to reduce income before extraordinary items and
net income by $56,000.


                                       8.1

<PAGE>   10




                      SLEEPMASTER L.L.C. AND SUBSIDIARIES

            SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
                        THREE MONTHS ENDED JUNE 30, 2000
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                            COMBINED
                                                            GUARANTOR       NON-GUARANTOR
                                            SLEEPMASTER    SUBSIDIARIES      SUBSIDIARY      ELIMINATIONS        TOTAL
<S>                                        <C>              <C>              <C>              <C>              <C>
Net sales                                   $ 18,527         $ 40,957         $  4,467         $    (30)        $ 63,921
Costs and expenses:
   Cost of sales                              12,614           24,147            2,833              (30)          39,564
   Selling, general and
     administrative expenses                   4,146           11,404              984               --           16,534
   Amortization of intangibles                   122              845               96               --            1,063
   Interest expense (income), net              3,995            1,803               (2)              --            5,796
   Other expense (income), net                    25                1               (4)              --               22
                                            --------         --------         --------         --------         --------
(Loss) income before income
   taxes and extraordinary items              (2,375)           2,757              560               --              942
(Benefit) provision for income taxes          (1,169)           1,373              200               --              404
                                            --------         --------         --------         --------         --------
(Loss) income before extraordinary
   items                                      (1,206)           1,384              360               --              538
Extraordinary items, net of
   income taxes                                 (208)              --               --               --             (208)
(Income) loss from equity investees
   net of tax                                 (1,744)              --               --            1,744               --
                                            --------         --------         --------         --------         --------
   Net income (loss)                        $    330         $  1,384          $   360          $(1,744)        $    330
                                            ========         ========         ========         ========         ========

</TABLE>



                                       9



<PAGE>   11




                      SLEEPMASTER L.L.C. AND SUBSIDIARIES

            SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
                        THREE MONTHS ENDED JUNE 30, 1999
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                            COMBINED
                                                            GUARANTOR       NON-GUARANTOR
                                            SLEEPMASTER    SUBSIDIARIES      SUBSIDIARY      ELIMINATIONS        TOTAL
<S>                                       <C>              <C>              <C>              <C>               <C>
Net sales                                   $ 19,060         $ 18,486         $  2,301         $    (88)        $ 39,759
Costs and expenses:
   Cost of sales                              12,556           10,924            1,415              (88)          24,807
   Selling, general and
    administrative expenses                    4,513            4,805              511               --            9,829
   Amortization of intangibles                   160              298               --               --              458
   Interest expense, net                       2,781               60                7               --            2,848
   Other expense, net                             36               --                7               --               43
                                            --------         --------         --------         --------         --------
(Loss) income before income
   taxes and extraordinary items                (986)           2,399              361               --            1,774
(Benefit) provision for income taxes            (409)           1,112              130               --              833
                                            --------         --------         --------         --------         --------
(Loss) income before extraordinary items        (577)           1,287              231               --              941
Extraordinary items, net of income taxes      (3,167)              --               --               --           (3,167)
(Income) loss from equity
   investees, net of tax                      (1,518)              --               --            1,518               --
                                            --------         --------         --------         --------         --------
Net (loss) income                           $ (2,226)        $  1,287         $    231         $ (1,518)        $ (2,226)
                                            ========         ========         ========         ========         ========
</TABLE>




                                       10

<PAGE>   12



                      SLEEPMASTER L.L.C. AND SUBSIDIARIES

            SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
                         SIX MONTHS ENDED JUNE 30, 2000
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                            COMBINED
                                                            GUARANTOR       NON-GUARANTOR
                                            SLEEPMASTER    SUBSIDIARIES      SUBSIDIARY      ELIMINATIONS        TOTAL
<S>                                       <C>              <C>              <C>              <C>             <C>
Net sales                                   $ 37,290         $ 75,117         $  8,276         $   (661)        $120,022
Costs and expenses:
   Cost of sales                              25,099           44,737            5,228             (661)          74,403
   Selling, general and
     administrative expenses                   8,632           20,343            1,814               --           30,789
   Amortization of intangibles                   244            1,468              193               --            1,905
   Interest expense (income), net              6,691            3,649               (7)              --           10,333
   Other expense (income), net                    82               (3)             (25)              --               54
                                            --------         --------         --------         --------         --------
(Loss) income before income
   taxes and extraordinary items              (3,458)           4,923            1,073               --            2,538
(Benefit) provision for income taxes          (1,567)           2,230              365               --            1,028
                                            --------         --------         --------         --------         --------
(Loss) income before extraordinary items      (1,891)           2,693              708               --            1,510
Extraordinary items, net of income taxes        (208)              --               --               --             (208)
(Income) loss from equity investees, net
   of tax                                     (3,401)              --               --            3,401               --
                                            --------         --------         --------         --------         --------
  Net income (loss)                         $  1,302         $  2,693          $   708          $(3,401)         $ 1,302
                                            ========         ========         ========         ========         ========
</TABLE>


                                       11



<PAGE>   13



                      SLEEPMASTER L.L.C. AND SUBSIDIARIES

            SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF INCOME
                         SIX MONTHS ENDED JUNE 30, 1999
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                             COMBINED
                                                             GUARANTOR    NON-GUARANTOR
                                            SLEEPMASTER     SUBSIDIARIES    SUBSIDIARY    ELIMINATIONS        TOTAL
<S>                                        <C>              <C>            <C>            <C>             <C>
Net sales                                    $ 37,245         $ 34,570      $  2,301       $   (130)       $ 73,986
Costs and expenses:
   Cost of sales                               24,382           20,401         1,415           (130)         46,068
   Selling, general and
     administrative expenses                    8,867            8,836           511             --          18,214
   Amortization of intangibles                    322              514            --             --             836
   Interest expense, net                        4,762              109             7             --           4,878
   Other (income) expense, net                    (49)              (1)            7             --             (43)
                                             --------         --------      --------       --------        --------
(Loss) income before income taxes and
   extraordinary items                         (1,039)           4,711           361             --           4,033
(Benefit) provision for income taxes             (430)           2,048           130             --           1,748
                                             --------         --------      --------       --------        --------
(Loss) income before extraordinary items         (609)           2,663           231             --           2,285
Extraordinary items, net of income taxes       (3,167)              --            --             --          (3,167)
(Income) loss from equity investees,
   net of tax                                  (2,894)              --            --          2,894              --
                                             --------         --------      --------       --------        --------
Net (loss) income                            $   (882)        $  2,663      $    231       $ (2,894)       $   (882)
                                             ========         ========      ========       ========        ========
</TABLE>



                                   12

<PAGE>   14
\


                       SLEEPMASTER L.L.C. AND SUBSIDIARIES

               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                                 JUNE 30, 2000
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                   COMBINED           NON-
                                                                   GUARANTOR        GUARANTOR
                                                 SLEEPMASTER      SUBSIDIARIES      SUBSIDIARY       ELIMINATIONS        TOTAL
<S>                                             <C>               <C>              <C>              <C>               <C>
ASSETS
Current assets:
Cash and cash equivalents                         $  13,217         $     140        $      80        $      --         $  13,437
Accounts receivable                                  12,395            23,787            3,303               (5)           39,480
Accounts receivable--other                            1,286               644               55               --             1,985
Intercompany receivable (payable)                        --            28,652            2,175          (30,827)               --
Inventories                                           2,674            11,452              458               --            14,584
Other current assets                                  2,254             3,391               50               --             5,695
Deferred income taxes                                   692               307               --             (450)              549
                                                  ---------         ---------        ---------        ---------         ---------
   Total current assets                              32,518            68,373            6,121          (31,282)           75,730
                                                  ---------         ---------        ---------        ---------         ---------
Property, plant and equipment, net                    4,724            40,692              928               --            46,344
Intangible assets, net                               16,875           273,741           15,798               --           306,414
Intercompany receivable (payable)                    70,879                --               --          (70,879)               --
Investment in subsidiaries                          231,952                --               --         (231,952)               --
Other assets                                         11,450             1,724               29               --            13,203
Deferred income taxes                                12,972                --               --          (12,972)               --
                                                  ---------         ---------        ---------        ---------         ---------
   Total assets                                   $ 381,370         $ 384,530        $  22,876        $(347,085)        $ 441,691
                                                  =========         =========        =========        =========         =========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable                                  $   9,273         $  15,848        $     762        $      --         $  25,883
Accrued advertising and sales allowances              3,447             4,194              524               --             8,165
Accrued interest                                      1,738               140               --               --             1,878
Payable to sellers in connection with
  with purchase of Crescent                          11,293                --               --               --            11,293
Other current liabilities                             3,329             7,503            1,408               --            12,240
Intercompany payable (receivable)                    30,862                --               --          (30,862)               --
Current portion of long-term debt                     9,375               514               --               --             9,889
Deferred income taxes                                    --               252              198             (450)               --
                                                  ---------         ---------        ---------        ---------         ---------
   Total current liabilities                         69,317            28,451            2,892          (31,312)           69,348
                                                  ---------         ---------        ---------        ---------         ---------
Intercompany payable (receivable)                        --            70,879               --          (70,879)               --
Long-term debt                                      267,125            16,444               --               --           283,569
Other liabilities                                       431               320              675               --             1,426
Deferred income taxes                                    --            44,984               97          (12,972)           32,109
                                                  ---------         ---------        ---------        ---------         ---------
   Total long-term liabilities                      267,556           132,627              772          (83,851)          317,104
                                                  ---------         ---------        ---------        ---------         ---------
Redeemable cumulative preferred interests            21,644                --               --               --            21,644
Members' equity (deficit)                            22,853           223,452           19,212         (231,922)           33,595
                                                  ---------         ---------        ---------        ---------         ---------
   Total liabilities and members' equity
   (deficit)                                      $ 381,370         $ 384,530        $  22,876        $(347,085)        $ 441,691
                                                  =========         =========        =========        =========         =========
</TABLE>



                                       13



<PAGE>   15



                       SLEEPMASTER L.L.C. AND SUBSIDIARIES

               SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
                                DECEMBER 31, 1999
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                   COMBINED           NON-
                                                                   GUARANTOR        GUARANTOR
                                                 SLEEPMASTER      SUBSIDIARIES      SUBSIDIARY     ELIMINATIONS           TOTAL
<S>                                              <C>               <C>              <C>              <C>               <C>
ASSETS
Current assets:
Cash and cash equivalents                         $   1,294         $     934        $     612        $       2         $   2,842
Accounts receivable                                  10,282            11,800            2,310             (175)           24,217
Accounts receivable--other                            1,061               630               --               --             1,691
Intercompany (payable) receivable                       (17)           18,144            1,503          (19,630)               --
Inventories                                           2,378             4,637              516               --             7,531
Other current assets                                  1,076               626               24             (393)            1,333
                                                  ---------         ---------        ---------        ---------         ---------
   Total current assets                              16,074            36,771            4,965          (20,196)           37,614
                                                  ---------         ---------        ---------        ---------         ---------
Property, plant and equipment, net                    4,477            15,773              717               --            20,967
Intangible assets, net                               17,119            97,707           15,998               --           130,824
Intercompany receivable (payable)                    67,378                --               --          (67,378)               --
Investment in subsidiaries                           67,628                --               --          (67,628)               --
Other assets                                         19,132               569                3             (122)           19,582
                                                  ---------         ---------        ---------        ---------         ---------
   Total assets                                   $ 191,808         $ 150,820        $  21,683        $(155,324)        $ 208,987
                                                  =========         =========        =========        =========         =========
LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable                                  $   4,984         $   8,808        $     645        $    (173)        $  14,264
Accrued advertising and sales allowances              3,541             1,758              456               --             5,755
Other current liabilities                             4,251             3,327            1,364             (393)            8,549
Intercompany payable (receivable)                    19,599                --               --          (19,599)               --
Current portion of long-term debt                     4,500               510               --               --             5,010
                                                  ---------         ---------        ---------        ---------         ---------
   Total current liabilities                         36,875            14,403            2,465          (20,165)           33,578
                                                  ---------         ---------        ---------        ---------         ---------
Intercompany payable (receivable)                        --            67,378               --          (67,378)               --
Long-term debt                                      153,800             7,803               --               --           161,603
Other liabilities                                      (437)            1,337              685             (122)            1,463
                                                  ---------         ---------        ---------        ---------         ---------
   Total long-term liabilities                      153,363            76,518              685          (67,500)          163,066
                                                  ---------         ---------        ---------        ---------         ---------
Redeemable cumulative preferred interests            20,423                --               --               --            20,423
Members' (deficit) equity                           (18,853)           59,899           18,533          (67,659)           (8,080)
                                                  ---------         ---------        ---------        ---------         ---------
   Total liabilities and members' equity
   (deficit)                                      $ 191,808         $ 150,820        $  21,683        $(155,324)        $ 208,987
                                                  =========         =========        =========        =========         =========
</TABLE>



                                       14



<PAGE>   16




                       SLEEPMASTER L.L.C. AND SUBSIDIARIES
          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                         SIX MONTHS ENDED JUNE 30, 2000
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                  COMBINED
                                                                  GUARANTOR      NON-GUARANTOR
                                                  SLEEPMASTER    SUBSIDIARIES     SUBSIDIARY     ELIMINATIONS        TOTAL
<S>                                               <C>              <C>             <C>             <C>             <C>
Net cash provided by (used in) operating
  activities                                       $ 23,284         $   484         $  (240)        $(3,679)        $19,849
                                                    -------         -------         -------         -------         -------

Cash flows from investing activities:
   Purchases of property, plant and
     equipment, net                                    (687)           (989)           (290)             --          (1,966)
   Acquisitions, net of cash acquired              (160,960)            (38)             --              38        (160,960)
   Net activity in investment in
     subsidiaries                                    (3,641)             --              --           3,641              --
                                                    -------         -------         -------         -------         -------
      Net cash (used in) provided by investing
        activities                                 (165,288)         (1,027)           (290)          3,679        (162,926)
                                                    -------         -------         -------         -------         -------

Cash flows from financing activities:
   Proceeds from issuance of senior
     subordinated notes                              25,000              --              --              --          25,000
   Proceeds from long-term debt                     175,861              --              --              --         175,861
   Payments on long-term debt                       (72,000)           (255)             --              --         (72,255)
   Loan origination fees                             (5,898)             --              --              --          (5,898)
   Borrowings under revolving line of credit         16,700              --              --              --          16,700
   Payments on revolving line of credit             (27,361)             --              --              --         (27,361)
   Capital contributions                             41,625              --              --              --          41,625
                                                    -------         -------         -------         -------         -------
      Net cash provided by (used in)
        financing activities                        153,927            (255)             --              --         153,672
                                                    -------         -------         -------         -------         -------

Net increase (decrease) in cash and cash
  equivalents                                        11,923            (798)           (530)             --          10,595
Cash and cash equivalents, beginning of
  period                                              1,294             938             610              --           2,842
                                                    -------         -------         -------         -------         -------
Cash and cash equivalents, end of period           $ 13,217         $   140         $    80         $    --         $13,437
                                                    =======         =======         =======         =======         =======
</TABLE>





                                       15




<PAGE>   17




                       SLEEPMASTER L.L.C. AND SUBSIDIARIES
          SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                         SIX MONTHS ENDED JUNE 30, 1999
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                  COMBINED
                                                                  GUARANTOR      NON-GUARANTOR
                                                  SLEEPMASTER    SUBSIDIARIES     SUBSIDIARY     ELIMINATIONS        TOTAL
<S>                                                <C>             <C>             <C>             <C>             <C>
Net cash provided by (used in) operating
  activities                                        $ 6,899         $    (1)        $   156         $(2,893)        $ 4,161
                                                    -------         -------         -------         -------         -------

Cash flows from investing activities:
   Purchases of property, plant and
     equipment, net                                  (1,507)           (456)             (8)             --          (1,971)
   Proceeds from sale of assets                          --              11              --              --              11
   Acquisitions, net of cash acquired               (42,160)             --              --             690         (41,470)
   Net activity in investment in
     subsidiaries                                    (2,925)             --              --           2,925              --
                                                    -------         -------         -------         -------         -------
      Net cash (used in) provided by investing
        activities                                  (46,592)           (445)             (8)          3,615         (43,430)
                                                    -------         -------         -------         -------         -------

Cash flows from financing activities:
   Proceeds from issuance of senior
     subordinated notes                             115,000              --              --              --         115,000
   Payments on long-term debt                       (63,996)           (285)             --              --         (64,281)
   Loan origination fees/bond issuance costs         (5,787)             --              --              --          (5,787)
   Penalties paid on early extinguishment of debt    (3,645)             --              --              --          (3,645)
   Distributions                                       (748)             --              --              --            (748)
                                                    -------         -------         -------         -------         -------
      Net cash provided by (used in) financing
        activities                                   40,824            (285)             --              --          40,539
                                                    -------         -------         -------         -------         -------

Net increase (decrease) in cash and cash
  equivalents                                         1,131            (731)            148             722           1,270
Cash and cash equivalents, beginning of
  period                                                 41             843              --            (722)            162
                                                    -------         -------         -------         -------         -------
Cash and cash equivalents, end of period            $ 1,172         $   112         $   148         $    --         $ 1,432
                                                    =======         =======         =======         =======         =======
</TABLE>


                                       16



<PAGE>   18




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         The following discussion of the Company's results of operations and of
its liquidity and capital resources should be read in conjunction with the
Condensed Consolidated Financial Statements of the Company and the related Notes
thereto included elsewhere herein.

GENERAL

         Sleepmaster acquired the stock of Crescent on June 30, 2000, the stock
of Simon on April 28, 2000, substantially all of the assets of Adam Wuest Inc.
and Adam Wuest Realty (collectively "Adam Wuest") on November 5, 1999,
substantially all of the assets of Star Bedding Products (1986) Limited ("Star")
on May 18, 1999 and the stock of Herr Manufacturing Company ("Herr") on February
26, 1999. Each of these acquisitions has been accounted for using the purchase
method of accounting. The Company's historical results of operations reflect the
results of the acquired businesses since their respective dates of acquisition.
Therefore, the historical operating results of the Company for the periods
presented are not necessarily comparable.

QUARTER ENDED JUNE 30, 2000 AS COMPARED TO QUARTER ENDED JUNE 30, 1999

         Net Sales. Net sales increased 60.8%, or $24.1 million, to $63.9 for
the quarter ended June 30, 2000, from $39.8 million for the quarter ended June
30, 1999. A significant portion of the increase was due to the contribution of
net sales from Star, acquired on May 18, 1999, Adam Wuest, acquired on November
5, 1999 and Simon, acquired on April 28, 2000. Net sales contributed by Star,
Adam Wuest and Simon in the second quarter of 2000 were $25.1 million. Excluding
these acquisitions, net sales increased by 3.5%, or $1.3 million, for the second
quarter of 2000. Generally, higher unit sales volumes and higher average unit
selling prices resulting from shifts in product sales mix toward higher priced
products contributed to this increase.

         Cost of Sales. Cost of sales increased 59.5%, or $14.8 million, to
$39.6 for the second quarter of 2000, from $24.8 million for the second quarter
of 1999. Cost of sales as a percentage of net sales decreased from 62.4% in 1999
to 61.9% in 2000. Margins were favorably impacted by Sleepmaster successfully
obtaining volume-related cost savings on raw material purchases as a result of
the acquisitions of Star, Adam Wuest and Simon. This impact was offset by an
increase in direct labor costs.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") increased 68.2%, or $6.7 million, to $16.5
million for the second quarter of 2000 from $9.8 million for the similar period
of 1999. The increase in SG&A is primarily due to the SG&A associated with the
Company's acquisitions of Star, Adam Wuest and Simon. SG&A as a percentage of
sales increased to 25.9% in the second quarter of 2000 from 24.7% in the second
quarter of 1999. This increase is primarily attributable to the increase in
corporate costs associated with the aforementioned acquisitions.

         Amortization of Intangibles. Amortization of intangibles increased $0.6
million to $1.1 million for the second quarter of 2000 from $0.5 for the second
quarter of 1999. The increase is a result of the intangible assets acquired in
connection with the acquisitions of Star, Adam Wuest and Simon.

         Interest Expense, Net. Interest expense increased $3.0 million to $5.8
million for the quarter ended June 30, 2000 from $2.8 million for the quarter
ended June 30, 1999. This increase was due primarily to the cost of additional
debt financing incurred for the acquisitions of Adam Wuest and Simon, the
issuance of senior subordinated notes on May 18, 1999 and the write-off of $0.6
million of unamortized debt issuance costs in the second quarter of 2000.

                                       17

<PAGE>   19


         Provision for Income Taxes. The provision for income taxes resulted in
an effective tax rate of 42.9% in the second quarter of 2000, down from 47.0% in
the second quarter of 1999. The effective tax rate decreased due to the
expansion of business activities into lower tax jurisdictions as a result of the
aforementioned acquisitions.

         Extraordinary Items. The extraordinary item recorded in the second
quarter of 2000 consisted of a write-off of unamortized debt issuance costs, net
of the associated income tax benefit of $208,000 and was recorded in connection
with the Company's third amended credit facility. The extraordinary item
recorded in the second quarter of 1999 consisted of the payment of $3.6 million
in premiums on the redemption of $20 million in aggregate principal amount of
Series A and Series B 12% Subordinated Notes and repayment of $69.2 million of
borrowings under the Company's former credit facility, together with the
write-off of $1.8 million of unamortized debt issuance costs relating to such
redemption and repayment on May 18, 1999, less an income tax benefit totaling
$2.3 million.

         Net Income. As a result of the above factors, net income increased by
$2.5 million, to $0.3 million for the quarter ended June 30, 2000 compared to
the net loss of $2.2 million for the quarter ended June 30, 1999.


SIX MONTHS ENDED JUNE 30, 2000 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

         Net Sales. Net sales increased 62.2%, or $46.0 million, to $120.0 for
the six months ended June 30, 2000, from $74.0 million for the six months ended
June 30, 1999. A significant portion of the increase was due to the contribution
of net sales from Herr, acquired on February 26, 1999, Star, acquired on May 18,
1999, Adam Wuest, acquired on November 5, 1999 and Simon, acquired on April 28,
2000. Net sales contributed by Herr, Star, Adam Wuest and Simon for the six
months were $53.1 million. Excluding these acquisitions, net sales increased by
4.9%, or $3.1 million, for the six months ended June 30, 2000. Generally, higher
unit sales volumes and higher average unit selling prices resulting from shifts
in product sales mix toward higher priced products contributed to this increase.

         Cost of Sales. Cost of sales increased 61.5%, or $28.3 million, to
$74.4 for the first half of 2000, from $46.1 million for the first half of 1999.
Cost of sales as a percentage of net sales decreased slightly from 62.3% in 1999
to 62.0% in 2000. Margins were favorably impacted by Sleepmaster successfully
obtaining volume-related cost savings on raw material purchases as a result of
the acquisitions of Star, Adam Wuest and Simon. This impact was offset by an
increase in direct labor costs.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") increased 69.0%, or $12.6 million, to $30.8
million for the first half of 2000 from $18.2 million for the similar period
of 1999. The increase in SG&A is primarily due to the SG&A associated with the
Company's acquisitions of Herr, Star, Adam Wuest and Simon. SG&A as a percentage
of sales increased to 25.7% in 2000 from 24.6% in 1999. This increase is
primarily attributable to the increase in corporate costs associated with the
aforementioned acquisitions.

         Amortization of Intangibles. Amortization of intangibles increased $1.1
million to $1.9 million for the first half of 2000 from $0.8 for the similar
period of 1999. The increase is a result of the intangible assets acquired in
connection with the acquisitions of Herr, Star, Adam Wuest and Simon.

         Interest Expense, Net. Interest expense increased $5.4 million to $10.3
million for the first half of 2000 from $4.9 million for the first half of 1999.
This increase was due primarily to the cost of additional debt financing
incurred for the acquisitions of Adam Wuest and Simon, the issuance of senior
subordinated notes on May 18, 1999 and the write-off of $0.6 million of
unamortized debt issuance costs in the first half of 2000.


                                       18

<PAGE>   20

         Provision for Income Taxes. The provision for income taxes resulted in
an effective tax rate of 40.5% in the first half of 2000, down from 43.3% in the
first half of 1999. The effective tax rate decreased due to the expansion of
business activities into lower tax jurisdictions as a result of the
aforementioned acquisitions.

         Extraordinary Items. The extraordinary item recorded in the first half
of 2000 consisted of a write-off of unamortized debt issuance costs, net of the
associated income tax benefit, of $208,000 and was recorded in connection with
the Company's third amended credit facility. The extraordinary item recorded in
the first half of 1999 consisted of the payment of $3.6 million in premiums on
the redemption of $20 million in aggregate principal amount of Series A and
Series B 12% Subordinated Notes and repayment of $69.2 million of borrowings
under the Company's former credit facility, together with the write-off of $1.8
million of unamortized debt issuance costs relating to such redemption and
repayment on May 18, 1999, less an income tax benefit totaling $2.3 million.

         Net Income. As a result of the above factors, net income increased by
$2.2 million, to $1.3 million for the first half of 2000 compared to a net loss
of $0.9 million for the first half of 1999.

LIQUIDITY AND CAPITAL RESOURCES

        The Company's principal source of cash to fund its liquidity needs is
net cash provided by operating activities and availability under its current
credit facility. Cash and cash equivalents increased by $10.6 million to $13.4
million as of June 30, 2000 from $2.8 million at December 31, 1999. Included in
cash and cash equivalents at June 30, 2000 was an amount of $11,293,000 received
as part of the proceeds from the Third Amended and Restated Credit Facility, and
for which there was a corresponding payable at June 30, 2000 to the sellers of
Crescent. Net cash provided by operating activities totaled $19.8 million for
the six months ended June 30, 2000 compared to $4.2 for the six months ended
June 30, 1999. The increase in cash flows from operations is primarily a result
of the acquisitions of Herr, Star, Adam Wuest and Simon and the aforementioned
proceeds due to the sellers of Crescent. At June 30, 2000, the Company was not
in compliance with two financial covenants contained in the Third Amended and
Restated Credit Facility (1) the Interest Coverage Ratio and (2) the Minimum
consolidated EBITDA. The interest coverage ratio requires a minimum ratio of
1.80 and the actual was 1.73 at June 30, 2000. The minimum consolidated EBITDA
covenant required a minimum of $56,000,000 (which is a 12 month rolling
computation) and the actual was $55,312,000 at June 30, 2000. The principal
reason the Company did not meet these two covenants was an increase in the
competitive environment. The Company has implemented various steps to reverse
this trend. The failure to comply with these covenants constituted an event of
default. On September 19, 2000 the lenders granted a waiver for the debt
covenant violations and an amendment to the Third Amended and Restated Credit
Facility (the "Waiver and First Amendment to the Third Amended and Restated
Credit Facility" or the "Waiver and Amendment"). The Waiver and Amendment also
modified various financial covenants going forward including the two identified
above. The minimum consolidated EBITDA was reset to $50,000,000 for the
quarterly period ending September 30, 2000 and the interest coverage ratio was
reset to a minimum of 1.50 for the period July 1, 2000 through December 31,
2000. The Company expects to comply with all of the covenants and conditions of
the Third Amended and Restated Credit Facility, as amended, but there is no
assurance that the Company will not require additional waivers in the future,
or if required, the lenders will grant them.

         Sleepmaster generated $153.7 million of cash inflows from financing
activities during the first half of 2000, principally arising from borrowings
under increased credit facilities to acquire Simon and Crescent, the issuance of
$25.0 million of 13.4% senior subordinated notes, and $41.5 million of equity
contributed by a group of investors and various members of Crescent's
management. Financing cash flows during the first half of 1999 of $40.5 million
arose primarily from net proceeds from the issuance on May 18, 1999 of $115.0
million of 11% senior subordinated notes, a portion of which was used to prepay
the existing credit facility, redeem the existing senior subordinated notes and
complete the acquisition of Star.

         Capital expenditures totaled $2.0 million for the six months ended June
30, 2000. These capital expenditures consisted primarily of normal recurring
capital expenditures. Management expects that capital expenditures at all of its
existing facilities will be approximately $4.5 million in 2000. Management
believes that annual capital expenditure limitations under its current credit
facility will not significantly inhibit Sleepmaster from meeting its capital
needs.

         On April 28, 2000, Sleepmaster amended and restated its existing credit
facility to provide for borrowings of up to $103,875,000, comprising a
$33,000,000 revolving credit facility, a $35,875,000 amortizing term loan
facility and a $35,000,000 incremental amortizing term loan facility (the
"Second Amended and Restated Credit Facility"). The terms of the Second Amended
and Restated Credit Facility were substantially equivalent to those of the prior
facility.

         On June 30, 2000, the Company issued an additional $25,000,000 of 13.4%
senior subordinated notes due November 2009. Sleepmaster used the proceeds of
the senior subordinated notes to acquire all the capital stock of Crescent. Also
on June 30, 2000, in connection with the acquisition of Crescent, the Company
entered into a third amended and restated credit agreement to provide for an
aggregate amount of borrowings of up to $172,500,000, comprising a $40,000,000
revolving credit facility, a Tranche A term loan of $57,500,000 and a Tranche B
term loan of $75,000,000 (the "Third Amended and Restated Credit Facility").
Similar to the prior credit facility, the revolving credit facility includes a
sublimit for letters of credit of $25.0 million. At June 30, 2000, the Company
had approximately $17.4 million available under its revolving credit facility
with letters of credit issued totaling approximately $18.6 million.


                                       19
<PAGE>   21





         Management believes that cash flows generated from operations, together
with its borrowing capacity, are sufficient to support the Company's operations
and general business and liquidity requirements for the foreseeable future.

YEAR 2000

         In order to minimize or eliminate  the effect of the Year 2000 risk on
the Company's business systems and applications, the Company identified,
evaluated, implemented  and  tested  changes  to its  computer  systems,
applications  and software  necessary to achieve Year 2000  compliance.  The
computer  systems and equipment successfully transitioned to the Year 2000 with
no significant issues. The  Company  continues  to keep its Year 2000  project
management  in place to monitor latent problems that could surface at key dates
or events in the future. Management does not anticipate any significant
problems related to these events. The total cost of the Year 2000 compliance
program was  approximately  $650,000 and was incurred  principally during the
first two quarters of 1999. The Company expensed and capitalized the costs to
complete its compliance plan in accordance with appropriate accounting
policies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market risk from fluctuations in interest
rates, which could impact its consolidated financial position, results of
operations and cash flows. The Company manages its exposure to market risk
through its regular operating and financing activities. The Company does not
use derivative financial instruments for speculative or trading purposes and
does not maintain such instruments that may expose the Company to significant
market risk.

         The Company's earnings are sensitive to changes in short-term
interest rates as a result of its borrowings under the amended and
restated credit facility. The Company also manages its portfolio of
fixed-rate debt to reduce its exposure to interest rate changes. The
fair value of the Company's fixed-rate long-term debt is sensitive to
interest rate changes. Interest rate changes would result in gains or losses
in the fair value of this debt due to differences between market interest
rates and rates at the inception of the obligation. Management does not
foresee nor expect any significant changes in its exposure to interest rate
fluctuations, or in how such exposure is managed in the near future.

FORWARD LOOKING STATEMENTS AND RISK FACTORS

         This document contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Although the Company believes its plans are based
upon reasonable assumptions as of the current date, it can give no
assurance that such expectations can be attained. Factors that could cause
actual results to differ materially from the Company's expectations
include; general business and economic conditions; competitive factors;
raw materials availability and pricing; fluctuations in demand; and
retention and availability of qualified employees.


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<PAGE>   22



PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         The Company is, from time to time, a party to litigation arising in the
normal course of business, most of which involves claims for personal injury and
property damage incurred in connection with its operations. Management believes
that none of these actions will have a material adverse effect on the financial
position, results of operations or cash flows, of the Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits:
          27.1 Financial Data Schedule.

(b)      Reports on Form 8-K:
          Report on Form 8-K/A,  filed September 13,  2000,  concerning
          the  Company's acquisition of Crescent Sleep Products Company.

          Report on Form 8-K/A,  filed on July 12, 2000,  concerning  the
          Company's acquisition of Simon Mattress Manufacturing Company.

                                       21


<PAGE>   23





                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Linden,
State of New Jersey.

                                    SLEEPMASTER L.L.C.



                                    By: /s/  Charles Schweitzer
                                        --------------------------------------
                                        President and Chief Executive Officer

Dated:  September 21, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated.


<TABLE>
<CAPTION>
        SIGNATURE                                 CAPACITY                       DATE

<S>                              <C>                                    <C>
/s/  Charles Schweitzer               President and Chief Executive     September 21 , 2000
  ---------------------------
     Charles Schweitzer                    Officer, Advisor


/s/   James P. Koscica             Executive Vice President and Chief   September 21 , 2000
  ---------------------------
      James P. Koscica                 Financial Officer, Advisor

</TABLE>

                                       22