Mail Stop 7010
July 29, 2005
Via U.S. mail and facsimile
Mr. Kenneth L. Walker
General Counsel
Sealy Corporation
One Office Parkway
Trinity, NC 27370
Re: Sealy Corporation
Registration Statement on Form S-1
Filed June 30, 2005
File No. 333-126280
Sealy Mattress Corporation
Form 10-K for the fiscal year ended November 28, 2004
Filed February 28, 2005
File No. 333-117081-27
Dear Mr. Walker:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents in
response
to these comments. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation. In some
of
our comments, we may ask you to provide us with information so we
may
better understand your disclosure. After reviewing this
information,
we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any
questions you may have about our comments or any other aspect of
our
review. Feel free to call us at the telephone numbers listed at
the
end of this letter.
Sealy Corporation Registration Statement on Form S-1
General
1. Please be advised that we may have additional comments on your
registration statement after you file a pre-effective amendment
containing pricing-related information. Since this information
affects a number of disclosure items, you should allow a
reasonable
time for our review prior to requesting acceleration. In the
course
of our review we may raise issues relating to matters we had not
previously commented upon. In addition, please be advised that
you
may not circulate copies of your prospectus until you have
included an
estimated price range and all other information required by the
federal securities laws, except information you may exclude in
reliance upon Rule 430A of Regulation C.
2. Please provide us with copies of any artwork or other graphics
you
intend to use in your prospectus. Please be advised that we may
have
comments and you may want to consider waiting for our comments
before
printing and circulating these materials.
3. In the forepart of your registration statement, please discuss
in
reasonable detail each of the following matters:
* The KKR acquisition of your company, including (i) the parties
to
the acquisition and their relationship to your company, (ii) the
amount and nature of the consideration, (iii) the reasons for the
acquisition, (iv) the sources of the funds used to finance the
acquisition, (v) the changes to your company`s operations and
financial condition resulting from the acquisition, (vi) the tax
consequences of the acquisition and (vii) the continuity of your
company`s management after the acquisition.
* The reasons that your company is planning a public offering
after
being taken private in July 2004. The discussion should address
the
material considerations that led to the decision to take your
company
private as well as the material considerations in deciding to
engage
in this offering.
* The manner in which this offering will benefit KKR and the other
security holders, including members of management, that
participated
in the KKR acquisition. The benefits should be quantified to the
extent practicable by each principal category of benefit. For
example, what is the estimated value of the securities to be sold
in
this offering or retained in comparison to the value of those
securities in the KKR acquisition?
Market and Industry Data, page ii
4. Please relocate this section to a more appropriate location in
your
prospectus as the prospectus summary should immediately follow
your
prospectus cover page or the table of contents, as applicable.
Summary, page 1
5. Please revise to include a more balanced description of your
business. For example, please disclose your leveraged position.
6. The disclosure set forth in this section is very detailed and
lengthy and provides too much information for summary disclosure.
In
this regard, we note that your disclosure includes detailed
descriptions of your business, competitive strengths and growth
strategy that are substantially similar to disclosures included in
your Business section. This detailed information is better suited
for
the body of your prospectus. Your summary section should provide
a
brief overview of the most important aspects of your business and
this
offering. If you believe some of the disclosure is necessary,
reduce
the disclosure to a bullet point presentation, with one sentence
per
bullet point. Please revise accordingly.
7. Please delete the second introductory paragraph as this
information
is clear from the context. In addition, please use a single term
throughout your prospectus for references to your subsidiary.
Finally, please avoid the use of any defined terms for which the
meaning is not clear from the context as investors should not have
to
learn a new vocabulary. See, for example and without limitation,
the
defined terms "SMC" and "ISPA."
8. Please disclose the basis for all of your assertions about your
industry or competitive position within your industry. For
example,
in the first paragraph on page 3 you state that "[t]hese factors
help
to create compelling economics for customers as returns on
investment
are superior to many other home furnishing categories." If you
funded
or were otherwise affiliated with any of the studies or reports
you
cite, please disclose this. Otherwise, please confirm that these
sources are widely available to the public. If sources are not
publicly available, either file consents, or explain why you are
not
required to do so under Rule 436 of Regulation C and Section 7 of
the
Securities Act. If you do not have appropriate independent
support
for a statement, please revise the language to make clear that
this is
your belief based on your experience in the industry, if true.
This
comment is also applicable to any unsupported claims in the
Business
section of the filing. We may have additional comments after we
review your response.
9. Please revise your summary and elsewhere throughout your
prospectus
to comply with plain English principles. For example, you should
refrain from using embedded lists of information. Please break
the
information into separate paragraphs or use a bullet point list.
You
should also use one or more descriptive subheadings to indicate
the
nature of the information that follows.
The Offering, page 7
10. Please quantify the portion of the proceeds of this offering
that
will be received by insiders, including KKR and other affiliates.
In
addition, please identify the number of directors affiliated with
the
insiders and disclose whether they voted to approve this offering.
General Information About This Prospectus, page 8
11. Please revise this section to eliminate terms and phrases that
do
little more than market KKR and its business, including terms such
as
"one of the oldest and most experienced private equity firms."
Risk Factors, page 13
12. Please delete the first and third sentences of the second
introductory paragraph to this section. You must disclose all
risks
you believe are material at this time.
13. The subheadings in this section should clearly and succinctly
convey the actual risk to an investor and not merely state a fact
about your business or describe a generic effect on your company.
Please carefully review each subheading with this comment in mind
and
make revisions as appropriate. See, for example and without
limitation, risk factors one, two, four, six, seven, 14, 16, 17,
27
and 29.
14. To the extent possible, please avoid the generic conclusion
you
make in certain of your risk factors that the risk discussed could
adversely affect your business, financial condition and / or
results
of operations. See, for example and without limitation, risk
factors
one, four, five, seven, eight, nine, 10, 14, 15, 17, 18 and 28.
Instead, replace the language with specific disclosure of how your
business, results of operations and / or financial condition would
be
affected.
15. Please revise your risk factors to remove the phrases "we
cannot
assure," "we cannot provide assurance" and "there can be no
assurance." The actual risk is that the event will occur, not
your
inability to prevent it. See, for example and without limitation,
risk factors six, nine, 14, 16, 17 and 18.
16. Item 503(c) of Regulation S-K states that issuers should not
"present risk factors that could apply to any issuer or any
offering."
Certain of your risk factors could apply to most issuers. See,
for
example and without limitation, risk factors five, eight, nine,
17,
22, 23 and 28. Please explain how these risk factors specifically
apply to your company and / or this offering or delete them.
17. In those risk factors where you disclose a risk related to
liabilities or compliance costs, please revise to quantify your
exposure, to the extent practicable. See, for example and without
limitation, risk factors eight, 14, 15, 16 and 17.
18. Please add risk factors addressing the significant amount of
proceeds that will be received by insiders and the effects of a
rating
downgrade of your company or its debt securities.
Our new product launches may not be successful, page 13
19. The disclosure in this risk factor does not discuss the actual
risks to an investor associated with new product launches, but
rather
generically refers to a number of risks inherent in new product
line
introductions. Please disclose and discuss the material risks to
investors associated with new product line introductions.
We have risks associated with our international operations, page
15
20. We note your disclosure concerning your business with 13
Middle
Eastern countries. Please tell us supplementally the names of the
countries in which you conduct business. We may have further
comment
based on your response.
We have a substantial amount of indebtedness, which may adversely
affect..., page 15
21. Please disclose the amount of your annual debt service payment
obligations. In addition, if the interest rate on your variable
rate
debt could materially affect the obligations, please disclose how
much
it will increase with a 1% increase.
KKR controls us and may have conflicts of interest with us or you
in
the future, page 22
22. The risk described in the fourth and fifth sentences of this
risk
factor appears to be a material risk that that should be assigned
its
own descriptive subheading. Please revise accordingly.
Compliance with Section 404 of the Sarbanes-Oxley Act and
other...,
page 22
23. Please describe the risks to investors associated with the
deficiencies referenced in the fifth sentence of this risk factor.
Dilution, page 27
24. We note the disclosure in the last paragraph of this section.
Your comparative table should include shares subject to
outstanding
options that are held by your officers, directors and affiliated
persons. This comparison includes shares that these persons have
a
right to acquire, as well as shares they already own. See Item
506 of
Regulation S-K.
Unaudited Pro Forma Condensed Consolidated Financial Information,
page
28
25. You disclosed in your pro forma statements of operations
reductions in interest expense due to extinguishments of existing
debt
and additions to interest expense due to new debt. Please expand
your
disclosure for each adjustment presented, to disclose the amount
of
each loan being repaid or issued multiplied by its interest rate
and
arrive at the amount of interest expense to be deducted or added
in
the pro forma adjustment. For debt that incurs interest at a
variable
rate, you should use the average variable rate that this debt
would
have incurred over the appropriate historical period for which you
are
giving pro forma effect. Please also disclose the average
interest
rate used for each period and the indexed rate (LIBOR+x% or prime
+x%)
of the new debt. Please also include in your disclosure any
assumptions you made in computing the above interest calculations.
26. Please expand your disclosures related to your pro forma
statements of operations to include a footnote that discusses the
components of and assumptions used in computing your pro forma tax
expense (benefit) for each period presented.
27. You disclosed pro forma basic and diluted weighted average
number
of common shares outstanding in your pro forma statements of
operations. Please expand your disclosure to include a footnote
that
reconciles your historic basic and diluted weighted average number
of
common shares outstanding to the pro forma basic and diluted
weighted
average number of common shares outstanding, as presented in your
pro
forma statements of operations for each period presented. Please
also
include in your footnote any assumptions you used in these pro
forma
computations.
Selected Historical Financial Data, page 37
28. Please expand your disclosure to include information relating
to
the cash dividends declared per common share. Refer to Item 301
of
Regulation S-K.
Management`s Discussion and Analysis of Financial Condition and
Results..., page 41
Critical Accounting Estimates, page 42
Cooperative Advertising, Rebate and Other Promotional Programs,
page
42
29. Your disclosure includes the cost of the programs that were
recorded as a reduction of sales and the cost for those recorded
as
selling, general and administrative expense in 2004. Please
expand
your disclosure here and in the footnotes to your financial
statements
to discuss the type of arrangements for which you have recorded a
reduction of sales and those that you recorded as selling, general
and
administrative expense. Please also include the costs recorded in
each of these line items for fiscal 2003 and 2002.
Results of Operations, page 45
30. You have disclosed various components, which have contributed
to
increases and decreases within your statements of operations line
items, including but not limited to, net sales and cost of goods
sold.
Some of the components you have cited include the following:
* higher volume and improved mix;
* increased material costs;
* new products sold; and
* roll-out of new product lines.
Please expand your disclosure to quantify the effects each of
these
components had on the increases and decreases within the income
statement line items, including expenses that offset one another.
Liquidity and Capital Resources, page 51
31. We note the disclosure in the second sentence of the first
paragraph on page 52 that your resources are sufficient to fund
your
liquidity needs throughout fiscal 2005. This section should also
discuss whether your resources are sufficient to fund your
liquidity
needs on a long-term basis. Please revise accordingly. See
Instruction 5 to Item 303(a) of Regulation S-K.
32. You disclosed on page 13 that you expect to incur increased
costs
in the near term associated with the introduction of the new
product
lines related to your Sealy Posturepedic and TrueForm brands and
the
training of your employees in the new manufacturing processes. If
material, please expand your disclosure to discuss the impact this
may
have on your liquidity and results of operations.
Debt Covenants, page 54
33. Please revise the fifth sentence of the first paragraph of
this
section to disclose the specific covenants and related
definitions.
You may not incorporate this information by reference. See Rule
411
of Regulation C.
34. Please confirm that you are currently in compliance with your
debt
covenants or revise, as necessary. In addition, please expand
your
disclosure to indicate whether or not you were in compliance your
debt
covenants during the years ended November 28, 2004 and November
30,
2003.
Contractual Obligations, Commercial Commitments and Off-Balance
Sheet..., page 56
35. Please discuss your off-balance sheet arrangements in a
separately
captioned section. See Item 303(a)(4) of Regulation S-K.
36. Please update the table as of a recent date to reflect your
April
2005 refinancing. Alternatively, you may include a discussion in
this
section regarding the impact of your April 2005 refinancing on
your
contractual obligations. See Instruction 7 to Item 303(b).
Business, page 61
37. Please apply our comments in this section to your Prospectus
Summary section, to the extent applicable.
38. Please disclose the information required by Item 101(a) of
Regulation S-K.
Recent Results, page 61
39. Please balance the disclosure in this section by discussing
your
financial results between fiscal 2003 and 2002. It appears that
net
sales were essentially flat and that domestic sales declined.
Products, page 61
40. We note the statistic cited in the seventh sentence of the
first
paragraph on page 62. It does not appear that there is a direct
correlation between this statistic and the growth in your industry
generally, especially in light of the overall industry growth
referenced in the immediately preceding sentence. Please either
delete this statistic or explain the correlation.
41. We note your disclosure in the last sentence of this section.
Please discuss these plans and new products in greater detail.
Also
explain what you mean by "placements." Please also comply with
this
comment in the fifth paragraph on page 68.
Other Company Information, page 70
42. Please disclose the information required by Items 101(c)(iv),
(c)(x) and (c)(xi) of Regulation S-K.
Licensing, page 70
43. Please briefly discuss the material terms of your licensing
agreements.
Management, page 74
Directors and Executive Officers, page 74
44. Please revise this section to present your executive officers
and
directors as of the completion of this offering, rather than as of
the
end of your second fiscal quarter.
45. Please confirm to us that you have disclosed all information
required by Item 401(e)(2) of Regulation S-K.
46. Please briefly describe Mr. Johnston`s business experience
during
the past five years. Please also briefly describe the nature of
the
responsibilities performed by Messrs. Brown, Carroll and Stuart in
their employment positions. See Item 401(e)(1) of Regulation S-K.
Board of Directors, page 76
Composition of the Board of Directors, page 76
47. Please identify your independent directors.
48. Please discuss Bain Capital`s right to designate a member of
your
board. In this regard, we note the disclosure in the fifth
paragraph
on page 85.
Option Grants in Last Fiscal Year, page 79
Aggregated Options/SAR Exercises in Last Fiscal Year and FY-End
Values, page 79
49. We note that you have no existing trading market for your
common
stock. With respect to calculating the potential realizable
values
and option values in the two tables, please refer to Section IV.C.
of
SEC Release 33-7009. The release states that you may use the mid-
point of the offering price in calculating these values in lieu of
using the fair market value on the dates of grant or as of the end
of
the applicable fiscal year end. Please also explain in reasonable
detail the valuation method you elect to use in a footnote to each
table.
Compensation Pursuant to Plans and Other Arrangements, page 80
50. Please disclose the information required by Item 402(e) of
Regulation S-K. In this regard, we note the disclosure set forth
in
Note 13 to your annual financial statements and Note 11 to your
quarterly financial statements.
Rollover and New Put Options - 2004 Stock Option Plan, page 80
51. Please disclose the number of shares underlying options
granted
under the 2004 option plan and the number of shares underlying
Rollover Options.
Executive Employment Agreements, page 80
52. Please disclose the material terms of your employment
agreements.
It appears that the employment agreements contain provisions
regarding
termination and severance, as well certain non-compete and
confidentiality covenants.
Sealy Corporation 1998 Stock Option Plan, page 80
53. Please disclose the number of shares underlying options you
have
granted under the 1998 option plan. Please also clarify whether
additional shares are reserved for issuance under the 1998 option
plan.
Principal and Selling Stockholders, page 83
54. Please disclose how the selling security holders received the
shares to be offered for resale and any material relationship that
the
selling security holders have had with your company over the last
three years. Alternatively, please provide cross references to
this
information. See Item 507 of Regulation S-K.
55. Please disclose the natural persons with dispositive voting or
investment control of each selling security holder that is not a
natural person.
56. Your calculation of beneficial ownership is dated as of May
29,
2005. You are required to calculate beneficial ownership as of
the
most recent practicable date. Please revise accordingly. See
Item
403 of Regulation S-K.
Certain Relationships and Related Party Transactions, page 85
57. Please state whether you believe the terms of your
arrangements
with KKR and Capstone Consulting LLC are on terms at least as
favorable to your company as you would expect to negotiate with
unrelated third parties.
Management Services Agreement, page 86
58. Please clarify the disclosure you are referencing in the cross
reference set forth at the end of this section.
Transactions with Capstone, page 87
59. Please disclose the identity of the board member referenced in
this section and briefly describe the consulting services provided
to
your company by Capstone Consulting LLC. In addition, please
disclose
the amount of fees paid in fiscal 2004. In this regard, we note
the
disclosure in the third sentence of the second paragraph on page
F-39.
Description of Indebtedness, page 88
Senior Secured Credit Facilities, page 88
60. Please disclose the amount outstanding under your credit
facility
as of the most recent practicable date.
Shares Eligible For Future Sale, page 96
61. We note the disclosure in the second paragraph of the section
entitled "Lock-Up Agreements" on page 97. Please disclose the
percentage of both the outstanding and issuable shares of common
stock
that will be subject to lock-up agreements, as well as the
percentage
that will not be subject to lock-up agreements.
62. We note that the representatives of the underwriters may
release
shares from the lock-up agreements in their sole discretion.
Please
briefly describe those factors that the representatives may likely
consider in determining to release shares. In addition, please
discuss whether the representatives have any current intentions to
release shares.
Underwriting, page 101
63. Please identify each member of the underwriting syndicate that
will engage in any electronic offer, sale or distribution of your
common stock and provide us with a description of their
procedures.
If you become aware of any additional members of the syndicate
after
you respond to this comment, please promptly provide us with a
description of their procedures. Please also briefly describe any
electronic distribution in this section.
In responding to this comment, please advise us as to how the
procedures will ensure that the distribution complies with Section
5
of the Securities Act, and whether the procedures have been
reviewed
by the Office of Chief Counsel.
64. Please advise us as to whether you or the underwriters have
any
arrangements with a third party to host or access your preliminary
prospectus on the Internet. If so, please identify the third
party
and website, describe the material terms of the agreement and
provide
us with a copy of the agreement. Please provide us with copies of
all
information concerning you or your prospectus that appeared or
will
appear on this website. If you subsequently enter into any
arrangement, please promptly supplement your response.
65. We note the disclosure in the fifth paragraph on page 103
regarding the directed share program. Please advise us as to how
the
directed share program will work and provide to us copies of any
materials provided to potential purchasers of the reserved shares.
In
addition, please advise us as to how the program procedures will
ensure that the program complies with Section 5 of the Securities
Act.
Financial Statements for the years ended November 29, 2004 and
November 30, 2003
66. Please address the comments below in your financial statements
and
related notes thereto for the period ended February 27, 2005 as
well.
67. Please update your disclosures here and elsewhere in the
filing to
include financial information through May 29, 2005. See Rule 3-12
of
Regulation S-X.
68. Please tell us the facts and circumstances you considered in
concluding the merger with the affiliates of KKR did not
constitute a
change in basis requiring push-down accounting. In your response,
please include the consideration you gave to the role of rollover
stockholders with respect to collaborative groups. Refer to SAB
Topic
5:J and EITF Topic D-97.
Statement of Stockholders` Deficit, page F-7
69. You disclosed on pages 6, F-17, and elsewhere in the document
that
new Class A common stock was issued to KKR for cash and that the
Rollover Stockholders retained their Class A common stock in
proportion to their respective ownership interests. Based on the
information included in your statement of stockholders` equity, it
appears as though the common stock related to the Rollover
Stockholders was cancelled and reissued. Please expand your
disclosures to discuss any significant changes in the terms of the
Class A common stock. Please advise or revise accordingly.
Statements of Cash Flows, page F-8
70. You disclosed on page 52 that in the second quarter of 2004,
you
received $4.6 million of proceeds from the sale of your former
Randolph, Massachusetts facility. Please tell us where this is
classified on your statements of cash flows.
71. Please present cash flows related to the changes in other
assets
separately from those related to the change in other liabilities,
rather than combining them in the other, net line item of your
cash
provided by operating activities section. See SFAS 95.
Notes to Financial Statements for the years ended November 29,
2004
and November 30, 2003
Note 1: Significant Accounting Policies, page F-9
72. You disclosed on page 18 that you hold over 300 worldwide
trademarks, which you believe have significant value. Please
expand
your disclosure to discuss your policies relating to any acquired
trademarks, including, but not limited to the following:
* your accounting policy, including the number of years over which
you
amortize your trademarks;
* the amount recorded at each of the balance sheet dates relating
to
trademarks; and
* the amount and line item that any related amortization was
included
in for each period presented.
73. Please disclose how you account for (a) step rent provisions
and
escalation clauses and (b) capital improvement funding and other
lease
concessions, which may be present in your leases. Paragraph 5.n.
of
SFAS 13, as amended by SFAS 29, discusses how lease payments that
depend on an existing index or rate, such as the consumer price
index
or the prime interest rate, should also be included in your
minimum
lease payments. If, as we assume, they are taken into account in
computing your minimum lease payments and the minimum lease
payments
are recognized on a straight-line basis over the minimum lease
term,
the note should so state. If our assumption is incorrect, please
tell
us how your accounting complies with SFAS 13 and FTB 88-1.
74. You disclosed on page F-11 that you include shipping and
handling
costs associated with the delivery of finished mattress products
to
your customers in selling, general and administrative expenses.
Please disclose the types of expenses that you include in the cost
of
goods sold line item and the other types of expenses that you
include
in the selling, general and administrative expenses line item.
Please
also disclose whether you include inbound freight charges,
purchasing
and receiving costs, inspection costs, warehousing costs, internal
transfer costs, and the other costs of your distribution network
in
the cost of goods sold line item. With the exception of
warehousing
costs, if you currently exclude a portion of these costs from cost
of
goods sold, please disclose:
* in a footnote the line items that these excluded costs are
included
in and the amounts included in each line item for each period
presented; and
* in MD&A that your gross margins may not be comparable to those
of
other entities, since some entities include all of the costs
related
to their distribution network in cost of goods sold and others
like
you exclude a portion of them from gross margin, including them
instead in another line item, such as selling, general and
administrative expenses.
Use of estimates, page F-12
75. You disclosed on page 12 that the line item, other in 2003
contains changes in certain accounting estimates. Please expand
your
disclosures to describe the nature of the changes in accounting
estimates and the corresponding line item and amount recorded for
each
of these changes.
Checks Issued In Excess of Funds on Deposit, page F-13
76. Please expand your disclosure to discuss how you classify the
amount relating to checks issued in excess of funds on deposit in
your
statements of cash flows. If, as we assume, they are taken into
account in computing your net cash used in financing activities,
please expand your note to so state. If our assumption is
incorrect,
please amend your statements of cash flows to properly classify
these
as financing activities. Refer to AICPA Technical Practice Aids
Section 1300.15.
Supply Agreements, page F-13
77. You disclosed that you enter into long-term supply agreements
with
your customers. Please expand your disclosure to discuss the
types of
agreements you enter into and the general terms of these
contracts.
Please include in your disclosure the types of costs you are able
and
unable to pass on to your customers. If the costs you are unable
to
pass along to your customers are significant, please include a
discussion regarding them in your MD&A.
Warranties, page F-15
78. Please expand your disclosure here and in your MD&A to discuss
the
components of your warranty reserve that resulted in a 52%
increase
from fiscal 2003 to 2004, any relevant trend information, and your
expectation of the impact on future liquidity and results of
operations.
79. You disclosed that the warranties you provide to your
customers
range from one to twenty years. Based on the information
presented in
your warranty disclosure, it appears as though the claims you have
deducted from your accrued warranty reserve during each year shown
exceed the ending balance from the prior year. Please provide us
with
a more detailed analysis of the changes in your accrued warranty
reserve, including the following for the fiscal years 2000 through
2004 and for the interim period ended May 29, 2005:
* please provide us with a breakdown of the beginning accrued
warranty
reserve balance, showing separately the portion of the balance
relating to each sales year still under warranty;
* please provide us with the components of your warranty claims
presented in your reconciliation, specifically tell us the amount
recorded and portion of the claims related to sales separately by
each
year still under warranty;
* please breakout the provision portion of your reconciliation to
include the amount that relates to the current year provision and
the
amount recorded as an adjustment to each prior year estimate; and
* please provide us with a breakdown of the ending accrued
warranty
reserve balance, showing separately the portion of the balance
relating to each sales year still under warranty.
Note 4: Stock Based Compensation, page F-19
80. We read your correspondence filed on July 19, 2005 relating to
the
methodology you used in determined the fair value of the issuances
of
your common stock and stock options. Please provide to us a more
detailed analysis of the facts and circumstances you considered in
determining the fair value of the issuances of your common stock
and
stock options for the following dates:
* January 11, 2005;
* January 12, 2005;
* April 6, 2005; and
* any additional issuances during fiscal year 2005.
In your analysis please include factors you considered in
determining
the fair value of the issuances, including, but not limited to the
following:
* any changes in your results of operations;
* material agreements entered into; and
* significant milestones achieved.
In addition to the above, please also provide to us more
clarification
on how you determined the following to be viable measures for
determining the fair value of the issuances:
* adjusted EBITDA;
* the multiple of x9; and
* a 20% discount.
We may have further comments after you determine the price in
which
you intend to sell your common stock in this offering.
81. Please expand your disclosure to include the assumptions you
used
in calculating the value of the put options for each of the
periods
presented. Please also include in your disclosure an explanation
for
any significant changes in assumptions.
Note 12: Income Taxes, page F-30
82. You disclosed that the expiration of your net operating loss
and
tax credit benefits will commence in fiscal 2005 and will continue
to
expire through 2024 if unused. Please expand your disclosure to
include the amounts that you anticipate will expire over each of
the
next five years and any remaining amounts thereafter in total.
Refer
to paragraph 48 of SFAS 109.
Note 20: Earnings per Share, page F-39
83. For each of the periods presented, please expand your
disclosure
to include separately by type of security the number of securities
that were not included in the calculation of diluted EPS because
they
would have had an antidilutive effect. Refer to paragraph 40(c)
of
SFAS 128.
Part II - Information Not Required in Prospectus, page II-1
Item 15. Recent Sales of Unregistered Securities, page II-1
84. We note the Securities Act exemption you cite with respect to
each
transaction listed in this section. Please briefly describe the
facts
upon which you relied to make each exemption available. See Item
701(d) of Regulation S-K.
85. Please provide the information required by paragraphs (a)
through
(d) of Item 701 of Regulation S-K for any options issued during
the
last three years.
Item 16. Exhibits and Financial Statement Schedules, page II-2
86. Please file as promptly as practicable each exhibit required
by
Item 601 of Regulation S-K, in particular Exhibits 1.1 and 5.1.
These
exhibits and any related disclosure are subject to review and you
should allow a reasonable period of time for our review prior to
requesting acceleration.
87. Please file each of the following as exhibits to your
registration
statement:
* management services agreement with KKR;
* termination agreement relating to the management services
agreement
with KKR;
* supply agreement relating to your "UniCased Construction"
mattresses;
* agreements relating to licensed intellectual property rights;
and
* consulting agreement with Capstone Consulting LLC.
88. With respect to Exhibits 2.1 and 2.2, please disclose your
agreement to furnish supplementally a copy of any omitted
schedules or
similar supplements to the staff upon request. This agreement to
furnish the staff with copies of omitted schedules or similar
supplements may be included in the exhibit index to your
registration
statement. See Item 601(b)(2) of Regulation S-K.
Sealy Mattress Corporation Form 10-K for the year ended November
28,
2004
89. Where a comment above requests additional disclosures or other
revisions to be made, please include these in Sealy Mattress
Corporation`s future Exchange Act filings as well.
* * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter that is filed on EDGAR with your amendment that keys
your
responses to our comments and provides any requested information.
Detailed cover letters greatly facilitate our review. Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing
includes all information required under the Securities Act and
that
they have provided all information investors require for an
informed
investment decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have
made.
Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of its registration statement,
it
should furnish a letter, at the time of such request,
acknowledging
that:
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and
* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division
of Corporation Finance in connection with our review of your
filing or
in response to our comments on your filing.
We will consider a written request for acceleration of the
effective date of the registration statement as confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act and the Exchange Act as
they
relate to the proposed public offering of the securities specified
in
the above registration statement. We will act on the request and,
pursuant to delegated authority, grant acceleration of the
effective
date.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Meagan Caldwell, Staff Accountant, at (202)
551-
3754 or, in her absence, Rufus Decker, Accounting Branch Chief, at
(202) 551-3769 if you have questions regarding comments on the
financial statements and related matters. Please contact Andrew
Schoeffler, Staff Attorney, at (202) 551-3748 or, in his absence,
Lesli Sheppard, Senior Staff Attorney, at (202) 551-3708 with any
other questions.
Sincerely,
Pamela A. Long
Assistant Director
cc: Mr. Joseph H. Kaufman, Esq.
Mr. Edward P. Tolley III, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Mr. Marc D. Jaffe, Esq.
Latham & Watkins LLP
855 Third Avenue
New York, NY 10022
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Mr. Kenneth L. Walker
Sealy Corporation
July 29, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE