Sealy Corporation Reports Fourth Quarter and Fiscal Full Year 2012 Results

  Sealy Corporation Reports Fourth Quarter and Fiscal Full Year 2012 Results

--4th Quarter Results from Continuing Operations--

--Adjusted EBITDA of $35.2 Million--

--Net Loss Per Share $0.03--

--Adjusted Earnings Per Share of $0.04--

PR Newswire

TRINITY, N.C., Jan. 23, 2013

TRINITY, N.C., Jan.23, 2013 /PRNewswire/ --Sealy Corporation (NYSE: ZZ), a
leading global bedding manufacturer, today announced results for its fiscal
fourth quarter and full year 2012. The fiscal year ended December 2, 2012 was
a 53-week year compared to a 52-week fiscal year ended November 27, 2011. 

Fiscal 2012 4th Quarter Recap for Continuing Operations

  oNet sales increased by $88.9 million or 33.0% to $358.1 million, compared
    to the same prior year quarter. The increase in net sales attributable to
    the 53rd week was approximately $37.1 million, which added growth of 13.8%
    over the prior year quarter.
  oGross profit increased by $43.8 million to $141.9 million compared to the
    same prior year quarter. The increase due to the 53^rd week was
    approximately $14.5 million.
  oGross profit margin increased approximately 320 bps to 39.6% of sales
    compared to 36.4% in the same prior year quarter.
  oIncome from operations increased by $12.3 million to $16.1 million
    compared to the same prior year quarter.
  oNet loss from continuing operations attributable to common shareholders
    was $2.7 million or $0.03 per diluted share, compared to net loss from
    continuing operations of $14.0 million or $0.14 per diluted share in the
    prior year quarter. Excluding the impact of restructuring expense, merger
    costs and income tax expense on repatriated foreign earnings, our adjusted
    EPS was $0.04. Please see the attached reconciliation of adjusted EPS.
  oAdjusted EBITDA increased by $20.1 million to $35.2 million compared to
    the same prior year quarter. The increase due to the 53^rd week was
    approximately $3.9 million.

"We were pleased with our performance in 2012 as we continued to execute on
our strategic initiatives," stated Larry Rogers, Sealy's President and Chief
Executive Officer. "Strong product offerings in both the specialty and
innerspring lines, compelling advertising and continued financial discipline
led to these financial results and we are working to ensure these trends
continue."

Fiscal 2012 Fourth Quarter Results

Total U.S. net sales increased 32.9% to $269.7 million from the fourth quarter
of fiscal 2011. The increase in net sales attributable to the 53rd week was
approximately $27.7 million. Also contributing to the increase in U.S. net
sales was a 13.3% increase in wholesale unit volume, coupled with a 15.8%
increase in wholesale average unit selling price. The significant improvement
in both of these metrics was primarily driven by the success of the Optimum by
Sealy Posturepedic and Next Generation Stearns & Foster product lines, both of
which sell at higher price points in the market.

International net sales increased $22.1 million, or 33.3%, from the fourth
quarter of fiscal 2011 to $88.4 million. The increase in net sales
attributable to the 53^rd week was approximately $9.3 million. This increase
was primarily attributable to the strong sales performance of Canada, Mexico
and South America. In Canada, local currency sales increases of 28.1%
translated into increases of 31.8% in U.S. dollars due to the strengthening of
the Canadian dollar versus the U.S. dollar. Excluding the effects of currency
fluctuation, international net sales increased 32.1% from the fourth quarter
of fiscal 2011.

Gross profit for the fourth fiscal quarter increased by $43.8 million to
$141.9 million from the prior year quarter. Gross margin increased 3.2
percentage points to 39.6%. The increase as a percentage of net sales was
primarily due to increases in gross profit margins in U.S. operations
partially offset by declines in Canada. U.S. gross profit margin increased 4.8
percentage points to 39.8%. The increase as a percentage of net sales was
primarily attributable to improved operational efficiencies on higher sales
volumes and an improvement in manufacturing processes which resulted in a 2.4
percentage point increase in U.S. gross profit margin. Additionally, the
leveraging of fixed costs due to the higher sales volumes contributed a 2.6
percentage point improvement in gross margin. The local currency gross profit
margin in Canada was 37.6% as a percentage of net sales which represents a
decrease of 4.6 percentage points from fiscal 2011. This decrease was
primarily driven by the impact of promotional activities to gain market share,
and higher raw material costs.

Selling, general, and administrative expenses were $127.8 million for the
fourth quarter of fiscal 2012, an increase of $28.9 million versus the
comparable period a year earlier. A portion of this increased expense was
driven by the 53^rd week. The increased variable expense was primarily driven
by higher cooperative advertising and promotional costs, and the increased
fixed expense was driven primarily by higher incentive compensation and an
increase in defined contribution costs and professional fees. As a percentage
of net sales, this expense was 35.7% and 36.7% for the quarters ended December
2, 2012 and November 27, 2011, respectively, a decrease of 1.0 percentage
points.

Cash flow from operations was $50.7 million for the fourth quarter of fiscal
2012, driven primarily by improvements in working capital. As a result of our
cash generation and the repatriation of a portion of our non US cash,
subsequent to the end of the fiscal year, the Company redeemed an additional
$35 million of its senior notes.

Fiscal 2012 Full Year Results

Net sales for the fiscal year ended December 2, 2012 increased 9.6% to
$1,347.9 million from $1,230.2 million for the prior fiscal year. Gross profit
was $539.5 million, or 40.0% of net sales, versus $478.7 million, or 38.9% of
net sales, for the prior fiscal year. For the 2012 fiscal year, net income
attributable to common shareholders from continuing operations was $2.0
million and net loss from discontinued operations was $2.0 million, resulting
in overall net income for the fiscal year of $0.0 million. Adjusted EBITDA
increased 18.9% to $150.1 million, or 11.1% of net sales, from $126.3 million,
or 10.3% of net sales, in the prior fiscal year. For further information on
the change in Adjusted EBITDA, please see the attached Reconciliation of 2012
Adjusted EBITDA to Prior Year schedule.

As of December 2, 2012, the Company's debt net of cash was $641.4 million and
Net Debt to Adjusted EBITDA ratio (excluding the Convertible Payment In Kind
Notes) was 2.94x.

"We were pleased to deliver improved year over year net sales, gross margin,
net income and Adjusted EBITDA results in 2012. As we move into 2013, we
expect to drive growth across our entire portfolio in both our domestic and
international markets," concluded Mr. Rogers.

Transaction Update

Sealy and Tempur-Pedic certified to substantial compliance with the Request
for Additional Information ("Second Request") issued by the Federal Trade
Commission under the Hart-Scott-Rodino Act on January 22, 2013. By agreement
of the parties with the FTC, the FTC has up to 45 days following substantial
compliance to complete its review of the transaction.

Results from Discontinued Operations

During the fourth quarter of 2010, the company divested the assets of its
manufacturing operations in France and Italy, which represented all of the
assets in its Europe segment. In addition, the company discontinued
manufacturing operations in Brazil. The company has transitioned to a license
arrangement with third parties in both of these markets. These businesses are
accounted for as discontinued operations, and accordingly, the company has
reclassified its financial data for all periods presented to reflect these
actions. Unless otherwise noted, the reported financial data pertains to
Sealy's continuing operations.

Non-GAAP Measures

Sealy provides information regarding Adjusted EBITDA and Adjusted EBITDA
Margin which are not recognized terms under GAAP (Generally Accepted
Accounting Principles) and do not purport to be alternatives to operating
income or net income as a measure of operating performance or to cash flows
from operating activities as a measure of liquidity. The Company presents
Adjusted EBITDA, because the covenants contained in the Company's senior debt
agreements are based upon these measures and Adjusted EBITDA is a material
component of those covenants. Additionally, management uses Adjusted EBITDA to
evaluate the Company's operating performance. The Company also presents
Adjusted EBITDA margin, which is Adjusted EBITDA reflected as a percentage of
net sales because it believes that this measure provides useful incremental
information to investors regarding the Company's operating performance.
Additionally, these measures are not intended to be measures of available cash
flow for management's discretionary use, as these measures do not consider
certain cash requirements such as interest payments, tax payments and debt
service requirements. Because not all companies use identical calculations,
this presentation may not be comparable to other similarly titled measures of
other companies. A reconciliation of Adjusted EBITDA and Adjusted EBITDA
Margin to the Company's net income is provided in the attached schedule.

In this release, Sealy also provides information regarding Adjusted Earnings
Per Share, which is GAAP earnings per share adjusted to exclude the impact of
restructuring expense, merger costs and income tax expense on repatriated
foreign earnings. Adjusted Earnings Per Share is not a recognized term under
GAAP and does not purport to be an alternative to GAAP earnings per share as a
measure of operating performance. The Company presents Adjusted Earnings Per
Share because it believes that this measure provides useful incremental
information to investors regarding the Company's operating performance. A
reconciliation of Adjusted Earnings Per Share to the Company's GAAP earnings
per share is provided in the attached schedule.

Additionally, the Company provides certain information on a constant currency
basis which reflects a comparison of current period results translated at the
prior period currency rates. This information is provided because the Company
believes that it provides useful incremental information to investors
regarding the Company's operating performance.

About Sealy

Sealy owns one of the largest bedding brands in the world, with sales of $1.3
billion in fiscal 2012. The company manufactures and markets a broad range of
mattresses and foundations under the Sealy®, Sealy Posturepedic®, Sealy
Embody™, Optimum™ by Sealy Posturepedic®, Stearns & Foster®, and Bassett®
brands. Sealy operates 25 plants in North America, and has the largest market
share and highest consumer awareness of any bedding brand on the continent. In
the United States, Sealy sells its products to approximately 3,000 customers
with more than 11,000 retail outlets. Sealy is also a leading supplier to the
hospitality industry. For more information, please visit www.sealy.com.

This document contains forward-looking statements within the meaning of the
safe harbor provisions of the Securities Litigation Reform Act of 1995. Terms
such as "expect," "believe," "continue," and "grow," as well as similar
comments, are forward-looking in nature. Although the Company believes its
growth plans are based upon reasonable assumptions, it can give no assurances
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
purchasing, fluctuations in demand and the Company's pending business
combination with Tempur-Pedic. Please refer to the Company's Securities and
Exchange Commission filings for further information.

The condensed consolidated statements of operations and related information
presented below have been adjusted for discontinued operations presentation
for all periods presented. However, the condensed consolidated balance sheets
and statements of cash flows have not been adjusted for such presentation.



SEALY CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
                                         December 2,         November 27,
                                         2012                2011
ASSETS
Current assets:
Cash and equivalents                    $     128,154  $      
                                                             107,975
Accounts receivable (net of allowance
for doubtful accounts, discounts and     152,619             126,494
returns, 2012—$29,959; 2011—$30,104)
Inventories                              72,364              57,002
Prepaid expenses                         31,358              29,275
Deferred income taxes                   21,579              21,349
Total current assets                     406,074             342,095
Property, plant and equipment—at cost:
Land                                    6,761               7,351
Buildings and improvements              128,039             128,700
Machinery and equipment                 281,345             261,650
Construction in progress                7,861               8,414
                                         424,006             406,115
Less accumulated depreciation           (259,983)           (239,370)
                                         164,023             166,745
Other assets:
Goodwill                                363,229             361,026
Other intangibles—net of accumulated
amortization
(2012—$4,614; 2011—$3,496)               14,710              1,116
Deferred income taxes                    3,945               1,772
Debt issuance costs, net, and other      53,364              46,440
assets
                                         435,248             410,354
Total Assets                            $    1,005,345   $      
                                                             919,194
                                         December 2,         November 27,
                                         2012                2011
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion-long term obligations   $             $        
                                         4,045              1,584
Accounts payable                        100,796             68,774
Accrued expenses:
Customer incentives and advertising     34,664              26,038
Compensation                            33,065              17,601
Interest                                14,484              14,074
Warranty                                 9,785               7,522
Other                                   26,128              20,904
Deferred income taxes                   3,000               -
Total current liabilities                225,967             156,497
Long term obligations, net of current    765,521             790,297
portion
Other noncurrent liabilities            60,249              52,415
Deferred income taxes                   93                  549
Commitments and contingencies           —                   —
Redeemable noncontrolling interest       11,035              -
Stockholders' deficit:
Preferred stock, $0.01 par value;
Authorized 50,000 shares;
Issued, none                            —                   —
Common stock, $0.01 par value;
Authorized 600,000 shares;
Issued and outstanding: 2012—104,322;    1,045               1,010
2011—100,916
Additional paid-in capital              955,777             935,512
Treasury stock, at cost: 2012—655,046;  (1,138)             —
2011—0
Accumulated deficit                     (1,016,567)         (1,016,577)
Accumulated other comprehensive income   3,363               (509)
(loss)
                                         (57,520)            (80,564)
Total Liabilities and Stockholders'      $    1,005,345   $      
Deficit                                                     919,194



SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
                                              Three Months Ended
                                              December 2,    November 27,
                                              2012           2011
Net sales                                     $          $     269,259
                                              358,115
Cost of goods sold                            216,208        171,135
   Gross profit                               141,907        98,124
Selling, general and administrative expenses  127,791        98,927
Asset impairment loss                         827            -
Amortization expense                          461            72
Restructuring expenses and asset impairment   2,421          -
Royalty income, net of royalty expense        (5,645)        (4,617)
       Income from operations                 16,052         3,742
Interest expense                              23,751         22,434
Refinancing and extinguishment of debt        407            (42)
Other income, net                             (195)          (114)
       Loss before income taxes               (7,911)        (18,536)
Income tax provision                          (2,273)        (3,675)
Equity in earnings of unconsolidated          1,892          836
affiliates
       Loss from continuing operations        (3,746)        (14,025)
Loss from discontinued operations             (148)          (1,182)
       Net loss                               (3,894)        (15,207)
Net loss attributable to noncontrolling       1,096          -
interests
       Net (loss) income attributable to      $         $    
       common shareholders                    (2,798)        (15,207)
Loss per common share attributable to common
shareholders—Basic
   Loss from continuing operations per common $        $      
   share                                      (0.03)         (0.14)
   Loss from discontinued operations per      -              (0.01)
   common share
Loss per common share attributable to common  $        $      
shareholders—Basic                            (0.03)         (0.15)
Loss per common share attributable to common
shareholders—Diluted
   Loss from continuing operations per common $        $      
   share                                      (0.03)         (0.14)
   Loss from discontinued operations per      -              (0.01)
   common share
Loss per common share attributable to common  $        $      
shareholders—Diluted                          (0.03)         (0.15)
Weighted average number of common shares
outstanding:
   Basic                                      104,194        100,865
   Diluted                                    104,194        100,865

SEALY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
                                   Twelve Months Ended
                                   December 2,    November 27,   November 28,
                                   2012           2011           2010
Net sales                          $             $            $  
                                   1,347,870     1,230,151     1,219,471
Cost of goods sold                 808,363        751,449        709,971
 Gross profit                  539,507        478,702        509,500
Selling, general and               455,045        414,235        398,053
administrative expenses
Asset impairment loss              827            -              -
Amortization expense               678            289            289
Restructuring expenses            2,421          -              -
Royalty income, net of royalty     (20,070)       (19,413)       (17,529)
expense
 Income from operations     100,606        83,591         128,687
Interest expense                   89,305         87,743         85,617
Refinancing and extinguishment of  3,748          1,222          3,759
debt
Other income, net                  (605)          (451)          (226)
 Income (loss) before       8,158          (4,923)        39,537
income taxes
Income tax provision               12,548         4,104          18,488
Equity in earnings of              5,175          3,371          3,611
unconsolidated affiliates
 Income (loss) from         785            (5,656)        24,660
continuing operations
Loss from discontinued operations  (1,962)        (4,232)        (38,399)
 Net loss                   (1,177)        (9,888)        (13,739)
Net loss attributable to           1,187          -              -
noncontrolling interests
 Net income attributable to $        $         $    
common shareholders                10            (9,888)        (13,739)
Earnings (loss) per common share
attributable to common
shareholders—Basic
 Income (loss) from continuing $         $        $      
operations per common share        0.02           (0.06)          0.26
 Loss from discontinued        (0.02)         (0.04)         (0.40)
operations per common share
Earnings (loss) per common share   $        $        $      
attributable to common              -           (0.10)         (0.14)
shareholders—Basic
Earnings (loss) per common share
attributable to common
shareholders—Diluted
 Income (loss) from continuing $         $        $      
operations per common share        0.02           (0.06)          0.14
 Loss from discontinued        (0.02)         (0.04)         (0.13)
operations per common share
Earnings (loss) per common share   $        $        $      
attributable to common               -          (0.10)          0.01
shareholders—Diluted
Weighted average number of common
shares outstanding:
 Basic                         102,470        99,261         95,934
 Diluted                       109,151        99,261         289,857



SEALY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
                                       Fiscal Year Ended
                                       December    November    November
                                       2,          27,         28,
                                       2012         2011         2010
Operating activities:
 Net loss                              $        $         $    
                                       (1,177)      (9,888)     (13,739)
 Adjustments to reconcile net income
 to cash provided by (used in)
 operating activities:
   Depreciation and amortization       26,379       24,234       28,676
   Deferred income taxes               1,646        1,905        1,121
   Amortization of deferred gain on    (49)         (624)        (646)
   sale-leaseback
   Paid in kind interest on            24,539       19,994       16,109
   convertible notes
   Amortization of discount on new     1,578        1,485        1,431
   senior secured notes
   Amortization of debt issuance costs 3,975        4,673        4,750
   and other
   Impairment charges                  827          288          22,963
   Share-based compensation            8,117        13,243       15,864
   Excess tax benefits from            -            -            (417)
   share-based payment arrangements
   Loss (gain) on sale of assets       327          (215)        260
   Write-off of debt issuance costs    1,862        643          2,709
   related to debt extinguishments
   Loss on repurchase of senior notes  1,050        300          1,050
   Dividends received from             6,500        1,011        -
   unconsolidated affiliates
   Equity in earnings of               (5,175)      (3,371)      -
   unconsolidated affiliates
   Loss on disposition of subsidiary   -            206          2,399
   Other, net                          (2,850)      (2,217)      2,618
 Changes in operating assets and
 liabilities:
   Accounts receivable                 (20,332)     10,296       (3,226)
   Inventories                         (20,302)     (666)        (12,115)
   Other current assets                (4,654)      (6,418)      (3,628)
   Other assets                        (1,495)      4,271        (3,791)
   Accounts payable                    29,856       4,774        (4,873)
   Accrued expenses                    28,769       (24,382)     (8,711)
   Other liabilities                   2,717        (5,790)      (338)
         Net cash provided by          82,108       33,752       48,466
         operating activities
Investing activities:
 Purchase of property, plant and       (15,914)     (22,408)     (16,578)
 equipment
 Acquisition of Comfort Revolution,
 inclusive of cash acquired of $159    159          -
 (1)
 Proceeds from sale of property, plant 2,383        227          124
 and equipment
 Net proceeds (outflow) from           -            -            (340)
 disposition of subsidiary
 Advances to Comfort Revolution        (7,833)      -            -
 Repayments of loans and capital from  -            -            3,205
 unconsolidated affiliate
                 Net cash used in      (21,205)     (22,181)     (13,589)
                 investing activities
Financing activities:
 Proceeds from issuance of long-term   5,236        3,387        4,702
 obligations
 Repayments of long-term obligations   (11,446)     (4,619)      (15,068)
 Repayment of senior secured notes,
 including premium of $1,050, $300 and (36,050)     (10,300)     (36,050)
 $1,050
 Repurchase of common stock associated
 with vesting of employee share-based  (3,059)      (3,746)      (4,806)
  awards
 Exercise of employee stock options    104          630          714
 Debt issuance costs                   (908)        (147)        -
 Other                                 -            (34)         (8)
         Net cash used in financing    (46,123)     (14,829)     (50,516)
         activities
Effect of exchange rate changes on     5,399        1,978        (6,533)
cash
Change in cash and equivalents         20,179       (1,280)      (22,172)
Cash and equivalents:
 Beginning of period                   107,975      109,255      131,427
 End of period                         $         $          $    
                                       128,154      107,975     109,255
Supplemental disclosures:
 Taxes paid (net of tax refunds of
 $3,157, $5 and $8,000 in fiscal 2012,
 2011
   and 2010, respectively)             $        $         $     
                                       10,487       16,198      20,069
 Interest paid                         $        $         $     
                                       58,803       61,875      66,071
Noncash investing transaction:
 Extension of capital lease            $       $        $      
                                          -      2,181          -
 Promotional displays transferred to   $        $       $      
 property, plant and equipment         10,131         -          -
(1) Cash contributed to Comfort        $        $       $      
Revolution for initial investment      10,000         -          -





Reconciliation of Adjusted EBITDA to Net Income (Loss)
Non-GAAP Measure
                           Three Months Ended:        Twelve Months Ended:
                           December 2,  November 27,  December 2,  November
                           2012         2011          2012         27, 2011
                           (in thousands)             (in thousands)
Net loss                   $           $  (15,207)  $          $   
                           (3,894)                   (1,177)     (9,888)
 Interest expense     23,751       22,434        89,305       87,743
 Income taxes         (2,273)      (3,675)       12,548       4,104
 Depreciation and     7,626        6,233         26,379       24,234
amortization
                           25,210       9,785         127,055      106,193
Adjustments for debt
covenants:
 Refinancing charges   407          -             3,748        1,222
 Non-cash compensation 1,551        4,004         8,117        13,243
 Merger costs          2,538        -             2,538        -
 Comfort Revolution    895          -             1,158        -
acquisition costs
 Discontinued          148          891           1,962        4,232
operations
 Noncontrolling        1,096        -             1,187        -
interest
 Restructuring         2,421        -             2,421        -
expenses
 Other (various) (a)   905          427           1,948        1,405
Adjusted EBITDA            $  35,171   $   15,107  $           $ 
                                                      150,134     126,295
(a) Consists of various immaterial adjustments





SEALY CORPORATION
SHARE COUNT RECONCILIATION
                                  Three Months Ended     Twelve Months Ended
                                  December 2,  November  December 2,  November
                                  2012         27, 2011  2012         27, 2011
                                  (in thousands)         (in thousands)
Numerator:
Net income from continuing        $          $       $          $  
operations, as reported           (2,650)     (14,025)  1,972       (5,656)
Net income attributable to        9            17        (6)          10
participating securities
Interest on convertible notes     -            (14,551)  -            -
Net income from continuing        $          $       $          $  
operations available to common    (2,641)     (28,559)  1,966       (5,646)
shareholders
Denominator:
Denominator for basic earnings
per share—weighted average        104,194      100,865   102,470      99,261
shares
Effect of dilutive securities:
Convertible debt                  -            -         -            -
Stock options                    -            -         449          -
Restricted share units            -            -         5,640        -
Other                            -            -         592          -
Denominator for diluted earnings
per share—adjusted weighted       104,194      100,865   109,151      99,261
average shares and assumed
conversions





SEALY CORPORATION
INTEREST EXPENSE
                  Three Months Ended:             Twelve Months Ended:
                  December 2,    November 27,     December 2,    November 27,
                  2012           2011             2012           2011
Cash interest     $   15,111  $   15,445    $   59,213  $   61,591
expense
Non-cash interest 8,640          6,988            30,092         26,152
expense
                  $   23,751  $   22,433    $   89,305  $   87,743



Sealy Corporation
Non-GAAP Earnings Per Share
Three Months Ended December 2, 2012
(amounts and shares presented in thousands)
                                      As reported  Adjustments     As adjusted
Net income (loss) from continuing     $           $    9,377  $  
operations, net (1)                   (2,650)                     6,727
Net (loss) income attributable to     9            (33)            (24)
participating securities
Interest on convertible notes (2)     -            7,475           7,475
Net income (loss) from continuing     $ 
operations available to common        (2,641)     $   16,819   $  14,178
shareholders
Denominator for diluted earnings per
share - adjusted weighted average     104,194      227,650         331,844
shares and assumed conversion (3)
Income (loss) from continuing         $                         $   
operations per common share - Diluted (0.03)                       0.04
(1)     Includes the following adjustments to net income from
        continuing operations:
              Restructuring expense   $  
                                      2,421
              Merger costs            2,538
              Income tax expense on
              repatriation of foreign 4,418
              earnings
              Total                   $  
                                      9,377
(2)     Reflects the inclusion of convertible note interest as the impact of
        the adjustments in (1) above causes the Convertible Notes to become
       dilutive for the purposes of calculating diluted earnings per share.
(3)     Reflects the inclusion of outstanding share-based awards and
        convertible notes that are considered dilutive based on the inclusion
       of the adjustments in (1) above:
              Convertible notes       221,156
              Stock options           518
              Restricted share units  5,333
              Other                   643
                                      227,650

SOURCE Sealy Corporation

Website: http://www.sealy.com
Contact: Mark D. Boehmer, VP & Treasurer, Sealy Corporation, +1-336-862-8705