Net sales for the fiscal quarter ended May 28, 2006 increased 5.9% to $376.7 million from $355.9 million for the comparable period a year earlier. Domestic net sales increased 2.5% to $291.5 million as average unit selling price improved 9.0% and unit volume declined 5.9%. International net sales increased $13.6 million or 19.0% (17.4% on a constant currency basis) to $85.2 million on unit volume increases of 12.2% and average unit selling price improvement of 6.0%.

Second quarter gross profit was $168.6 million, or 44.7% of sales, versus $157.1 million, or 44.1% of sales, for the comparable period a year earlier. This increase was due primarily to improvements in Sealy's international operations, domestic manufacturing efficiency and sales mix, as its luxury products, which retail above $1,000, continued to outpace sales of other products. Adjusted EBITDA(1) for the quarter increased to $56.9 million versus $56.0 million for the comparable period a year earlier.

Net income was $0.1 million, or $0.00 per diluted share, versus $6.4 million for the comparable period a year ago. Second quarter 2006 operating results included pretax costs of $34.2 million, or $21.0 million after tax or $0.24 per diluted share, related to the Company's initial public offering ("IPO") and related debt repayment. Second quarter results also include $6.4 million of incremental cost related to the launch of Sealy's new products and $1.5 million of incremental expense for stock options versus the comparable prior year period. As previously disclosed, these incremental costs are expected to total approximately $15 million to $20 million in 2006. Second quarter 2005 operating results included pretax costs of $6.2 million, or $3.7 million after tax, related to debt refinancing.

"We are pleased with our results for the quarter and the progress we have made on our new product introductions. The Stearns & Foster roll-out is complete and approximately half of the new Posturepedic product has been rolled out," said David J. McIlquham, Sealy's Chairman and Chief Executive Officer. "As we have previously communicated, product upgrade cycles typically impact unit volumes in the short term as our retail partners transition the beds on their selling floors. Over the long term, such new product innovation is an important driver of our growth. This process is expected to last until the beginning of the fourth quarter domestically and is already complete in some of our international businesses that introduced major new lines in the first quarter of 2006."

Mr. McIlquham continued, "Along with ongoing strong demand in our international markets, we are focused on driving domestic unit volume through new product introductions and targeted promotions during the key summer months. We firmly believe that the strength of our brands, our position as the market share leader in the industry, combined with continued operating improvements, position Sealy to increase its annual cash flow and profitability consistently over the long term."

Net sales for the six months ended May 28, 2006 increased 8.0% to $772.4 million from $714.9 million for the comparable period a year earlier. Gross profit was $345.3 million, or 44.7% of sales, versus $316.2 million, or 44.2% of sales, for the comparable period a year earlier. Adjusted EBITDA was $120.9 million versus $115.7 million for the comparable period a year earlier. Net income was $23.1 million, versus net income of $27.1 million for the comparable period a year ago. Six month results include $14.9 million of incremental cost related to the launch of Sealy's new products and $1.8 million of incremental expense for stock options versus the comparable prior year.

As of May 28, 2006, Sealy's cash and cash equivalent balance was $24.2 million versus $25.0 million at the comparable time last year. The Company had total debt of $818.0 million at May 28, 2006, compared to total debt of $1,033.8 million as of May 29, 2005.

As previously announced, the Company's Board of Directors has authorized a quarterly cash dividend of $0.075 per common share. The dividend is payable on August 1, 2006, to common stockholders of record on July 14, 2006.

Conference Call

The Company will host a conference call and audio webcast with investors, analysts and other interested parties today at 5:00 P.M. Eastern time. The live call can be accessed by dialing (800) 289-0529 or for international participants (913) 981-5523. Participants should register at least 15 minutes prior to the commencement of the call. Additionally, a live audio webcast will be available to interested parties at http://www.sealy.com under the Investor Relations section. Participants should allow at least 15 minutes prior to the commencement of the call to register, download and install necessary audio software.

About Sealy

Sealy is the largest bedding manufacturer in the world with sales of nearly $1.5 billion in 2005. The company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), Stearns & Foster(R), and Bassett(R) brands. Sealy has the largest market share and highest consumer awareness of any bedding brand in North America. Domestically, Sealy has 20 plants and sells its products to 2,900 customers with more than 7,000 retail outlets. Sealy is also a leading supplier to the hospitality industry. For more information, please visit http://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, and fluctuations in demand. Please refer to the Company's Securities and Exchange Commission filings for further information.

(1) Please see the attached tables below for a reconciliation of Adjusted EBITDA to net income and cash flow from operations.

SEALY CORPORATION

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Quarter Ended

May 28, 2006 May 29, 2005

Net sales $376,712 $355,890

Cost of goods sold 208,136 198,777

Gross Profit 168,576 157,113

Selling, general and administrative expenses 123,111 110,465

Expenses associated with initial public

offering of common stock 28,510 -

Amortization of intangibles 133 112

Royalty income, net of royalty expense (3,706) (3,716)

Income from operations 20,528 50,252

Interest expense 17,893 20,378

Debt extinguishment and refinancing expenses 5,295 6,248

Other income, net (379) (65)

Income (loss) before income tax expense (benefit) (2,281) 23,691

Income tax expense (benefit) (2,407) 17,270

Net income $126 $6,421

Earnings per common share - Basic $- $0.09

Earnings per common share - Diluted $- $0.09

Weighted average number of common

shares outstanding:

Basic 82,065 70,323

Diluted 88,440 75,054

SEALY CORPORATION

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Six Months Ended

May 28, 2006 May 29, 2005

Net sales $772,447 $714,913

Cost of goods sold 427,174 398,750

Gross Profit 345,273 316,163

Selling, general and administrative expenses 246,715 218,796

Expenses associated with initial public

offering of common stock 28,510 -

Amortization of intangibles 255 287

Royalty income, net of royalty expense (7,395) (6,344)

Income from operations 77,188 103,424

Interest expense 36,629 40,105

Debt extinguishment and refinancing expenses 5,295 6,248

Other income, net (566) (158)

Income before income tax expense 35,830 57,229

Income tax expense 12,445 30,174

Income before cumulative effect of a change

in accounting principle 23,385 27,055

Cumulative effect on prior years

(to November 28, 2005) of the adoption

of FASB Interpretation No. 47, net of

related tax benefit of $191 287 -

Net income $23,098 $27,055

Earnings per common share - Basic

Income before cumulative effect of a change

in accounting principle $0.30 $0.38

Cumulative effect of a change in accounting

principle - -

Earnings per common share - Basic $0.30 $0.38

Earnings per common share - Diluted

Income before cumulative effect of a change

in accounting principle $0.28 $0.35

Cumulative effect of a change in accounting

principle - -

Earnings per common share - Diluted $0.28 $0.35

Weighted average number of common shares

outstanding:

Basic 76,273 70,285

Diluted 82,458 77,848

SEALY CORPORATION

Condensed Consolidated Balance Sheets

(in thousands)

May 28, November 27, May 29,

2006 2005 2005

(Unaudited) (Unaudited)

Assets

Current assets:

Cash and cash equivalents $24,207 $36,554 $25,038

Accounts receivable, net of

allowances for bad debts,

cash discounts and returns 184,096 175,414 185,440

Inventories 67,827 60,141 56,278

Assets held for sale 1,405 1,405 4,270

Prepaid expenses and other

current assets 21,676 14,320 11,636

Deferred income taxes 16,583 16,555 13,201

315,794 304,389 295,863

Property, plant and

equipment-at cost 346,450 328,935 319,683

Less: accumulated depreciation (171,110) (160,958) (152,720)

175,340 167,977 166,963

Other assets:

Goodwill 388,286 384,646 384,240

Other intangibles 4,508 4,559 4,470

Debt issuance costs, net,

and other assets 28,849 33,116 36,211

421,643 422,321 424,921

$912,777 $894,687 $887,747

Liabilities and Stockholders' Deficit

Current liabilities:

Current portion of long-term

obligations $21,955 $12,769 $20,676

Accounts payable 108,920 119,558 103,558

Accrued incentives and advertising 31,351 37,958 32,525

Accrued compensation 30,390 44,138 32,511

Accrued interest 16,809 18,414 18,548

Other accrued expenses 39,381 47,429 41,869

248,806 280,266 249,687

Long-term obligations, net of

current portion 796,092 948,975 1,013,135

Other noncurrent liabilities 45,314 43,659 43,355

Deferred income taxes 13,644 12,356 15,652

Commitments and contingencies - - -

Common stock and options subject to

redemption 21,310 21,654 -

Stockholders' deficit:

Common stock, $0.01 par value;

Authorized 200,000 shares; Issued

and outstanding: 2006 - 90,836;

2005 - 70,480 (including shares

classified above as subject to

redemption: 2006 - 263; 2005 - 263) 905 702 926

Additional paid-in capital 662,799 365,900 386,702

Accumulated deficit (883,365) (781,463) (822,887)

Accumulated other comprehensive

income 7,272 2,638 1,177

(212,389) (412,223) (434,082)

$912,777 $894,687 $887,747

SEALY CORPORATION

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Six Months Ended

May 28, 2006 May 29, 2005

Cash flows from operating activities:

Net income $23,098 $27,055

Adjustments to reconcile net income to

net cash provided by (used in) operating

activities:

Depreciation and amortization 10,994 10,719

Deferred income taxes 975 17,344

Non-cash interest expense:

Senior Subordinated PIK Notes 3,348 3,886

Amortization of debt issuance

costs and other 756 2,084

Stock-based compensation 2,074 251

(Gain) loss on sale of assets 564 (53)

Write-off of debt issuance costs

related to debt extinguishments 1,725 3,384

Cumulative effect of accounting change 287 -

Other, net (177) 314

Changes in operating assets and liabilities:

Accounts receivable (8,682) (12,611)

Inventories (7,686) (4,355)

Prepaid expenses and other current assets (6,644) 4,294

Accounts payable (12,114) 6,992

Accrued expenses (29,140) (22,387)

Other liabilities 778 (2,182)

Net cash provided by (used in) operating activities (19,844) 34,735

Cash flows from investing activities:

Purchase of property, plant and equipment, net (16,047) (14,807)

Proceeds from the sale of property, plant

and equipment 464 4,648

Net cash used in investing activities (15,583) (10,159)

Cash flows from financing activities:

Proceeds from initial public offering of

common stock, net of underwriting discount

and other direct costs of $24,489 295,511 -

Cash dividend (125,000) -

Repayments of long-term obligations,

including premiums paid of $2,703 in 2006 (139,317) (35,000)

Borrowings under revolving credit facilities 108,718 178,122

Repayments of amounts borrowed under

revolving credit facilities (121,576) (172,861)

Other borrowings 2,594 8,149

Exercise of employee stock options,

including related excess tax benefits 1,814 252

Other - (251)

Net cash provided by (used in)

financing activities 22,744 (21,589)

Effect of exchange rate changes on cash 336 (728)

Change in cash and cash equivalents (12,347) 2,259

Cash and cash equivalents:

Beginning of period 36,554 22,779

End of period $24,207 $25,038

Our long-term obligations contain various financial tests and covenants. Our senior secured credit facilities require us to meet a minimum interest coverage ratio and a maximum leverage ratio. The indenture governing our new senior subordinated notes also requires us to meet a fixed charge coverage ratio in order to incur additional indebtedness, subject to certain exceptions. We are currently in compliance with all debt covenants. The specific covenants and related definitions can be found in the applicable debt agreements, each of which we have previously filed with the Securities and Exchange Commission.

The covenants contained in our senior secured credit facilities are based on what we refer to herein as "Adjusted EBITDA". In the senior secured credit facilities, EBITDA is defined as net income plus interest, taxes, depreciation and amortization and Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments permitted in calculating covenant compliance as discussed above. Adjusted EBITDA is presented herein as it is a material component of these covenants. Non-compliance with such covenants could result in the requirement to immediately repay all amounts outstanding under such facilities. While the determination of "unusual items" is subject to interpretation and requires judgment, we believe the adjustments listed below are in accordance with the covenants.

EBITDA and Adjusted EBITDA are not recognized terms under GAAP and do not purport to be alternatives to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Additionally, they are not intended to be measures of free cash flow for management's discretionary use, as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies.

The following table sets forth a reconciliation of net income to EBITDA and EBITDA to Adjusted EBITDA for the three and six months ended May 28, 2006 and May 29, 2005:

Three months ended Six months ended

May 28, May 29, May 28, May 29,

2006 2005 2006 2005

Income before cumulative effect of

change in accounting principle $0.1 $6.4 $23.4 $27.1

Interest cost 17.9 20.4 36.6 40.1

Income taxes (2.4) 17.3 12.4 30.2

Depreciation and amortization 5.3 5.2 11.0 10.7

EBITDA $20.9 $49.3 $83.4 $108.1

Management fees to KKR 0.2 0.5 0.8 1.0

Unusual and nonrecurring losses:

IPO expenses 28.5 - 28.5 -