748015--1/25/2010--SEALY

related topics

{debt, indebtedness, cash}

{cost, regulation, environmental}

{customer, product, revenue}

{product, market, service}

{product, liability, claim}

{operation, international, foreign}

{tax, income, asset}

{stock, price, operating}

{property, intellectual, protect}

{cost, operation, labor}

{personnel, key, retain}

{cost, contract, operation}

{condition, economic, financial}

The bedding industry is highly competitive, and if we are unable to compete effectively, we may lose customers and our sales may decline. Our new product launches may not be successful due to development delays, failure of new products to achieve anticipated levels of market acceptance and significant costs associated with failed product introductions, which could adversely affect our revenues and profitability. We may experience fluctuations in our operating results due to seasonality, which could make sequential quarter to quarter comparison an unreliable indication of our performance. A substantial decrease in business from our significant customers could have a material adverse effect on our sales and market share. Unfavorable economic conditions could continue to negatively affect our revenues and profitability. Our profitability may be materially and adversely affected by increases in the cost of petroleum-based products, steel and other raw materials. Our profitability may be materially and adversely affected by any interruption in supply from third party vendors. We are dependent upon a single supplier for certain polyurethane foam components in our mattress units. A disruption in the supply of these products and services could adversely affect our operations. We are dependent upon a single supplier for the visco-elastic components and assembly of our TrueForm product line. A disruption in the supply of these products and services could adversely affect our operations. Our significant international operations are subject to foreign exchange, tariff, tax, inflation and political risks and our ability to expand in certain international markets is limited by the terms of licenses we have granted to manufacture and sell Sealy products. The loss of the services of one or more members of our senior management team could impair our ability to execute our business strategy and adversely affect our business. Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our outstanding indebtedness Despite our current leverage, we may still be able to incur substantially more debt. This could further exacerbate the risks that we and our subsidiaries face The terms of our debt covenants could limit how we conduct our business and our ability to raise additional funds. We are a holding company and rely on dividends, interest and other payments, advances and transfers of funds from our subsidiaries to enable us to pay dividends. We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful Changes in tax laws and regulations or other factors could cause our income tax rate to increase, potentially reducing our net income and adversely affecting our cash flows. The time and expense of defending against challenges to our trademarks, patents and other intellectual property could divert our management's attention and substantial financial resources from our business. Our goodwill and ability to differentiate our products in the marketplace could be negatively affected if we were unsuccessful in defending against such challenges. Regulatory requirements relating to our products may increase our costs, alter our manufacturing processes and impair our product performance. Environmental, health and safety requirements could expose us to material liabilities and changes in our operations as a result of environmental contamination, among other things. A change or deterioration in labor relations could disrupt our business or increase costs, which could lead to a material decline in sales or profitability. Our pension plans are currently underfunded and we will be required to make cash payments to the plans, reducing the cash available for our business.

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748015--1/25/2010--SEALY_CORP