Sealy (ZZ) 8-K Kohlberg Kravis Roberts & Co. Completes

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Exhibit 99.2

	Contact:	James B. Hirshorn Executive VP & CFO (336) 861-3724
FOR IMMEDIATE RELEASE

SEALY REPORTS RECORD FIRST QUARTER SALES AND PROFITABILITY

HIGH POINT, North Carolina (April 14, 2004)—Sealy Corporation, the world's largest manufacturer of bedding products, today announced results for the fiscal first quarter ending February 29, 2004.

For the quarter, Sealy reported sales of $318.2 million, an increase of 10.4% from $288.3 million for the same period a year ago. Net income was $11.3 million, compared with $9.1 million a year earlier, an increase of 24.2%. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $42.6 million, compared with $38.2 million a year earlier. Adjusted EBITDA was $46.1 million, compared with $40.3 million for the same period a year ago. EBITDA and Adjusted EBITDA were both positively impacted by the continuing success of the new products introduced in the second half of 2003 and in the first quarter of 2004.

"We are very pleased with our financial results and the continued progress we have made against our top initiatives during the first quarter of 2004," said David J. McIlquham, Sealy's Chairman and Chief Executive Officer. "The continued strong momentum with our top and bottom line results was driven by the success of our Unicased® Posturepedic product line in the U.S. and strong operating results from our international business unit. We have seen good unit and AUSP gains from our new Posturepedic line since it was launched last year, and are off to a strong start with our new TripLCased® Stearns & Foster product line. We expect to build on our momentum as we complete the roll-out of Stearns & Foster in the U.S. and Unicased® Posturepedic in Canada and Mexico over the next few months."

Sealy is the largest bedding manufacturer in the world with sales of $1.2 billion in 2003. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy ®, Sealy Posturepedic ®, Stearns & Foster ®, and Bassett ® brands. Sealy has the largest market share and highest consumer awareness of any bedding brand in North America. Sealy employs more than 6,000 individuals, has 31 plants, and sells its products to 3,200 customers with more than 7,400 retail outlets worldwide. 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, and fluctuations in demand. Please refer to the Company's Securities and Exchange Commission filings for further information.

SEALY CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)

		February 29, 2004			November 30, 2003 *
		(Unaudited)
Assets
Current assets:
	Cash and cash equivalents	$	77,841		$	101,100
	Accounts receivable — Non-affiliates, net		181,130			160,984
	Accounts receivable — Affiliates, net		1,967			1,758
	Inventories		50,117			49,413
	Prepaid expenses, deferred taxes and other current assets		41,942			43,404
			352,997			356,659
Property, plant and equipment—at cost			305,932			299,718
Less: accumulated depreciation			(134,318	)		(128,893	)
			171,614			170,825
Other assets:
	Goodwill		382,885			381,891
	Other intangibles, net		5,123			5,364
	Long-term notes receivable		13,573			13,323
	Debt issuance costs, net, and other assets		30,666			31,004
			432,247			431,582
		$	956,858		$	959,066
Liabilities and Stockholders' (Deficit)
Current liabilities:
	Current portion of long-term obligations	$	71,129		$	47,623
	Accounts payable		90,647			85,478
	Accrued incentives and advertising		33,562			35,546
	Accrued compensation		17,479			27,583
	Accrued interest		12,234			23,565
	Other accrued expenses		44,665			44,839
			269,716			264,634
Long-term obligations, net			676,805			699,630
Other noncurrent liabilities			49,241			48,851
Deferred income taxes			22,946			22,113
Stockholders' (deficit) equity:
	Common stock		326			324
	Additional paid-in capital		146,552			146,240
	Accumulated deficit		(190,236	)		(201,497	)
	Accumulated other comprehensive loss		(4,920	)		(8,165	)
	Common stock held in treasury, at cost		(13,572	)		(13,064	)
			(61,850	)		(76,162	)
		$	956,858		$	959,066

*

Condensed from audited financial statements.

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SEALY CORPORATION
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

				Quarter Ended
				February 29, 2004			March 2, 2003
Net sales—Non-affiliates				$	312,609		$	277,403
Net sales—Affiliates					5,589			10,908
	Total net sales				318,198			288,311
Cost of goods sold—Non-affiliates					180,393			159,465
Cost of goods sold—Affiliates					3,208			5,890
		Total cost of goods sold			183,601			165,355
		Gross Profit			134,597			122,956
Selling, general and administrative					101,626			92,657
Stock based compensation					—			540
Amortization of intangibles					294			260
Royalty income, net of royalty expense					(3,384	)		(2,713	)
			Income from operations		36,061			32,212
Interest expense					16,944			17,077
Other income					(434	)		(296	)
Income before income tax expense					19,551			15,431
Income tax expense					8,290			6,338
	Net income			$	11,261		$	9,093

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SEALY CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

			Quarter Ended
			February 29, 2004			March 2, 2003
Net cash used in operating activities			$	(18,543	)	$	(15,712	)
Cash flows from investing activities:
	Purchase of property, plant and equipment, net			(5,343	)		(2,316	)
		Net cash used in investing activities		(5,343	)		(2,316	)
Cash flows from financing activities:
	Treasury stock repurchase			(508	)		—
	Proceeds from long-term obligations, net			854			6,912
	Equity issuances			314			87
	Debt issuance costs			(33	)		(1,161	)
		Net cash provided by financing activities		627			5,838
Change in cash and cash equivalents				(23,259	)		(12,190	)
Cash and cash equivalents:
	Beginning of period			101,100			27,443
	End of period		$	77,841		$	15,253

        The Company's long-term obligations contain various financial tests and covenants. The Company was in compliance with its covenants associated with the previous debt agreements as of the quarter ended February 29, 2004. The new senior credit facilities associated with the previously announced merger with affiliates of Kohlberg Kravis Roberts & Co., L.P. also contain various financial tests and covenants. The most restrictive covenants relate to ratios of adjusted EBITDA to interest coverage and total debt to adjusted EBITDA all as defined in the agreements. The specific ratio requirements can be found in the credit agreements previously filed with the Securities and Exchange Commission. The Company expects to meet such covenants as they relate to the new senior credit facilities in 2004. Adjusted EBITDA (as defined in the senior and revolving credit agreements) differs from the term "EBITDA" as it is commonly used. In addition to adjusting net income to exclude income taxes, interest expense and depreciation and amortization, adjusted EBITDA (as defined in the senior and revolving credit agreements) also adjusts net income by excluding items or expenses not typically excluded in the calculation of "EBITDA." Adjusted EBITDA is presented herein as it is a material component of the covenants contained within the aforementioned credit agreements. Non-compliance with such covenants could result in the requirement to immediately repay all amounts outstanding under such agreements. While the determination of "unusual and nonrecurring losses" is subject to interpretation and requires judgment, the Company believes the items listed below are in accordance with the stated credit agreements. EBITDA does not represent net income or cash flow from operations as those terms are defined by generally accepted accounting principles ("GAAP") and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. For a reconciliation of EBITDA to cash flows from operations, please refer to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 13, 2004.

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        The following is a calculation of the Company's adjusted EBITDA for the three months ended February 29, 2004 and March 2, 2003:

			Three Months Ended February 29, 2004			Three Months Ended March 2, 2003
Net income			$	11.3		$	9.1
	Interest			16.9			17.1
	Income Taxes			8.3			6.3
	Depreciation & Amortization			6.1			5.7
EBITDA				42.6			38.2
Adjustments to EBITDA:
	Stock based compensation			—			0.5
	Bain management fees			0.5			0.5
	Unusual and nonrecurring losses:
		Post-closing residual plant costs		0.3			1.0
		Consulting fees associated with strategic initiatives		—			0.5
		Effect of price rollback programs due to introduction of new "Unicase" product		2.5			(1.6	)
		Various other new product introduction costs		0.6			(0.1	)
		Unusual relocation costs		—			0.4
		Other (various)		(0.4	)		0.9
Adjusted EBITDA			$	46.1		$	40.3

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Exhibit 99.2