content: SECURITIES AND EXCHANGE COMMISSION
  
                                      FORM 10-Q
  
                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                  For the quarterly period ended September 30, 1998
  
                      Commission file numbers 1-11432; 1-11436
  
  
                                     FOAMEX L.P.
                             FOAMEX CAPITAL CORPORATION
               (Exact name of registrant as specified in its charter)
  
  
            Delaware                                        05-0475617
            Delaware                                        22-3182164
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                        Identification Number)
  
  
  1000 Columbia Avenue
  Linwood, PA                                                    19061
  (Address of principal                                       (Zip Code)
  executive offices)
  
  Registrant's telephone number, including area code:  (610) 859-3000
  
  Indicate  by check mark  whether  the  registrants  (1) have  filed all  reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant  was required to file such reports) and (2) have been subject to such
  filing requirements for the past 90 days. YES X  NO ___
  
  Foamex L.P. and Foamex  Capital  Corporation  meet the  conditions  set forth in
  General  Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this
  form with the reduced disclosure format.
  
  The number of shares of Foamex Capital Corporation's common stock outstanding as
  of November 16, 1998 was 1,000.
  
                                    Page 1 of 30
                            Exhibit List on Page 24 of 30
  <PAGE>
                                     FOAMEX L.P.
                             FOAMEX CAPITAL CORPORATION
  
                                        INDEX
                                                                              Page
  Part I.  Financial Information:
  
            Item 1. Financial Statements
  
             Foamex L.P.
  
              Condensed Consolidated Statements of Operations -
                 Quarterly and Year to Date Periods Ended September
                 30, 1998 and September 28, 1997                                3
  
              Condensed Consolidated Balance Sheets as of September
                 30, 1998 and December 28, 1997                                 4
  
              Condensed Consolidated Statements of Cash Flows -
                 Year to Date Periods Ended September 30, 1998 and
                 September 28, 1997                                             5
  
              Notes to Condensed Consolidated Financial Statements              6
  
              Foamex Capital Corporation
  
              Balance Sheets as of September 30, 1998 and 
                  December 28, 1997                                            15
  
              Notes to Balance Sheets                                          16
  
            Item 2.  Management's Discussion and Analysis of Financial 
                     Condition and Results of Operations                       17
  
  Part II. Other Information                                                   24
  
           Exhibit List                                                        24
  
           Signatures                                                          30
  
                                  2
  <PAGE>
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                     FOAMEX L.P. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  <TABLE>
  <CAPTION>
                                            Quarterly Periods Ended      Year to Date Periods Ended
                                         September 30,   September 28,  September 30, September 28,
                                              1998           1997           1998          1997
                                                                (thousands)
  <S>                                      <C>            <C>           <C>            <C>      
  NET SALES                                $ 300,274      $ 233,434     $ 873,555      $ 702,441
  
  COST OF GOODS SOLD                         252,072        195,395       730,266        576,825
                                           ---------      ---------     ---------      ---------
  
  GROSS PROFIT                                48,202         38,039       143,289        125,616
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                  14,109         15,562        51,472         46,893
                                           ---------      ---------     ---------      ---------
  
  INCOME FROM OPERATIONS                      34,093         22,477        91,817         78,723
  
  INTEREST AND DEBT ISSUANCE EXPENSE          16,956         11,846        49,936         33,355
  
  OTHER INCOME (EXPENSE), NET                 (1,146)           281        (1,765)         1,403
                                           ---------      ---------     ---------      ---------
  
  INCOME FROM CONTINUING OPERATIONS
     BEFORE PROVISION FOR INCOME TAXES        15,991         10,912        40,116         46,771
  
  PROVISION FOR INCOME TAXES                     165          1,359         2,049          4,618
                                           ---------      ---------     ---------      ---------
  
  INCOME BEFORE EXTRAORDINARY LOSS            15,826          9,553        38,067         42,153
  
  EXTRAORDINARY LOSS ON EARLY
     EXTINGUISHMENT OF DEBT                       --             --        (3,195)       (45,538)
                                           ---------      ---------     ---------      ---------
  
  NET INCOME (LOSS)                        $  15,826      $   9,553     $  34,872      $  (3,385)
                                           =========      =========     =========      =========
  </TABLE>
  
            The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                          3
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
  
                                                      September 30,  December 28,
  ASSETS                                                  1998           1997
                                                       ---------      ---------
  CURRENT ASSETS:                                             (thousands)
       Cash and cash equivalents                       $   2,112      $   9,405
       Accounts receivable, net                          157,422        174,959
       Inventories                                       133,686        120,299
       Accounts receivable, related party                 21,836             --
       Other current assets                               37,654         47,554
                                                       ---------      ---------
          Total current assets                           352,710        352,217
  
  PROPERTY, PLANT AND EQUIPMENT, NET                     206,618        221,274
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                 181,094        219,699
  
  DEBT ISSUANCE COSTS, NET                                14,454         18,889
  
  OTHER ASSETS                                            22,409         21,989
                                                       ---------      ---------
  
  TOTAL ASSETS                                         $ 777,285      $ 834,068
                                                       =========      =========
  
  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
       Short-term borrowings                           $   6,058      $   6,598
       Current portion of long-term debt                   4,347         12,161
       Accounts payable                                  114,046        121,147
       Accounts payable - related parties                     --         11,662
       Accrued interest                                    9,670         10,655
       Other accrued liabilities                          31,646         63,920
                                                       ---------      ---------
          Total current liabilities                      165,767        226,143
  
  LONG-TERM DEBT                                         681,231        726,649
  
  LONG-TERM DEBT - RELATED PARTY                          34,000             --
  
  OTHER LIABILITIES                                       28,749         37,578
                                                       ---------      ---------
  
          Total liabilities                              909,747        990,370
                                                       ---------      ---------
  
  COMMITMENTS AND CONTINGENCIES                               --             --
                                                       ---------      ---------
  
  PARTNERS' EQUITY (DEFICIT):
       General partners                                    1,953       (122,304)
       Limited partners                                  (99,516)            --
       Notes receivable from partner                     (16,118)       (16,118)
       Accumulated other comprehensive income             (8,986)        (8,085)
       Other                                              (9,795)        (9,795)
                                                       ---------      ---------
          Total partners' equity (deficit)              (132,462)      (156,302)
                                                       ---------      ---------
  
  TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT)     $ 777,285      $ 834,068
                                                       =========      =========
  
            The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                          4
  <PAGE>
                     FOAMEX L.P. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
  <TABLE>
  <CAPTION>
  <S>                                                                     <C>            <C>       
                                                                          Year to Date Periods Ended
                                                                         September 30,  September 28,
                                                                             1998            1997
                                                                          ---------      ---------
  OPERATING ACTIVITIES:                                                          (thousands)
     Net income (loss)                                                    $  34,872      $  (3,385)
     Adjustments to reconcile  net income (loss) to net cash provided
         by operating activities:
         Depreciation and amortization                                       24,208         15,570
         Amortization of debt issuance costs and debt discount                 (114)         1,903
         Extraordinary loss on extinguishment of debt                         2,857         22,620
         Other operating activities                                           2,448         (1,696)
         Changes in operating assets and liabilities                        (91,259)       (26,203)
                                                                          ---------      ---------
  
            Net cash (used for) provided by operating activities            (26,988)         8,809
                                                                          ---------      ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                                   (21,853)       (25,444)
     Acquisition, net of cash acquired                                       (3,899)            --
     Divestiture of General Felt                                             (8,971)            --
     Purchase of FJPS senior secured discount debentures                         --       (105,829)
     Decrease in restricted cash                                                 --         12,143
     Loan to partner                                                             --         (5,000)
     Other investing activities                                              (1,465)          (930)
                                                                          ---------      ---------
  
            Net cash used for investing activities                          (36,188)      (125,060)
                                                                          ---------      ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from short-term borrowings                                    185          1,179
     Net proceeds from revolving loans                                       81,489         31,000
     Proceeds from long-term debt                                           129,000        453,500
     Repayment of long-term debt                                           (134,203)      (363,443)
     Debt issuance costs                                                     (1,598)       (15,617)
     Distributions to partners                                              (20,074)       (10,283)
     Other financing activities                                               1,084             25
                                                                          ---------      ---------
  
            Net cash provided by financing activities                        55,883         96,361
                                                                          ---------      ---------
  
  NET DECREASE IN CASH
     AND CASH EQUIVALENTS                                                    (7,293)       (19,890)
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                                   9,405         20,968
                                                                          ---------      ---------
  
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                     $   2,112      $   1,078
                                                                          =========      =========
  </TABLE>
  
            The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                         5
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  1.     ORGANIZATION AND BASIS OF PRESENTATION
  
         Foamex  L.P.'s  condensed  consolidated  balance sheet as of December 28,
  1997 has been  condensed  from the audited  consolidated  balance  sheet at that
  date. The condensed  consolidated balance sheet as of September 30, 1998 and the
  condensed consolidated statements of operations for the quarter and year to date
  periods  ended  September  30, 1998 and  September  28,  1997 and the  condensed
  consolidated  statements  of cash  flows  for the  year  to date  periods  ended
  September  30, 1998 and September 28, 1997 have been prepared by Foamex L.P. and
  subsidiaries and have not been audited by Foamex L.P.'s independent accountants.
  In the  opinion  of  management,  all  adjustments,  consisting  only of  normal
  recurring  adjustments,  considered  necessary  for a fair  presentation  of the
  consolidated financial position,  results of operations and cash flows have been
  included.
  
         During  September 1998,  management of Foamex L.P.  decided to change the
  year-end  reporting  requirement  of Foamex L.P. from a fifty-two or fifty-three
  week fiscal year ending on the Sunday closest to the end of the calendar year to
  a  calendar  year  ending  December  31st  to  improve  the  internal  reporting
  requirement of Foamex L.P. On November 3, 1998, Foamex  International's Board of
  Directors and other required third parties  approved the fiscal year-end change.
  This change is  effective  for the third  fiscal  quarter of 1998 which ended on
  September  30, 1998 and will  result in a 1998  fiscal year end of December  31,
  1998 as compared to January 3, 1999;  accordingly,  the  quarterly  period ended
  September 30, 1998 includes an additional three days with estimated  revenues of
  approximately $18.9 million.
  
         On December 23, 1997, Foamex International Inc. ("Foamex  International")
  acquired Crain Industries,  Inc.  ("Crain")  pursuant to a merger agreement with
  Crain  Holdings  Corp. for a purchase  price of  approximately  $213.7  million,
  including  the  assumption  of debt  with a face  value of  approximately  $98.6
  million (and an estimated fair value of approximately  $112.3  million),  Foamex
  International  then  contributed  the  assets  of  Crain  subject  to all of its
  liabilities  and  indebtedness  to Foamex  L.P.  (the "Crain  Acquisition").  In
  addition,   fees  and  expenses  associated  with  the  Crain  Acquisition  were
  approximately $13.2 million. (See Note 3).
  
         Certain  information  and  note  disclosures  normally  included  in  the
  financial  statements  prepared in accordance with generally accepted accounting
  principles  have been  condensed  or  omitted in  accordance  with the rules and
  regulations  of  the  Securities  and  Exchange   Commission.   These  condensed
  consolidated  financial  statements  should be read in  conjunction  with Foamex
  L.P.'s 1997 consolidated  financial statements and notes thereto as set forth in
  Foamex L.P.'s  Annual  Report on Form 10-K/A for the fiscal year ended  December
  28, 1997.
  
  2.     TRANSFER OF GENERAL FELT INDUSTRIES, INC.
  
         On February 27, 1998,  Foamex  International,  Foamex L.P. and certain of
  its affiliates  completed a series of  transactions  designed to simplify Foamex
  International's   corporate   structure  and  to  provide   future   operational
  flexibility.  Prior to the consummation of these  transactions,  (i) Foamex L.P.
  and  Foamex  L.P.'s  wholly-owned  subsidiary,  General  Felt  Industries,  Inc.
  ("General Felt"), entered into a Supply Agreement and an Administrative Services
  Agreement (see Note 7), (ii) Foamex L.P. repaid its outstanding  indebtedness to
  General  Felt with $4.8  million in cash and a $34.0  million  principal  amount
  promissory note (the  "Foamex/GFI  Note") supported by a $34.5 million letter of
  credit under the credit  facility,  (the "Credit  Facility"),  (iii) Foamex L.P.
  contributed  to  General  Felt $9.4  million  of  outstanding  net  intercompany
  payables and intercompany loans with General Felt, and (iv) Foamex L.P. defeased
  the $4.5 million outstanding principal amount of its 9 1/2% senior secured notes
  due 2000. The initial  transaction  resulted in the transfer from Foamex L.P. to
  Foam  Funding LLC of all of the  outstanding  common stock of General  Felt,  in
  exchange for (i) the  assumption  Foam  Funding LLC of $129.0  million of Foamex
  L.P.'s  indebtedness and (ii) the transfer by Foam Funding LLC to Foamex L.P. of
  a 1%  non-managing  general  partnership  interest  in Foamex  L.P. As a result,
  General Felt ceased being a subsidiary  of Foamex L.P. and was relieved from all
  obligations under Foamex L.P.'s 9 7/8% senior subordinated notes due 2007 and 13
  1/2% senior
  
                                         6
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  2.     TRANSFER OF GENERAL FELT INDUSTRIES, INC. (continued)
  
  subordinated  notes due 2005.  Upon  consummation  of the  initial  transaction,
  Foamex Carpet  Cushion,  Inc.  ("Foamex  Carpet"),  a newly formed  wholly-owned
  subsidiary of Foamex International,  Foamex International, Foam Funding LLC, and
  General Felt entered into an Asset Purchase  Agreement  dated February 27, 1998,
  in which  General  Felt sold  substantially  all of its assets  (other  than the
  Foamex/GFI Note and its operating facility in Pico Rivera, California) to Foamex
  Carpet in  exchange  for (i) $20.0  million in cash and (ii) a  promissory  note
  issued by Foamex Carpet to Foam Funding LLC in the amount of $70.2 million.  The
  $20.0 million cash payment was funded with a distribution by Foamex L.P. As part
  of these  transactions,  Foamex Fibers,  Inc. ("Foamex Fibers"),  a wholly-owned
  subsidiary  of General  Felt,  was merged with and into  General Felt and Foamex
  LLC, a  wholly-owned  subsidiary of Foamex L.P., was merged with and into Foamex
  L.P. In addition, FMXI, Inc. and Crain, both wholly-owned subsidiaries of Foamex
  International and general partners of Foamex L.P., were merged and Crain, as the
  surviving corporation, subsequently changed its name to FMXI, Inc. Foamex Carpet
  will conduct the carpet cushion business  previously  conducted by General Felt.
  Also, Foam Funding LLC has retained ownership of one of General Felt's operating
  facilities  which is  being  leased  to  Foamex  Carpet  and the  $34.0  million
  Foamex/GFI Note.
  
         No gain has been recognized on the General Felt net assets transferred to
  Foam Funding LLC and repurchased by Foamex  International.  Foamex International
  will  continue  to account  for these net assets  using the  carryover  basis of
  Foamex L.P.  The $129.0  million of debt  assumed by Foam Funding LLC in the GFI
  Transaction was accounted for as an  extinguishment of debt which resulted in an
  extraordinary  loss of approximately $2.0 million.  The 1% non-managing  general
  partnership  interest  acquired  in  connection  with  the GFI  Transaction  was
  accounted  for as a redemption  of equity.  By virtue of the transfer of General
  Felt stock and the subsequent  merger of General Felt into Foam Funding LLC, the
  Pico Rivera facility was transferred to Foam Funding LLC; no gain was recognized
  on the transfer since Foamex International leased-back the facility.
  
  3.     CRAIN ACQUISITION
  
         On December 23, 1997, Foamex  International  acquired Crain pursuant to a
  merger with Crain Holdings Corp.  for a purchase price of  approximately  $213.7
  million,  including the  assumption  of debt with a face value of  approximately
  $98.6 million (with an estimated fair value of  approximately  $112.3  million),
  Foamex  International  then contributed the assets of Crain,  subject to all its
  liabilities and  indebtedness  to Foamex L.P. Fees and expenses  associated with
  the Crain  Acquisition  are  approximately  $13.2 million.  The  acquisition was
  funded by $118.0  million in bank  borrowings  by Foamex  L.P.  under the Credit
  Facility.  The excess of the purchase price over the estimated fair value of the
  net assets acquired was approximately $152.5 million.
  
         The Crain  Acquisition was accounted for as a purchase and the operations
  of Crain are included in the  consolidated  statements  of  operations  and cash
  flows from the date of acquisition.  The cost of the Crain  Acquisition has been
  allocated  on the  basis  of the  fair  value  of the  assets  acquired  and the
  liabilities  assumed.  The excess of the purchase  price over the estimated fair
  value of the net assets  acquired  is being  amortized  using the  straight-line
  method over forty years.  The  allocation  of the  purchase  price for the Crain
  Acquisition is based upon  preliminary  estimates and assumptions and is subject
  to revision once  appraisals,  valuations and other studies of the fair value of
  the acquired assets and liabilities  have been completed.  The pro forma results
  listed below are unaudited and assume that the Crain Acquisition occurred at the
  beginning of fiscal year 1997.
  
  <TABLE>
  <CAPTION>
                                         Quarterly Period Ended   Year to Date Period Ended
                                           September 28, 1997       September 28, 1997
                                                (thousands, except per share data)
  <S>                                            <C>                     <C>     
  Net sales                                      $320,847                $946,927
                                                 ========                ========
  
  Income before extraordinary loss               $ 15,712                $ 39,009
                                                 ========                ========
  </TABLE>
  
                                         7
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  3.     CRAIN ACQUISITION (continued)
  
         The pro forma results are not  necessarily  indicative of what would have
  occurred  if the Crain  Acquisition  had been in effect for the  entire  periods
  presented nor are they necessarily indicative of future consolidated results.
  
  4.     INVENTORIES
  
         Inventories consist of:
  
                                         September 30,           December 28,
                                             1998                   1997
                                           --------               --------
                                                   (thousands)
  Raw materials and supplies               $ 84,637               $ 75,487
  Work-in-process                            19,051                 15,620
  Finished goods                             29,998                 29,192
                                           --------               --------
      Total                                $133,686               $120,299
                                           ========               ========
  
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  
         Long-term debt consists of:
  <TABLE>
  <CAPTION>
  <S>                                                             <C>              <C>    
                                                              September 30,     December 28,
                                                                  1998              1997
                                                                --------          --------
  Credit Facility:                                                      (thousands)
    Term Loan A                                                 $     --          $ 76,700
    Term Loan B                                                   82,924           109,725
    Term Loan C                                                   75,385            99,750
    Term Loan D                                                  109,175           110,000
    Revolving credit facility                                    136,953            54,928
  9 7/8% Senior subordinated notes due 2007                      150,000           150,000
  13 1/2% Senior subordinated notes due 2005 (includes
    $12,824 and $13,720 of unamortized debt premium)             110,376           111,720
  9 1/2% Senior secured notes due 2000                                --             4,523
  Industrial revenue bonds                                         7,000             7,000
  Subordinated note payable (net of unamortized
    debt discount of $709 and $886)                                6,394             6,129
  Other                                                            7,371             8,335
                                                                --------          --------
                                                                 685,578           738,810
  
  Less current portion                                             4,347            12,161
                                                                --------          --------
  
  Long-term debt-unrelated parties                              $681,231          $726,649
                                                                ========          ========
  
  Long-term debt-related party consists of:
  
  Foamex/GFI Note                                               $ 34,000          $ 38,800
                                                                ========          ========
  </TABLE>
  
                                         8
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY (continued)
  
         Refinancing Associated with Transfer of General Felt Common Stock
  
         In  connection  with the  transfer of General Felt common stock (see Note
  2), Foamex L.P.  amended its agreements with lenders under the Credit  Facility,
  which  included  additional  borrowings  of $129.0  million  under new term loan
  agreements  that were assumed by Foam  Funding LLC (as  discussed in Note 2) and
  borrowings of $32.0 million under the existing revolving credit facility.  These
  funds were used to (i) repay approximately $125.1 million of existing term loans
  and accrued interest thereon of  approximately  $0.9 million,  (ii) deposit $4.8
  million  into an escrow  account in order to defease  the senior  secured  notes
  during June 1998, (iii) repay $4.8 million of indebtedness owed to General Felt,
  (iv) fund the $20.0 million  distribution  to Foamex  International  and (v) pay
  fees and expenses of approximately $5.4 million.  Also, this amendment increased
  the  availability  under the revolving  credit  facility from $150.0  million to
  $200.0 million;  however, $34.5 million of this increase is used for a letter of
  credit to support the Foamex/GFI Note.
  
         Foamex/GFI Note
  
         In connection  with the transfer of General  Felt's common stock,  Foamex
  L.P.  entered  into the $34.0  million  Foamex/GFI  Note to  settle an  existing
  intercompany  note payable to General Felt. The Foamex/GFI Note matures in March
  2000 with  interest  payable at LIBOR plus an applicable  margin.  The principal
  amount is due upon maturity in March 2000.
  
         Principal Payments
  
         Principal  payments on Foamex L.P.'s  long-term debt and long-term debt -
  related  party  for the  remainder  of 1998 and for the next  five  years are as
  follows:  1998 - $1.3 million; 1999 - $7.2 million; 2000 - $40.9 million; 2001 -
  $6.9 million; 2002 - $2.9 million; 2003 - $147.8 million and thereafter - $500.8
  million.
  
  6.    EARLY EXTINGUISHMENT OF DEBT
  
         In connection with the General Felt transaction,  Foamex L.P. incurred an
  extraordinary  loss on the early  extinguishment  of debt of approximately  $3.1
  million.  The extraordinary  loss is comprised of approximately $2.9 million for
  the  write-off  of  debt  issuance  costs  and  approximately  $0.2  million  of
  professional fees and other costs.
  
         During  1997,  in  connection  with  the   refinancing   plan  of  Foamex
  International's  indebtedness,  Foamex  International  incurred an extraordinary
  loss on the early  extinguishment of debt of approximately $42.0 million (net of
  income  taxes  of  $25.7  million).  The  extraordinary  loss  is  comprised  of
  approximately $39.0 million for premium and consent fee payments,  approximately
  $16.2  million  for the  write-off  of debt  issuance  costs and debt  discount,
  approximately   $8.2  million  for  the  loss   associated  with  the  effective
  termination and amendment of the interest rate swap agreements and approximately
  $4.3  million of  professional  fees and other costs.  In addition,  during 1997
  Foamex L.P. incurred  extraordinary losses of approximately $0.6 million (net of
  income  taxes of $0.4  million)  associated  with the  early  extinguishment  of
  approximately  $11.8 million of long-term debt funded with  approximately  $12.1
  million  of the  remaining  net  proceeds  from  the  sale  of its  Perfect  Fit
  Industries,   Inc.   subsidiary.   The   extraordinary   loss  is  comprised  of
  approximately  $0.4 million of premium payments and  approximately  $0.6 million
  for the write-off of debt issuance costs.
  
                                         9
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  7.      RELATED PARTY TRANSACTIONS
  
         Effective  February  27,  1998,  Foamex  L.P.  entered  into  the  Supply
  Agreement  (see Note 2) (i) whereby  Foamex Carpet may purchase from Foamex L.P.
  finished prime, rubber and rebond carpet cushion at the lessor of cost plus 4.7%
  or fair market value,  (ii) Foamex L.P. may purchase from Foamex Carpet nonwoven
  textile fiber products at the lessor of cost plus 15% or fair market value,  and
  (iii) either party may purchase from the other trim foam and other raw materials
  and  supplies  for the lessor of the price paid for such raw  materials  or fair
  market  value.  Prior to February 27, 1998,  Foamex L.P. had sales and purchases
  with General Felt based on an established  intercompany transfer price which was
  adjusted to comply with the transfer pricing regulations of the Internal Revenue
  Code, as amended, if necessary. During the quarterly periods ended September 30,
  1998 and September 28, 1997,  Foamex L.P. sold  approximately  $43.6 million and
  $37.1 million,  respectively,  to Foamex Carpet and purchased from Foamex Carpet
  approximately  $4.8 million and $0.3 million,  respectively.  During the year to
  date periods ended  September 30, 1998 and September 28, 1997,  Foamex L.P. sold
  approximately $110.0 million and $109.6 million,  respectively, to Foamex Carpet
  and purchased  from Foamex Carpet  approximately  $7.4 million and $1.1 million,
  respectively.
  
         In connection with the General Felt transaction (see Note 2), Foamex L.P.
  and Foamex Carpet entered into a Management  Services  Agreement  whereby Foamex
  L.P. will provide certain administrative functions on behalf of Foamex Carpet at
  a cost basis.  During the quarterly and year to date periods ended September 30,
  1998,  Foamex L.P.  received  $1.2 million and $1.8 million,  respectively,  for
  services provided to Foamex Carpet.
  
         During the year to date period  ended  September  30,  1998,  Foamex L.P.
  incurred  approximately $0.5 million of interest expense on a $38.8 million note
  due to General Felt. On February 27, 1998, Foamex L.P. repaid approximately $4.8
  million of this note, and the balance was replaced by the  Foamex/GFI  Note. The
  Foamex/GFI Note was retained by Foam Funding LLC in connection with the transfer
  of General Felt.  During the quarterly and year to date periods ended  September
  30, 1998,  Foamex L.P.  incurred  approximately  $0.6 million and $1.4  million,
  respectively, of interest expense on the Foamex/GFI Note (see Note 2).
  
         Foamex L.P. had a supply  agreement (the "Supply  Agreement") with Foamex
  International   pursuant  to  which,  at  the  option  of  Foamex  L.P.,  Foamex
  International would purchase certain raw materials,  which are necessary for the
  manufacture of Foamex L.P.'s products,  and resell such materials to Foamex L.P.
  at a price equal to net cost plus reasonable out of pocket expenses.  Management
  believed  that the terms of the Supply  Agreement  were no less  favorable  than
  those which Foamex L.P.  could have obtained from an  unaffiliated  third party.
  During the  quarterly  period ended  September 28, 1997,  Foamex L.P.  purchased
  approximately  $31.4 million of raw material under the Supply Agreement.  During
  the year to date periods ended September 30, 1998 and September 28, 1997, Foamex
  L.P. purchased approximately $15.0 million and $94.4 million,  respectively,  of
  raw materials under the Supply Agreement.  Effective March 30, 1998, Foamex L.P.
  had discontinued utilizing the Supply Agreement to purchase its raw materials.
  
         Foamex  L.P.  chartered  an  aircraft  (which is owned by a  wholly-owned
  subsidiary of Foamex International)  through a third party and incurred costs of
  approximately  $0.2 million and $0.3 million during the quarterly  periods ended
  September 30, 1998 and September 28, 1997,  respectively and approximately  $0.7
  million and $0.9 million  during the year to date periods  ended  September  30,
  1998 and September 28, 1997, respectively.
  
         On December 11, 1996, Foamex L.P. entered into a Tax Distribution Advance
  Agreement,  pursuant to which its partners are entitled to obtain  advances,  in
  the aggregate not to exceed $17.0 million,  against future  distributions  under
  Foamex L.P.'s tax distribution  agreement.  As of September 30, 1998, there were
  $13.6 million of advances to Foamex International under this agreement.
  
                                         10
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  8.     ENVIRONMENTAL MATTERS
  
         Foamex L.P. is subject to extensive and changing  federal,  state,  local
  and foreign environmental laws and regulations,  including those relating to the
  use, handling,  storage,  discharge and disposal of hazardous substances and the
  remediation of  environmental  contamination,  and as a result,  is from time to
  time involved in administrative and judicial  proceedings and inquiries relating
  to  environmental  matters.  During the year to date period ended  September 30,
  1998,  expenditures  in connection  with Foamex L.P.'s  compliance with federal,
  state,  local and  foreign  environmental  laws and  regulations  did not have a
  material adverse effect on Foamex L.P.'s operations, financial position, capital
  expenditures or competitive  position. As of September 30, 1998, Foamex L.P. has
  accruals of approximately $3.4 million for environmental  matters.  In addition,
  as of September 30, 1998 Foamex L.P. has net receivables of  approximately  $0.6
  million relating to indemnification for environmental  liabilities.  Foamex L.P.
  believes that realization of the receivables  established for indemnification is
  probable.
  
         The Clean Air Act Amendments of 1990 (the "1990 CAA Amendments")  provide
  for the establishment of federal emission standards for hazardous air pollutants
  including  methylene  chloride,  propylene oxide and TDI,  materials used in the
  manufacturing  of foam. On December 27, 1996,  the United  States  Environmental
  Protection Agency (the "EPA") proposed regulations under the 1990 CAA Amendments
  that  will  require  manufacturers  of slab  stock  polyurethane  foam  and foam
  fabrication  plants to reduce  emissions of methylene  chloride.  Because  these
  regulations  are subject to change  prior to  finalization,  Foamex L.P.  cannot
  accurately predict the actual cost of their implementation. Foamex L.P. does not
  believe  implementation  of the  regulations  will  require it to make  material
  expenditures  at  facilities  owned prior to December  23,  1997,  due to Foamex
  L.P.'s use of alternative  technologies  which do not utilize methylene chloride
  and its ability to shift current  production to the  facilities  which use these
  alternative technologies;  however, material expenditures may be required at the
  facilities  formerly  operated by Crain. The 1990 CAA Amendments also may result
  in  the  imposition  of  additional  standards  regulating  air  emissions  from
  polyurethane foam manufacturers,  but these standards have not yet been proposed
  or promulgated.
  
         In addition to general regulatory requirements,  state laws have resulted
  or will result in more stringent  regulations  regarding the use and emission of
  methylene  chloride.  Several former Crain facilities have been required to meet
  greater  restrictions  regarding  emission limits and/or quantities used of this
  chemical.
  
         On April 10,  1997,  the  Occupational  Health and Safety  Administration
  promulgated new standards  governing  employee  exposure to methylene  chloride,
  which is used as a blowing agent in some of Foamex International's manufacturing
  processes.  Foamex  International  does not believe  that it will be required to
  make any material expenditures to comply with these new standards due to its use
  of alternative  technologies which do not use methylene chloride and its ability
  to shift  production  to  facilities  which  use  these  technologies;  however,
  material  expenditures  may be required at the facilities  formerly  operated by
  Crain.
  
         Foamex L.P. has reported to  appropriate  state  authorities  that it has
  found soil and  groundwater  contamination  in excess of state standards at four
  facilities and soil  contamination  in excess of state  standards at three other
  facilities.  Foamex  L.P.  has  begun  remediation  and  is  conducting  further
  investigations  into the extent of the  contamination  at these  facilities and,
  accordingly,  the extent of the remediation that may ultimately be required. The
  actual cost and the timetable of any such  remediation  cannot be predicted with
  any degree of certainty at this time. As of September 30, 1998,  Foamex L.P. has
  accruals of approximately $2.8 million for the remaining  potential  remediation
  costs for these facilities based on estimates.
  
         Federal  regulations  require  that by the end of  1998  all  underground
  storage tanks  ("USTs") be removed or upgraded in all states to meet  applicable
  standards.  Foamex  L.P.  has two USTs that will  require  removal or  permanent
  in-place closure by the end of 1998. Due to the age of these tanks,  leakage may
  have occurred resulting in soil and possibly groundwater  contamination.  Foamex
  L.P. has accrued $0.1 million for the estimated removal and remediation, if any,
  associated with these USTs. However, the full extent of contamination and,
  
                                         11
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  8.     ENVIRONMENTAL MATTERS (continued)
  
  accordingly,  the actual cost of such  remediation  cannot be predicted with any
  degree of certainty at this time. Foamex L.P. believes that its USTs do not pose
  a  significant  risk  of  environmental   liability  because  of  Foamex  L.P.'s
  monitoring  practices  for  USTs  and  conditional  approval  for the  permanent
  in-place closure for certain USTs. However,  there can be no assurance that such
  USTs will not result in significant environmental liability in the future.
  
         Foamex  L.P.  has been  designated  as a  Potentially  Responsible  Party
  ("PRP") by the EPA with respect to nine sites, with an estimated total liability
  to Foamex  L.P.  for the nine  sites of less than  approximately  $0.5  million.
  Estimates of total clean-up  costs and  fractional  allocations of liability are
  generally  provided  by the EPA or the  committee  of PRP's with  respect to the
  specified site. In each case, the participation of Foamex L.P.
  is considered to be immaterial.
  
         Although it is possible that new information or future developments could
  require Foamex L.P. to reassess its potential  exposure  relating to all pending
  environmental  matters,  including those described herein,  management  believes
  that,  based upon all currently  available  information,  the resolution of such
  environmental  matters will not have a material  adverse effect on Foamex L.P.'s
  operations,  financial position,  capital expenditures or competitive  position.
  The possibility  exists,  however,  that new  environmental  legislation  and/or
  environmental  regulations may be adopted, or other environmental conditions may
  be found to exist, that may require  expenditures not currently  anticipated and
  that may be material.
  
  9.     LITIGATION
  
         As of November 16, 1998,  Foamex L.P. and Trace  International  Holdings,
  Inc.  ("Trace  Holdings")  were two of multiple  defendants  in actions filed on
  behalf of  approximately  5,000  recipients of breast implants in various United
  States federal and state courts and one Canadian provincial court. Some of these
  transactions  allege  substantial  damages,  but  most of these  actions  allege
  unspecified damages for personal injuries of various types. Three of these cases
  seek to  allege  claims  on behalf of all  breast  implant  recipients  or other
  allegedly  affected parties,  but no class has been approved or certified by the
  court.  In addition,  three cases have been filed  alleging  claims on behalf of
  approximately  700 residents of Australia,  New Zealand,  England,  and Ireland.
  Foamex L.P. believes that the number of suits may increase.  During 1995, Foamex
  L.P.  and Trace  Holdings  were  granted  summary  judgments  and  dismissed  as
  defendants  from all cases in the  federal  courts of the United  States and the
  state courts of California.  Appeals for these  decisions were withdrawn and the
  decisions  are final.  Although  breast  implants do not contain  foam,  certain
  silicone  gel  implants  were  produced  using  a  polyurethane   foam  covering
  fabricated by independent  distributors or fabricators  from bulk foam purchased
  from Foamex L.P.  or Trace  Holdings.  Neither  Foamex L.P.  nor Trace  Holdings
  recommended,  authorized  or  approved  the use of its foam for these  purposes.
  Foamex L.P. is indemnified by Trace Holdings for any such  liabilities  relating
  to foam  manufactured  prior to October 1990.  Although  Trace Holdings has paid
  Foamex  L.P.'s  litigation  expenses to date  pursuant to such  indemnification,
  there can be no absolute  assurance  that Trace Holdings will be able to provide
  such  indemnification  in the  future.  While it is not  feasible  to predict or
  determine  the  outcome  of  these  actions,  based  on  Foamex  L.P.'s  present
  assessment of the merits of pending claims,  after consultation with the general
  counsel of Trace Holdings,  and without taking into account potential  indemnity
  from the  manufacturers  of  polyurethane  covered breast  implants,  management
  believes that the disposition of matters that are pending or that may reasonably
  be  anticipated  to be  asserted  should not have a material  adverse  effect on
  either  Foamex  L.P.'s or Trace  Holdings'  consolidated  financial  position or
  results of operations.  If Foamex L.P.'s assessment of liability with respect to
  these actions is incorrect, such actions could have a material adverse effect on
  Foamex L.P.
  
         In November  1997, a complaint  was filed in the United  States  District
  Court for the  Southern  District of Texas  alleging  that  various  defendants,
  including Crain through the use of the CARDIO(R)  process  licensed from a third
  party, infringed on a patent held by plaintiff.  Foamex L.P. is negotiating with
  the licensor of the process for the  assumption  of the defense of the action by
  the licensor; however, the action is in the preliminary stages, and there can be
  no assurance as to the ultimate outcome of the action.
  
                                         12
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  9.     LITIGATION (continued)
  
         On or about March 17, 1998,  five  purported  class action  lawsuits were
  filed in the Delaware  Chancery Court, New Castle County (the "Court"),  against
  Foamex  International,  directors of Foamex International,  Trace Holdings,  and
  individual  officers  and  directors  of Trace  Holdings:  Brickell  Partners v.
  Marshall S. Cogan, et al., No. 16260NC;  Mimona Capital v. Salvatore J. Bonanno,
  et al., No.  16259NC;  Daniel Cohen v. Foamex  International  Inc.,  No.  16263;
  Eileen Karisinki v. Foamex  International  Inc., et al., No. 16261NC and John E.
  Funky Trust v. Salvatore J. Bonanno,  et al., No. 16267. A sixth purported class
  action lawsuit,  Barnett Stepak v. Foamex International Inc., et al., No. 16277,
  was filed on or about March 23, 1998 against the same defendants.  A stipulation
  and  order  consolidating  these six  actions  under  the  caption  In re Foamex
  International Inc. Shareholders Litigation Consolidation Action, No. 16259NC was
  entered  by the  Court on May 28,  1998  (the  "Shareholders  Litigation").  The
  complaints in the six actions  allege,  among other things,  that the defendants
  have violated  fiduciary and other common law duties  purportedly owed to Foamex
  International's stockholders in connection with Trace Holdings' initial proposal
  to acquire all of the outstanding shares of Foamex International's common stock.
  The complaints sought, among other things,  class  certification,  a declaration
  that  the  defendants  have  breached  their  fiduciary  duties  to  the  class,
  preliminary and permanent  injunctions  barring  implementation  of the proposed
  transaction,   rescission  of  the  transaction  if   consummated,   unspecified
  compensatory  damages,  and  costs  and  attorneys'  fees.  The  parties  to the
  Stockholder  Litigation  entered into a Memorandum of Understanding,  dated June
  25, 1998 to settle the Stockholder Litigation, subject to, inter alia, execution
  of a definitive  Stipulation of Settlement  and approval by the Court  following
  notice to the stockholders and a hearing,  and on September 9, 1998, the parties
  entered  into a  definitive  Stipulation  of  Settlement.  On November 10, 1998,
  counsel for certain of the defendants in the Stockholder  Litigation gave notice
  pursuant to the Stipulation of Settlement that such defendants were  withdrawing
  from the Stipulation of Settlement.  On November 12, 1998, the plaintiffs in the
  Stockholder  Litigation filed an amended class action  complaint  against Foamex
  International,  Trace  Holdings  and  certain  individual  directors  of  Foamex
  International  alleging that (i) they breached their  fiduciary and other common
  law duties purportedly owed to Foamex International's stockholders in connection
  with Trace Holding's  revised proposal to acquire all of the outstanding  shares
  of Foamex  International's common stock, (ii) the individual defendants violated
  the Delaware Code in approving the Merger  Agreement (as  hereinafter  defined),
  and (iii) Trace Holdings breached the Stipulation of Settlement.
  
         Foamex L.P. is party to various  other  lawsuits,  both as defendant  and
  plaintiff,  arising in the normal course of business.  Management  believes that
  the  disposition  of these lawsuits will not  individually  or in the aggregate,
  have a  material  adverse  effect  on  the  financial  position  or  results  of
  operations of Foamex L.P. If management's  assessment of Foamex L.P.'s liability
  with respect to these actions is  incorrect,  such actions could have a material
  adverse effect on Foamex L.P.'s consolidated financial position.
  
  10.     COMPREHENSIVE INCOME
  
         In June 1997, the Financial  Accounting  Standards Board issued Statement
  of  Financial  Accounting  Standards  No.  130  ("SFAS  No.  130"),   "Reporting
  Comprehensive  Income," which requires  disclosure of comprehensive  income,  as
  defined,  including  comprehensive  disclosure in interim financial  statements.
  Comprehensive  income for the quarterly and year to date periods ended September
  30, 1998 and September 28, 1997 is comprised of the following:
  
  
                                         13
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  10.     COMPREHENSIVE INCOME (continued)
  <TABLE>
  <CAPTION>
  <S>                                             <C>              <C>              <C>             <C>      
                                                    Quarterly Period Ended          Year to Date Period Ended
                                                September 30,   September 28,    September 30,   September 28,
                                                    1998              1997             1998            1997
                                                                            (thousands)
  Net income                                      $ 15,826         $  9,553         $ 34,872        $ (3,385)
  Foreign currency translation adjustments          (1,130)             (62)            (900)           (230)
                                                  --------         --------         --------        --------
  Total comprehensive income                      $ 14,696         $  9,491         $ 33,972        $ (3,615)
                                                  ========         ========         ========        ========
  </TABLE>
  
                                         14
  <PAGE>
                             FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                             BALANCE SHEETS (unaudited)
  
  <TABLE>
  <CAPTION>
  <S>                                                                <C>              <C>
                                                                September 30,    December 28,
                                                                    1998             1997
  ASSETS                                                                (thousands)
  
  CASH                                                               $1               $1
                                                                     ==               ==
  
  LIABILITIES AND STOCKHOLDER'S EQUITY
  
  COMMITMENTS AND CONTINGENCIES                                      $-               $-
                                                                     --               --
  
  STOCKHOLDER'S EQUITY:
       Common stock, par value $.01 per share;
       1,000 shares authorized, issued and outstanding                -                -
       Additional paid-in capital                                     1                1
                                                                     --               --
  
          TOTAL STOCKHOLDER'S EQUITY                                 $1               $1
                                                                     ==               ==
  </TABLE>
  
         The accompanying notes are an integral part of the balance sheets.
  
                                         15
  <PAGE>
                             FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                         NOTES TO BALANCE SHEETS (unaudited)
  
  1.     ORGANIZATION
  
         Foamex Capital Corporation  ("FCC"), a wholly-owned  subsidiary of Foamex
  L.P.,  was formed for the sole  purpose of  obtaining  financing  from  external
  sources.
  
  2.     COMMITMENTS AND CONTINGENCIES
  
         FCC is a joint obligor and severally  liable on the following  borrowings
  of Foamex L.P.:
  
         9 7/8% Senior Subordinated Notes due 2007 ("Senior Subordinated Notes")
  
         The Senior  Subordinated  Notes  were  issued by Foamex  L.P.  and FCC in
  connection with the June 1997 refinancing  plan. The Senior  Subordinated  Notes
  bear interest at the rate of 9 7/8% per annum payable  semiannually on each June
  15 and December 15, commencing  December 15, 1997. The Senior Subordinated Notes
  mature on June 15, 2007.  The Senior  Subordinated  Notes may be redeemed at the
  option of Foamex  L.P.,  in whole or in part,  at any time on or after  June 15,
  2002, initially at 104.938% of their principal amount, plus accrued interest and
  liquidated  damages,  as defined,  if any, thereon to the date of redemption and
  declining to 100.0% on or after June 15, 2005. In addition, at any time prior to
  June 15, 2000,  Foamex L.P. may on one or more  occasions  redeem up to 35.0% of
  the initially outstanding principal amount of the Senior Subordinated Notes at a
  redemption  price  equal to  109.875%  of the  principal  amount,  plus  accrued
  interest and liquidated  damages, if any, thereon to the date of redemption with
  the cash proceeds of one or more Public Equity Offerings,  as defined.  Upon the
  occurrence  of  a  change  of  control,  as  defined,   each  holder  of  Senior
  Subordinated  Notes will have the right to require Foamex L.P. to repurchase the
  Senior  Subordinated  Notes at a price equal to 101.0% of the principal  amount,
  plus accrued interest and liquidated damages, if any, to the date of repurchase.
  Trace Holdings' proposed acquisition of Foamex International may constitute such
  a change of control.  The Senior Subordinated Notes are subordinated in right of
  payment to all senior indebtedness and are pari passu in right of payment to the
  13 1/2% Senior  Subordinated Notes and approximately  $7.0 million  subordinated
  promissory note.
  
         13 1/2% Senior  Subordinated Notes due 2005 ("13 1/2% Senior Subordinated
  Notes")
  
         The 13 1/2% Senior  Subordinated Notes were issued by Foamex L.P. and FCC
  in a  private  placement  on  December  23,  1997 in  connection  with the Crain
  Acquisition.  The 13 1/2% Senior Subordinated Notes bear interest at the rate of
  13 1/2% per annum  payable  semiannually  on each  February  15 and  August  15,
  commencing  February 15, 1998. The 13 1/2% Senior  Subordinated  Notes mature on
  August 15, 2005.  The 13 1/2% Senior  Subordinated  Notes may be redeemed at the
  option of Foamex L.P.,  in whole or in part,  at any time on or after August 15,
  2000,  initially at 106.75% of their principal amount, plus accrued interest and
  liquidated  damages,  as defined,  if any, thereon to the date of redemption and
  declining to 100.0% on or after August 15, 2004. Upon the occurrence of a change
  of control,  as defined,  each holder of the 13 1/2% Senior  Subordinated  Notes
  will have the right to require  Foamex  L.P.  to  repurchase  the 13 1/2% Senior
  Subordinated  Notes at a price  equal to 101.0% of the  principal  amount,  plus
  accrued  interest and  liquidated  damages,  if any, to the date of  repurchase.
  Trace Holdings' proposed acquisition of Foamex International may constitute such
  a change of control.  The 13 1/2% Senior  Subordinated Notes are subordinated in
  right of  payment  to all  senior  indebtedness  and are pari  passu in right of
  payment to the Senior  Subordinated  Notes and an approximately  $7.0 million of
  subordinated promissory note.
  
                                         16
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         Foamex L.P.  operates in the flexible  polyurethane  and advanced polymer
  foam products industry.  The following  discussion should be read in conjunction
  with the condensed  consolidated  financial statements and related notes thereto
  of Foamex  L.P.  included in this  report.  Certain  information  in this report
  contains  forward-looking  statements and should be read in conjunction with the
  discussion regarding forward-looking statements set forth on page five of Foamex
  L.P.'s 1997 Annual Report on Form 10-K/A.
  
         During 1997,  Foamex  L.P.'s  products  were  utilized  primarily in four
  businesses:  (i)  Foam  Products,  consisting  of  cushioning  foams,  including
  bedding, furniture, packaging, health care and foam-based consumer products such
  as futons,  pillows,  mattress pads and juvenile furniture,  (ii) Carpet Cushion
  Products,  consisting of carpet padding and related  products,  (iii) Automotive
  Products,  consisting of automotive trim,  laminates and other accessories,  and
  (iv) Technical  Products,  consisting of reticulated  and other  specialty foams
  used for reservoiring, gasketing and sealing.
  
         On November 5, 1998,  Trace  Holdings,  Trace Merger Sub, Inc. and Foamex
  International  entered  into an  Agreement  and  Plan  of  Merger  (the  "Merger
  Agreement").  Pursuant to the terms of the Merger  Agreement,  Trace  Merger Sub
  will be  merged  with and into  Foamex  International  (the  "Merger")  and each
  outstanding share of common stock (except for shares owned by the Trace Holdings
  shareholders,  shares  owned by Foamex  International  and  shares  owned by the
  stockholders  who  perfected  their  appraisal  rights  in  accordance  with the
  Delaware  law)  will be  converted  into the right to  received  $12.00 in cash,
  without interest.  Also on November 5, 1998, Trace Holdings terminated the prior
  Merger  Agreement  among the parties by  delivering a Notice of  Termination  to
  Foamex  International.  Trace  Holdings  terminated  the prior Merger  Agreement
  because the  financing  condition  contained in the prior Merger  Agreement  was
  incapable of being satisfied on or prior to December 31, 1998.
  
         Consummation of the Merger is subject to various  conditions,  including,
  among others:  (i) the approval and adoption of the Merger  Agreement by (A) the
  affirmative  vote of holders of a majority of the  outstanding  shares of Common
  Stock entitled to vote thereon,  and (B) the  affirmative  vote of a majority of
  the independent Shares (as defined) voting with respect to the Merger,  (ii) the
  absence of any  injunction  preventing  consummation  of the  Merger,  (iii) the
  obtaining of financing for the transactions contemplated by the Merger Agreement
  on terms and conditions and in amounts  reasonably  satisfactory  to Trace,  and
  (iv) other conditions that may be waived by the parties,  including: the absence
  of any action,  suit, claim or legal,  administrative or arbitral  proceeding or
  investigation  pending  before any  governmental  entity  seeking to restrain or
  prohibit,  or to obtain  damages in respect  of,  the  Merger  Agreement  or the
  consummation of the transactions contemplated thereby.
  
         In April 1998, Foamex L.P.'s facility in Orlando,  Florida was damaged by
  a fire which  recommenced the  manufacturing  of Foam Products in  mid-September
  1998.  During this idle period,  Foamex L.P. supplied local customers from other
  facilities.  Foamex L.P.  believes that it has adequate  insurance  coverage for
  business  interruption  and damages to the  facility  associated  with the fire;
  however,  there can be no  assurance  that the fire will not have a  significant
  impact on Foamex L.P.'s financial position or operations.
  
         On February 27, 1998,  Foamex  International,  Foamex L.P. and certain of
  its affiliates  completed a series of  transactions  designed to simplify Foamex
  International's   corporate   structure  and  to  provide   future   operational
  flexibility.  Prior to the consummation of these  transactions,  (i) Foamex L.P.
  and Foamex L.P.'s wholly-owned subsidiary, General Felt, entered into the Supply
  Agreement and the Administrative Services Agreement, (ii) Foamex L.P. repaid its
  outstanding  indebtedness  to  General  Felt with $4.8  million  in cash and the
  Foamex/GFI  Note  supported by a $34.5 million letter of credit under the Credit
  Facility,  (iii)  Foamex  L.P.  contributed  to  General  Felt $9.4  million  of
  outstanding net intercompany  payables and intercompany  loans with General Felt
  and (iv) Foamex L.P. defeased the $4.5 million  outstanding  principal amount of
  its 9 1/2% Senior  Secured Notes due 2000. The initial  transaction  resulted in
  the  transfer  from Foamex L.P.  to Foam  Funding LLC of all of the  outstanding
  common stock of General Felt, in exchange for (i) the assumption by Foam Funding
  LLC of $129.0  million of Foamex  L.P.'s  indebtedness  and (ii) the transfer by
  Foam  Funding  LLC to  Foamex  L.P.  of a 1%  non-managing  general  partnership
  interest  in Foamex  L.P. As a result,  each of General  Felt and Foamex  Fibers
  ceased being a subsidiary of Foamex L.P. and was relieved  from all  obligations
  under  Foamex  L.P.'s  9 7/8%  Senior  Subordinated  Notes  and 13  1/2%  senior
  subordinated  notes due 2005.  Upon  consummation  of the  initial  transaction,
  Foamex Carpet, a newly formed wholly-owned  subsidiary of Foamex  International,
  Foamex  International,  Foam Funding LLC, and General Felt
  
                                         17
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  entered into an Asset  Purchase  Agreement,  pursuant to which General Felt sold
  substantially  all of its  assets  (other  than  the  Foamex/GFI  Note  and  its
  operating facility in Pico Rivera,  California) to Foamex Carpet in exchange for
  (i) $20.0 million in cash and (ii) a promissory  note issued by Foamex Carpet to
  Foam Funding LLC in the amount of $70.2 million.  The $20.0 million cash payment
  was funded with a  distribution  by Foamex  L.P. As part of these  transactions,
  Foamex Fibers,  a  wholly-owned  subsidiary of General Felt, was merged with and
  into General Felt and Foamex LLC, a wholly-owned  subsidiary of Foamex L.P., was
  merged with and into  Foamex  L.P.  In  addition,  FMXI,  Inc.  and Crain,  both
  wholly-owned subsidiaries of Foamex International and general partners of Foamex
  L.P., were merged and Crain, as the surviving corporation,  subsequently changed
  its name to FMXI,  Inc.  Foamex Carpet will conduct the carpet cushion  business
  previously  conducted  by General  Felt.  Also,  Foam  Funding LLC has  retained
  ownership of one of General Felt's operating facilities which is being leased to
  Foamex Carpet and the Foamex/GFI Note.
  
         No gain has been recognized on the General Felt net assets transferred to
  Foam Funding LLC and repurchased by Foamex  International.  Foamex International
  will  continue  to account  for these net assets  using the  carryover  basis of
  Foamex L.P.  The $129.0  million of debt  assumed by Foam Funding LLC in the GFI
  Transaction was accounted for as an  extinguishment of debt which resulted in an
  extraordinary  loss of approximately $2.0 million.  The 1% non-managing  general
  partnership  interest  acquired  in  connection  with  the GFI  Transaction  was
  accounted  for as a redemption  of equity.  By virtue of the transfer of General
  Felt stock and the subsequent  merger of General Felt into Foam Funding LLC, the
  Pico Rivera facility was transferred to Foam Funding LLC; no gain was recognized
  on the transfer since Foamex International leased-back the facility.
  
         On December 23, 1997, Foamex  International  acquired Crain pursuant to a
  merger  agreement  with Crain  Holdings  for a purchase  price of  approximately
  $213.7  million,  including  the  assumption  of  debt  with  a  face  value  of
  approximately $98.6 million (and an estimated fair value of approximately $112.3
  million).  Foamex  International then contributed the assets of Crain subject to
  all of its  liabilities and  indebtedness  to Foamex L.P. In addition,  fees and
  expenses associated with the Crain Acquisition are approximately $13.2 million.
  
         Operating  results  for 1998 are  expected  to be  influenced  by various
  internal and external factors.  These factors include,  among other things,  (i)
  consolidation of the Crain  Acquisition,  (ii) continued  implementation  of the
  continuous  improvement  program to improve Foamex L.P.'s  profitability,  (iii)
  additional  raw  material  cost  increases,  if any, by Foamex  L.P.'s  chemical
  suppliers,  (iv) Foamex L.P.'s  success in passing on to its  customers  selling
  price increases to recover such raw material cost increases and (v) fluctuations
  in interest rates.
  
  Quarterly  Period Ended  September 30, 1998  Compared to Quarterly  Period Ended
  September 28, 1997
  
  Results of Operations
  
         Net sales for the third  quarter of 1998 were $300.3  million as compared
  to $233.4  million in the third quarter of 1997, an increase of $66.9 million or
  28.7%. Foam Products net sales for the third quarter of 1998 increased to $155.6
  million from $89.8  million in the third  quarter of 1997  primarily  due to net
  sales from the Crain  operations  and increased  volume to our national  bedding
  customers  and  fabricators.  Carpet  Cushion  Products  net sales for the third
  quarter of 1998 decreased 28.8% to $51.3 million from $72.0 million in the third
  quarter of 1997  primarily due to the transfer of General Felt offset by the net
  sales from the Crain  Acquisition.  Automotive  Products net sales for the third
  quarter of 1998 increased 40.6% to $73.6 million from $52.3 million in the third
  quarter of 1997 primarily due to increased  volume  associated with above normal
  volume to General Motors and General Motor suppliers following the settlement of
  the  General  Motor  labor  dispute.  This above  normal  level of volume is not
  expected to continue. Technical Products net sales for the third quarter of 1998
  increased  2.6% to $19.8 million from $19.3 million in the third quarter of 1997
  primarily due to increased net sales volume for felted,  gasketing,  and sealing
  products.
  
         Gross  profit as a  percentage  of net sales  decreased  to 16.1% for the
  third quarter of 1998 from 16.3% in the third quarter of 1997 primarily due to a
  shift in product mix for 1998 as a result of the Crain  Acquisition and transfer
  of General  Felt offset by  increased  purchasing  leverage.  Crain's  principal
  product lines,  bedding,  furniture and carpet cushion,  have  inherently  lower
  gross profit margins than Foamex L.P.'s historical gross
  
                                         18
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  profit margins.
  
         Selling,  general and administrative  expenses decreased primarily due to
  the  transfer  of  General  Felt  offset by  additional  expenses  from  Crain's
  operations.
  
         Income from  operations  increased to $34.1 million for the third quarter
  of 1998 from $22.5  million in the third  quarter of 1997  primarily  due to the
  Crain Acquisition and other items discussed above..
  
         Income before extraordinary loss increased to $15.8 million for the third
  quarter of 1998 as compared to $9.5 million for the third  quarter of 1997.  The
  increase is primarily  due to the increase in income from  operations  discussed
  above offset by an increase of  approximately  $5.0 million in interest and debt
  issuance expense and an increase of $1.4 million in other income (expense),  net
  associated   with  certain   financial   and  legal   advisors  used  by  Foamex
  International  in the buyout  proposal and foreign  currency  loss in Mexico and
  Canada.  The increase in interest and debt issuance  expense is primarily due to
  the additional  debt incurred in connection  with the Crain  Acquisition and the
  June 1997 refinancing plan.
  
  Year to Date Period Ended September 30, 1998 Compared to Year to Date Period
  Ended September 28, 1997
  
  Results of Operations
  
         Net sales  for the year to date  period  ended  September  30,  1998 were
  $873.6  million as compared to $702.4  million for the year to date period ended
  September  28, 1997, an increase of $171.2  million or 24.4%.  Foam Products net
  sales for the year to date period ended  September 30, 1998  increased to $450.6
  million from $259.7 million for the year to date period ended September 28, 1997
  primarily due to the net sales from the Crain operations and increased volume to
  our national  bedding  customers and  fabricators.  Carpet Cushion  Products net
  sales for the year to date period ended  September 30, 1998  decreased  24.3% to
  $162.6 million from $214.9  million for the year to date period ended  September
  28, 1997  primarily  due to the transfer of General Felt and reduction of rebond
  selling  prices as compared to 1997 and product mix offset by net sales from the
  Crain  operations.  Automotive  Products  net sales for the year to date  period
  ended  September 30, 1998 increased  16.3% to $199.3 million from $171.4 million
  for the year to date period ended  September 28, 1997 primarily due to increased
  volume. Technical Products net sales for the year to date period ended September
  30, 1998 increased 8.2% to $61.1 million from $56.4 million for the year to date
  period ended  September 28, 1997 primarily due to increased net sales volume for
  felted, gasketing, and sealing products.
  
         Gross profit as a percentage of net sales decreased to 16.4% for the year
  to date period  ended  September  30, 1998 from 17.9% in the year to date period
  ended September 28, 1997 primarily due to the shift in product mix for 1998 as a
  result of the Crain  Acquisition.  Crain's  principal  product  lines,  bedding,
  furniture and carpet cushion,  have  inherently  lower gross profit margins than
  Foamex  International's  historical gross profit margins. Also, the gross profit
  was lower since Foamex International carried the full individual operating costs
  of both organizations during the first half of 1998.
  
         Income from  operations  increased to $91.8  million for the year to date
  period ended  September  30, 1998 from $78.7  million in the year to date period
  ended September 28, 1997 primarily due to the Crain Acquisition.
  
         Income before  extraordinary loss decreased to $38.1 million for the year
  to date period  ended  September  30, 1998 as compared to $42.2  million for the
  year to date period ended  September 28, 1997. The decrease is primarily due the
  increase in income from operations, offset by an increase of approximately $12.0
  million in interest and debt issuance expense and an increase of $3.2 million of
  other income (expense), net associated with certain fees and financial and legal
  advisors  used by  Foamex  International  in the  buyout  proposal  and  foreign
  currency losses in Mexico and Canada. The increase in interest and debt issuance
  expense is primarily due to the additional  debt incurred in connection with the
  Crain Acquisition and the June 1997 refinancing plan.
  
                                         19
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $3.2 million  during the year to date period ended  September 30, 1998 primarily
  relates to the  write-off of debt  issuance  costs with debt  extinguishment  in
  connection  with the GFI  Transaction  and the  redemption of the senior secured
  notes. The extraordinary  loss on early  extinguishment of debt of approximately
  $45.5 million during the year to date period ended  September 28, 1997 primarily
  relates  to the  write-off  of debt  issuance  costs with debt  extinguished  in
  connection with the June 1997 refinancing plan.
  
  Foamex Capital Corporation ("FCC")
  
         FCC is solely a co-issuer of certain  indebtedness of Foamex L.P. and has
  no other material operations.
  
  Liquidity and Capital Resources
  
         Foamex L.P.'s operating cash requirements  consist principally of working
  capital   requirements,   scheduled   payments  of  principal  and  interest  on
  outstanding  indebtedness and capital  expenditures.  Foamex L.P.  believes that
  cash flow from operating activities,  cash on hand and periodic borrowings under
  the Credit  Facility,  if  necessary,  will be adequate to meet  operating  cash
  requirements. The ability to meet the operating cash requirements of Foamex L.P.
  could be impaired if Foamex L.P. was to fail to comply with any of the covenants
  contained in the Credit Facility and such  noncompliance was not cured by Foamex
  L.P. or waived by the lenders.  Foamex L.P. was in compliance with the covenants
  in the Credit  Facility as of September 30, 1998 and expects to be in compliance
  with the covenants for the foreseeable future.
  
         Cash and cash  equivalents  decreased  $7.3  million  during 1998 to $2.1
  million at September  30, 1998 from $9.4 million at December 28, 1997  primarily
  due to an increase of cash used by the operating assets and liabilities and cash
  used for capital expenditures,  offset by increased revolving credit borrowings.
  Working  capital  increased  $60.8  million  during  1998 to $186.9  million  at
  September  30, 1998 from $126.1  million at December 28, 1997  primarily  due to
  changes in net  operating  assets (as  discussed  below),  a decrease in current
  portion  of  long-term  debt and a net  increase  in other  current  assets  and
  liabilities.  The decrease in current portion of long-term debt is primarily due
  to the  assumption  of  Foamex  L.P.'s  long-term  debt by Foam  Funding  LLC in
  connection with the General Felt transaction.  The net increase in other current
  assets and  liabilities is primarily  associated with the timing of payments for
  prepaid  expenses and the receipt of cash for other  receivables.  Net operating
  assets and liabilities  (comprised of accounts receivable,  accounts receivables
  from related parties, inventories, accounts payable and accounts payable related
  parties)  increased $14.6 million during 1998 to $177.1 million at September 30,
  1998 from $162.5  million at December  28, 1997  primarily  due to  increases in
  accounts  receivable,  accounts receivable related party,  decreases in accounts
  payable  and  accounts  receivable  related  party.  The  increase  in  accounts
  receivable is primarily  due to an increase in net sales for  September  1998 as
  compared  to December  1997.  The  decrease  in accounts  payable and in account
  payable related party is primarily due to the timing of payments.
  
         As of September 30, 1998,  there were $137.0 million of revolving  credit
  borrowings under the Credit Facility and approximately  $50.0 million associated
  with letters of credit  outstanding  which are supported by the Credit  Facility
  with unused  availability of approximately  $13.1 million.  Borrowings by Foamex
  Canada as of  September  30,  1998  were  $3.6  million  under  Foamex  Canada's
  revolving  credit  agreement  with unused  availability  of  approximately  $1.7
  million.
  
         Cash flow used for operating activities was $27.0 million for the year to
  date period  ended  September  30, 1998 as compared to cash  provided by of $8.8
  million for the year to date period ended  September 28, 1997.  This decrease is
  primarily due to (i) a reduction in operating  cash results,  (ii) cash used for
  an increase in accounts  receivable and other  receivables  associated  with the
  timing of receipts  and (iii) a  reduction  in  accounts  payable  and  accounts
  payable related party associated with the timing of payments.
  
         Cash flow used for  investing  activities  decreased to $36.2 million for
  the year to date period  ended  September  30, 1998 from $125.1  million for the
  year to date period ended  September 28, 1997 primarily due to the use of $105.8
  million of cash during 1997 to purchase the outstanding FJPS discount debentures
  in connection
  
                                         20
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  with the refinancing plan.
  
         Cash flow provided by financing activities decreased to $55.9 million for
  the year to date period ended September 30, 1998 as compared to cash provided of
  $96.4 million for the year to date period ended September 28, 1997. The decrease
  is due to greater net borrowings  during the year to date period ended September
  28, 1997 primarily relating to the June 1997 refinancing plan as compared to net
  cash  borrowings  during  the  year to date  period  ended  September  30,  1998
  primarily for working  capital needs and to fund  distributions  relating to the
  General Felt transaction.
  
         Certain  credit  agreements and  promissory  notes of Foamex L.P.  and/or
  Foamex Carpet  pursuant to which  approximately  $500.0 million of debt has been
  issued,  contain  provisions  that  would  result  in the  acceleration  of such
  indebtedness  if Trace  were to cease  to own at  least  30% of the  outstanding
  common stock.  Similarly,  certain  indentures of Foamex L.P. and Foamex Capital
  Corporation  relating to  approximately  $248.0  million of Senior  Subordinated
  Notes contain  provisions  that provide the holders of such Senior  Subordinated
  Notes with the right to require the issuers  thereof to  repurchase  such Senior
  Subordinated  Notes at a price in cash equal to 101% of the aggregate  principal
  amount  thereof,  plus accrued and unpaid  interest  thereon,  if Trace Holdings
  falls below certain specified ownership levels of common stock and other persons
  or group owns a greater  percentage of common stock than Trace  Holdings.  Trace
  Holdings  has  informed  Foamex  International  that  it  has  substantial  debt
  obligations  due at the end of  December  1998 and  currently  does not have the
  financial  resources to pay these  obligations.  Trace Holdings  intends to seek
  waivers and/or  modifications  of such  indebtedness;  however,  there can be no
  assurance  that such waivers  and/or  modifications  will be achieved.  If Trace
  Holdings  were  to  default  on  its   indebtedness  and  the  holders  of  such
  indebtedness or other Trace Holdings creditors were to foreclose on or otherwise
  attach the common  stock held by Trace  Holdings,  such event could  trigger the
  acceleration and put rights described above.  Although  management believes that
  all such debt obligations  would be refinanced under such  circumstances,  there
  can be no assurance that Foamex  International or its subsidiaries would be able
  to do so. Trace Holdings has informed Foamex  International  that it anticipates
  that if the  proposed  merger  is  consummated  it will  be able to  satisfy  or
  restructure its outstanding obligations.
  
         Interest Rate Swaps
  
         In September 1998, Foamex  International  sold its existing interest rate
  swap  agreements  for a net gain of  approximately  $1.0 million  which is being
  amortized over the life of the debt.
  
         The effect of Foamex International's  interest rate swap agreements was a
  favorable  adjustment to interest and debt issuance  expense of $0.3 million and
  $0.5 million for the quarterly  periods  ended  September 30, 1998 and September
  28,  1997,  respectively  and $0.7 million and $2.2 million for the year to date
  periods ended September 30, 1998 and September 28, 1997, respectively.
  
  Environmental Matters
  
         Foamex L.P. is subject to extensive and changing  environmental  laws and
  regulations.  Expenditures to date in connection  with Foamex L.P.'s  compliance
  with  such  laws and  regulations  did not have a  material  adverse  effect  on
  operations,  financial position,  capital expenditures or competitive  position.
  The  amount  of  liabilities   recorded  by  Foamex  L.P.  in  connection   with
  environmental matters as of September 30, 1998 was $3.4 million. In addition, as
  of  September  30, 1998  Foamex L.P.  has net  receivables  of $0.6  million for
  indemnification of environmental  liabilities from former owners. Although it is
  possible that new information or future  developments  could require Foamex L.P.
  to  reassess  its  potential  exposure  to all  pending  environmental  matters,
  including  those  described  in the  footnotes  to  Foamex  L.P.'s  consolidated
  financial  statements,  management  believes  that,  based  upon  all  currently
  available information,  the resolution of all such pending environmental matters
  will not have a material adverse effect on Foamex L.P.'s  operations,  financial
  position, capital expenditures or competitive position.
  
                                         21
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  Inflation and Other Matters
  
         There was no significant  impact on Foamex L.P.'s  operations as a result
  of  inflation  during  the  periods  presented.  In some  circumstances,  market
  conditions or customer  expectations may prevent Foamex L.P. from increasing the
  price of its products to offset the inflationary pressures that may increase its
  costs in the future.
  
         Foamex L.P.'s automotive products customers are predominantly  automotive
  original  equipment  manufacturers or other automotive  suppliers.  As such, the
  sales of these  product  lines are  directly  related  to the  overall  level of
  passenger car and light truck production in North America.  Also,  Foamex L.P.'s
  sales are  sensitive  to sales of new and  existing  homes,  changes in personal
  disposable  income  and  seasonality.  Foamex  L.P.  typically  experiences  two
  seasonally  slow periods  during each year, in early July and in late  December,
  due to scheduled plant shutdowns and holidays.
  
  Year 2000 Compliance
  
         Foamex  International uses multiple business  information systems as well
  as  manufacturing  support  systems  that  could be  impacted  by the "Year 2000
  problem".  The Year 2000 problem  arises from  computer  programs that have been
  written using two digits rather than four to designate the year.  Date-sensitive
  computer  software may  recognize a date using "00" as the year 1900 rather than
  the year 2000, resulting in system failures or miscalculations,  which may cause
  operational disruptions.
  
         Foamex  International  is in the  process  of the  remediation  of  their
  business  information  computer  systems.  Foamex  International  is also in the
  process of the conversion of the former Crain systems to Foamex  International's
  standard business information computer systems. The replacement of these systems
  will  increase  the  integration  of systems and allow  employees  at  different
  locations  to  share  financial  information  and  operations  information  more
  effectively.  Remediation of Foamex International  business information computer
  systems and the  conversion of the former Crain  systems  should be completed in
  1998.  These  systems and software are Year 2000  compliant,  thus  handling the
  majority of Foamex International's Year 2000 business systems requirements.
  
         Foamex  International  has  a  Year  2000  Executive  Sponsor  Team  with
  representatives of Foamex International. The Year 2000 Executive Sponsor Team is
  providing direction to the Year 2000 Steering Committee within the organization.
  The Steering  Committee is in the process of  completing  an  assessment  of the
  state of readiness of the  Information  Technology  ("IT") and non-IT systems of
  Foamex International.  These assessments cover manufacturing systems,  including
  laboratory information systems and field instrumentation,  and significant third
  party vendor and supplier systems,  including employee  compensation and benefit
  plan  maintenance  systems.  The  Steering  Committee  is also in the process of
  assessing the readiness of significant customers and suppliers.
  
         The Year  2000  assessment  process  for  each  facility  consists  of an
  inventory  of Year 2000  sensitive  equipment,  an  assessment  of the impact of
  possible  failures,  determination  of the  required  remediation  actions,  and
  testing and implementation of solutions. The inventory, assessment,  remediation
  and testing phases should be completed in 1998, with fail safe testing and final
  implementation  taking  place in  1999.  The  progress  of  these  phases  as of
  September 30, 1998 is summarized as follows:
  
         The total  estimated  spending of $2.4  million for Foamex  International
  represents  a midpoint  of an  estimated  range  between  $2.1  million and $2.7
  million.  These  spending  estimates will be refined as phases of the assessment
  are completed. Spending is funded by cash generated from operations. Preliminary
  estimates  indicate  that from 25 to 35 percent  of the  estimated  costs  could
  qualify for capitalization.
  
         Management  believes that all  significant  systems  controlled by Foamex
  International  will be Year  2000  ready in the last  half of  1999.  While  the
  Steering  Committee  is  communicating  readiness to third party  customers,  as
  requested, and is assessing the readiness of critical suppliers, there can be no
  assurance  that third  parties with a  significant  business  relationship  will
  successfully test, reprogram,  and replace all of their IT and non-IT systems on
  a timely basis. As part of the overall readiness, Foamex International is in the
  process of developing contingency plans in the event of Year 2000 non-compliance
  of certain systems or third parties.  Details of such contingency
  
                                         22
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  plans  will be  determined  after  the  Steering  Committee  has  completed  its
  assessment  of both  internal  and third  party  systems and the  potential  for
  possible failures.
  
         There  is  inherent  uncertainty  in the  Year  2000  problem  due to the
  possibility of  unanticipated  failures by third party  customers and suppliers.
  Accordingly,  Foamex International is unable, at this time, to assess the extent
  and  resulting  materiality  of the impact of possible Year 2000 failures on its
  operations, liquidity or financial position. The Year 2000 assessment process is
  expected  to provide  information  that will  significantly  reduce the level of
  uncertainty  regarding  the  Year  2000  impact.  Management  believes  that the
  completion of the assessment as scheduled will help minimize the  possibility of
  any significant disruptions of Company operations.
  
  New Accounting Standards
  
         Statement of Financial  Accounting  Standards  No. 130 ("SFAS No.  130"),
  "Reporting  Comprehensive  Income,"  was  issued  by  the  Financial  Accounting
  Standards  Board in June 1997.  This  statement  requires all items that must be
  recognized under accounting  standards as components of comprehensive  income to
  be reported in a financial  statement that is displayed with the same prominence
  as other financial statements. Foamex L.P. adopted SFAS No. 130 during the first
  quarter of 1998 (see Note 10).
  
         Statement of Financial  Accounting  Standards  No. 131 ("SFAS No.  131"),
  "Disclosures  about  Segments of an Enterprise  and Restated  Information,"  was
  issued by the Financial  Accounting Standards Board in June 1997. This statement
  establishes  standards for reporting  information  about  operating  segments in
  annual  financial  statements  and  requires  reporting  of  selected  financial
  information  about  operating  segments in interim  financial  reports issued to
  stockholders.  It also  establishes  standards  for  related  disclosures  about
  products and services,  geographic areas, and major customers.  Foamex L.P. will
  adopt SFAS No. 131 for year end 1998  reporting.  Management is  evaluating  the
  impact,  if any,  the  standard  will  have on  Foamex  L.P.'s  present  segment
  reporting.
  
         In February 1998 the Financial Accounting Standards Board issued SFAS No.
  132, "Employers'  Disclosures about Pension and Other  Postretirement  Benefits"
  ("SFAS No. 132"),  which is effective for fiscal years  beginning after December
  15, 1997. SFAS No. 132 revised the required  disclosures about pension and other
  postretirement  benefit  plans.  Foamex L.P.  plans to adopt SFAS No. 132 in the
  fourth quarter of 1998.
  
         In June 1998 the Financial Accounting Standards Board issued SFAS No. 133
  ("SFAS  No.  133"),   "Accounting   for  Derivative   Instruments   and  Hedging
  Activities."  SFAS  No.  133  established  new  procedures  for  accounting  for
  derivatives  and  hedging  activities  and  supercedes  and  amends a number  of
  existing standards.  The statement is effective for fiscal years beginning after
  June 15, 1999.
  
                                         23
  <PAGE>
  
  
  
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
           Reference is made to the description of the legal proceedings contained
           in the Foamex  L.P.  Annual  Report on Form  10-K/A for the fiscal year
           ended December 28, 1997 and in Foamex L.P.'s  Quarterly  Report for the
           fiscal quarter ended June 28, 1998.
  
           The  information  from  Notes  8 and 9 of  the  condensed  consolidated
           financial  statements  of Foamex L.P. and  subsidiaries  as of June 28,
           1998 (unaudited) is incorporated herein by reference.
  
  Item 2.  Changes in Securities.
  
           None.
  
  Item 3.  Defaults Upon Senior Securities.
  
           None.
  
  Item 4.  Submission of Matters to a Vote of Securities Holders.
  
           None.
  
  Item 5.  Other Information.
  
           None.
  
  Item 6.  Exhibits and Financial Statement Schedules.
  
           (a)  Exhibits
  
  2.1(x)        -  Transfer  Agreement,  dated as of  February  27,  1998,  by and
                between Foam Funding LLC ("Foam LLC") and Foamex L.P.
  3.1(a)        - Certificate of Limited Partnership of Foamex L.P.
  3.2.1(a)      - Fourth Amended and Restated Agreement of Limited  Partnership of
                Foamex L.P., dated as of December 14, 1993, by and among FMXI Inc.
                ("FMXI") and Trace Foam Company,  Inc. ("Trace Foam"),  as general
                partners,  and Foamex L.P., as a limited partner (the "Partnership
                Agreement").
  3.2.2(b)      - First  Amendment to the  Partnership  Agreement,  dated June 28,
                1994.
  3.2.3(c)      - Second  Amendment to the Partnership  Agreement,  dated June 12,
                1997.
  3.2.4(v)      - Third Amendment to the Partnership Agreement, dated December 23,
                1997.
  3.2.5(x)      - Fourth  Amendment to the Partnership  Agreement,  dated February
                27, 1998.  
  3.3(y)        - Certificate of Incorporation of FMXI.
  3.4(y)        - By-laws of FMXI.
  3.5(k)        -  Certificate  of  Incorporation  of Foamex  Capital  Corporation
                ("FCC").
  3.6(k)        - By-laws of FCC.
  4.1.1(d)      - Indenture,  dated as of June 12, 1997, by and among Foamex L.P.,
                FCC,  the  Subsidiary  Guarantors  and The  Bank of New  York,  as
                Trustee,  relating  to  $150,000,000  principal  amount  of 9 7/8%
                Senior  Subordinated Notes due 2007,  including the form of Senior
                Subordinated Note and Subsidiary Guarantee.
  4.1.2(v)      - First  Supplemental  Indenture,  dated as of December  23, 1997,
                between  Foamex LLC ("FLLC") and The Bank of New York, as trustee,
                relating to the 9 7/8% Notes.
  
                                         24
  <PAGE>
  
  4.1.3(x)      - Second  Supplemental  Indenture,  dated as of February 27, 1998,
                among Foamex L.P. and FCC, as joint and several obligors,  General
                Felt  Industries,  Inc.  ("General  Felt"),  Foamex  Fibers,  Inc.
                ("Foamex Fibers"),  and FLLC, as withdrawing  guarantors,  and The
                Bank of New York, as trustee, relating to the 9 7/8% Notes.
  4.2.1(v)      - Indenture,  dated as of December  23, 1997,  by and among Foamex
                L.P.,  FCC, the Subsidiary  Guarantors,  Crain Holdings  Corp., as
                Intermediate  obligator,  and The Bank of New  York,  as  trustee,
                relating  to  $98,000,000  principal  amount  of  13  1/2%  Senior
                Subordinated  Notes due 2005 (the "13 1/2% Notes"),  including the
                form of Senior Subordinated Note and Subsidiary Guarantee.
  4.2.2(x)      - First  Supplemental  Indenture,  dated as of February  27, 1998,
                among Foamex L.P. and FCC, as joint and several obligors,  General
                Felt,  Foamex Fibers and FLLC, as  withdrawing  guarantors,  Crain
                Industries,  Inc., as withdrawing  intermediate  obligor,  and The
                Bank of New York, as trustee, relating to the 13 1/2% Notes.
  4.3(x)        - Discharge of  Indenture,  dated as of February 27, 1998,  by and
                among  Foamex  L.P.,  General  Felt,  Foamex   International  Inc.
                ("Foamex  International") and State Street Bank and Trust Company,
                as trustee, relating to the 9 1/2% Senior Secured Notes due 2000.
  4.4.1(x)      - Credit  Agreement,  dated as of June 12,  1997,  as amended  and
                restated as of February  27, 1998,  by and among Foamex L.P.,  and
                FMXI, the institutions from time to time party thereto as lenders,
                the institutions from time to time party thereto as issuing banks,
                and  Citicorp  USA,   Inc.  and  The  Bank  of  Nova  Scotia,   as
                Administrative Agents.
  4.4.2(x)      - Second Amended and Restated Foamex International Guaranty, dated
                as of February 27, 1998, made by Foamex  International in favor of
                Citicorp USA, Inc., as Collateral Agent.
  4.4.3(x)      - Amended and Restated Partnership Guaranty,  dated as of February
                27,  1998,  made  by FMXI in  favor  of  Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.4(p)      - Foamex Guaranty,  dated as of June 12, 1997, made by Foamex L.P.
                in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.5(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Latin America,  Inc. in favor of Citicorp USA, Inc., as Collateral
                Agent.
  4.4.6(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
                
  4.4.7(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by FCC in
                favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.8(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Mexico II, Inc.  in favor of Citicorp  USA,  Inc.,  as  Collateral
                Agent.
  4.4.9(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Asia, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.10(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.11(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex Latin  America,  Inc. in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.12(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex Asia,  Inc. in favor of Citicorp  USA,  Inc., as Collateral
                Agent.
  4.4.13(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex Mexico,  Inc. in favor of Citicorp USA, Inc., as Collateral
                Agent.
  4.4.14(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex  Mexico  II,  Inc.  in  favor of  Citicorp  USA,  Inc.,  as
                Collateral Agent.             
  4.4.15(p)     - Foamex  Security  Agreement,  dated as of June 12, 1997, made by
                Foamex L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.16(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by Foamex Latin  America,  Inc. in favor of Citicorp USA, Inc., as
                Collateral Agent.
  4.4.17(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by  Foamex  Mexico,  Inc.  in  favor of  Citicorp  USA,  Inc.,  as
                Collateral Agent.
  
                                         25
  <PAGE>
  
  4.4.18(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by Foamex  Mexico II,  Inc.  in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.19(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by Foamex Asia, Inc. in favor of Citicorp USA, Inc., as Collateral
                Agent.
  4.4.20(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.21(r)     - Foamex  Pledge  Agreement,  dated as of June 12,  1997,  made by
                Foamex L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.22(w)     - First Amendment to Foamex Pledge Agreement, dated as of December
                23,  1997,  by Foamex  L.P.  in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.23(w)     - First  Amendment  to  Foamex  Security  Agreement,  dated  as of
                December 23, 1997, by Foamex L.P. in favor of Citicorp USA,  Inc.,
                as Collateral Agent.
  4.4.24(w)     - First Amendment to Foamex Patent Agreement, dated as of December
                23,  1997,  by Foamex  L.P.  in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.25(w)     - First  Amendment to Trademark  Security  Agreement,  dated as of
                December 23, 1997, by Foamex L.P. in favor of Citicorp USA,  Inc.,
                as Collateral Agent.
  4.4.26(w)     -  Acknowledgment  of  Guaranty  by  each of the  guarantors  to a
                Guaranty dated June 12, 1997 in favor of Citicorp USA, Inc.
  4.4.27(w)     - First  Amendment to Pledge  Agreement,  dated as of December 23,
                1997, by pledgors in favor of Citicorp USA, Inc.
  4.4.28(w)     - Crain Industries  Guaranty,  dated as of December 23, 1997, made
                by Crain in favor of Citicorp USA, Inc.
  4.4.29(x)     -  Partnership  Pledge  Agreement,  dated as of February 27, 1998,
                made by Foamex  International  and FMXI in favor of Citicorp  USA,
                Inc., as Collateral Agent.
  4.6(j)        -  Commitment  letter,  dated July 9, 1996,  from The Bank of Nova
                Scotia to Foamex Canada Inc.
  4.7(a)        - Subordinated  Promissory  Note,  dated as of May 6, 1993, in the
                original principal amount of $7,014,864 executed by Foamex L.P. to
                John Rallis ("Rallis").
  4.8(a)        - Marely Loan Commitment Agreement, dated as of December 14, 1993,
                by and between Foamex L.P. and Marely s.a. ("Marely").
  4.9(a)        - DLJ Loan Commitment Agreement, dated as of December 14, 1993, by
                and between Foamex L.P. and DLJ Funding, Inc. ("DLJ Funding").
  4.10(p)       - Promissory Note, dated June 12, 1997, in the aggregate principal
                amount of $5,000,000, executed by Trace Holdings to Foamex.
  4.10.1(p)     - Promissory Note, dated June 12, 1997, in the aggregate principal
                amount of $4,794,828, executed by Trace Holdings to Foamex.
  4.11.1(x)     -  Promissory  Note of  Foamex  L.P.  in  favor of Foam LLC in the
                principal amount of $34 million, dated February 27, 1998.      
  10.1.1(p)     - Amendment to Master Agreement, dated as of June 5, 1997, between
                Citibank, N.A. and Foamex.
  10.1.2(p)     -  Amended  confirmation,  dated  as of  June  13,  1997,  between
                Citibank, N.A. and Foamex L.P.
  10.1.3(w)     - Amended  confirmation,  dated as of  February  2, 1998,  between
                Citibank, N.A. and Foamex L.P. 
  10.2(h)       -  Reimbursement  Agreement,  dated as of March 23, 1993,  between
                Trace Holdings and General Felt.
  10.3(h)       - Shareholder Agreement,  dated December 31, 1992, among Recticel,
                s.a.  ("Recticel"),  Recticel  Holding  Noord B.V.,  Foamex  L.P.,
                Beamech Group Limited,  LME-Beamech,  Inc., James Brian Blackwell,
                and Prefoam AG relating to foam technology sharing arrangement.
  10.4.1(k)     - Asset Transfer  Agreement,  dated as of October 2, 1990, between
                Trace  Holdings  and Foamex (the "Trace  Holdings  Asset  Transfer
                Agreement").
  10.4.2(k)     - First  Amendment,  dated as of December 19,  1991,  to the Trace
                Holdings Asset Transfer Agreement.
  
                                         26
  <PAGE>
  10.4.3(k)     - Amended and  Restated  Guaranty,  dated as of December 19, 1991,
                made by Trace Foam in favor of Foamex L.P.
  10.5.1(k)     - Asset Transfer  Agreement,  dated as of October 2, 1990, between
                RFC and Foamex L.P. (the "RFC Asset Transfer Agreement").
  10.5.2(k)     - First Amendment, dated as of December 19, 1991, to the RFC Asset
                Transfer Agreement.
  10.5.3(k)     - Schedule  5.03 to the RFC Asset  Transfer  Agreement  (the "5.03
                Protocol").
  10.5.4(h)     - The 5.03 Protocol Assumption Agreement,  dated as of October 13,
                1992, between RFC and Foamex L.P.
  10.5.5(h)     - Letter Agreement  between Trace Holdings and Recticel  regarding
                the Recticel Guaranty, dated as of July 22, 1992.
  10.6(l)       - Supply Agreement,  dated June 28, 1994,  between Foamex L.P. and
                Foamex International.
  10.7.1(l)     - First  Amended and Restated Tax Sharing  Agreement,  dated as of
                December 14, 1993, among Foamex, Trace Foam, FMXI and Foamex L.P.
  10.7.2(d)     - First Amendment to Amended and Restated Tax Sharing Agreement of
                Foamex,  dated as of June 12, 1997,  by and among  Foamex,  Foamex
                L.P., FMXI, Inc. and Trace Foam.
  10.7.3(w)     - Second  Amendment to Amended and Restated Tax Sharing  Agreement
                of Foamex L.P., dated as of December 23, 1997, by and among Foamex
                L.P., Foamex International, FMXI, and Trace Foam.
  10.7.4(y)     - Third Amendment to Amended and Restated Tax Sharing Agreement of
                Foamex L.P.,  dated as of February 27, 1998, by and between Foamex
                L.P., Foamex International and FMXI.
  10.8.1(m)     - Tax  Distribution  Advance  Agreement,  dated as of December 11,
                1996, by and between Foamex and Foamex-JPS Automotive.
  10.8.2(d)     - Amendment No. 1 to Tax Distribution Advance Agreement,  dated as
                of June 12, 1997, by and between Foamex L.P. and Foamex.
  10.9.1(h)     - Trace Foam Management  Agreement  between Foamex and Trace Foam,
                dated as of October 13, 1992.
  10.9.2(l)     - Affirmation  Agreement  re:  Management  Agreement,  dated as of
                December 14, 1993, between Foamex and Trace Foam.
  10.9.3(d)     - First  Amendment to Management  Agreement,  dated as of June 12,
                1997, by and between Foamex and Trace Foam.
  10.10.1(k)    - Salaried Incentive Plan of Foamex and Subsidiaries.
  10.10.2(k)    - Trace Holdings 1987 Nonqualified Stock Option Plan.
  10.10.3(k)    - Equity Growth Participation Program.
  10.10.4(e)(o) - Foamex L.P.  Salaried  Retirement  Plan  (formerly  known as the
                Foamex L.P. Products,  Inc. Salaried Employee Retirement Plan), as
                amended, effective July 1, 1994.
  10.10.5(u)    - Foamex L.P. 401(k) Savings Plan effective October 1, 1997.
  10.10.6(a)    - Foamex L.P.'s 1993 Stock Option Plan.
  10.10.7(a)    - Foamex L.P.'s Non-Employee Director Compensation Plan.
  10.11.1(o)    -  Employment  Agreement,  dated as of  February  1, 1994,  by and
                between Foamex L.P. and William H. Bundy.
  10.12(a)      - Warrant  Exchange  Agreement,  dated as of December 14, 1993, by
                and between Foamex L.P. and Marely.
  10.13(a)      - Warrant  Exchange  Agreement,  dated as of December 14, 1993, by
                and between Foamex L.P. and DLJ Funding.
  10.14(o)      - Stock Purchase Agreement,  dated as of December 23, 1993, by and
                between   Transformacion   de  Espumas  y  Fieltros,   S.A.,   the
                stockholders which are parties thereto, and Foamex L.P.
  10.15.1(r)    - Asset  Purchase  Agreement,  dated as of August 29, 1997, by and
                among  General  Felt,  Foamex  L.P.,  Bretlin,  Inc. and The Dixie
                Group.
  10.15.2(s)    - Addendum  to Asset  Purchase  Agreement,  dated as of October 1,
                1997, by and among General Felt,  Foamex L.P.,  Bretlin,  Inc. and
                The Dixie Group.
  
                                         27
  <PAGE>
  
  10.16.1(x)    - Supply Agreement,  dated as of February 27, 1998, by and between
                Foamex L.P. and General Felt (as assigned to Foamex Carpet).
  10.16.2(x)    -  Administrative  Services  Agreement,  dated as of February  27,
                1998, by and between  Foamex L.P. and General Felt (as assigned to
                Foamex Carpet).
  10.17.1(w)    - Joint  Venture  Agreement  between Hua Kee  Company  Limited and
                Foamex Asia, Inc., dated July 8, 1997.
  10.17.2(w)    - Loan Agreement  between Hua Kee Company Limited and Foamex Asia,
                Inc.,  dated July 8, 1997. 
  27            - Financial Data Schedule for the period ended March 29, 1998.
  ----------------------------
  (a)  Incorporated   herein  by  reference  to  the  Exhibit  to  Foamex   L.P.'s
       Registration Statement on Form S-1, Registration No. 33-69606.
  
  (b)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       for the fiscal year ended January 1, 1995.
  
  (c)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred May 28, 1997.
  
  (d)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred June 12, 1997.
  
  (e)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex and FCC on Form S-4, Registration No. 33-65158.
  
  (f) Intentionally omitted.
  
  (g) Intentionally omitted.
  
  (h)  Incorporated  herein by reference to the Exhibit to the Form 10-K Statement
       of Foamex and FCC for fiscal 1992.
  
  (i) Intentionally omitted.
  
  (j)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended September 30, 1996.
  
  (k)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement  of Foamex and FCC on Form S-1,  Registration  Nos.  33-49976 and
       33-49976-01.
  
  (l)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement  of FJPS,  FJCC and Foamex  L.P.  on Form S-4,  Registration  No.
       33-82028.
  
  (m)  Incorporated  herein by  reference  to the Exhibit to the Annual  Report on
       Form 10-K of Foamex for the fiscal year ended December 29, 1996.
  
  (n)  Intentionally omitted.
  
  (o)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       L.P. for fiscal 1993.
  
  (p)  Incorporated  herein  by  reference  to the  Exhibit  in  the  Registration
       Statement of Foamex on Form S-4, Registration No. 333-30291.
  
                                         28
  <PAGE>
  (q)  Intentionally omitted.
  
  (r)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on August 29, 1997.
  
  (s)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on October 6, 1997.
  
  (t)  Intentionally omitted.
  
  (u)  Incorporated  by  reference  to the Exhibit to the Form 10-Q of Foamex L.P.
       for the quarterly period ended September 28, 1997.
  
  (v)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form  8-K  of  Foamex  L.P.,   Foamex   Capital   Corporation   and  Foamex
       International reporting an event that occurred December 23, 1997.
  
  (w)  Incorporated  herein  by  reference  to the  Exhibit  in  the  Registration
       Statement of Foamex L.P. and FCC on Form S-4, Registration No. 333-45733.
  
  (x)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex International reporting an event that occurred on February 27, 1998.
  
  (y)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
  International for fiscal 1997.
  
           Certain  instruments  defining the rights of security holders have been
  excluded herefrom in accordance with Item  601(b)(4)(iii) of Regulation S-K. The
  registrant  hereby  agrees  to  furnish  a copy of any  such  instrument  to the
  Commission upon request.
  
           (b) Foamex L.P. filed the following Current Reports on Form 8-K:
  
  
  
                                         29
  <PAGE>
  
                                     SIGNATURES
  
  
     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  the
  registrants  have duly caused  this  report to be signed on their  behalf by the
  undersigned thereunto duly authorized.
  
  
  
                                           FOAMEX L.P.
  
                                           By:  FMXI, INC.
                                           General Partner
  
  
  Date:  November 20, 1998                 By:/s/ John A. Feenan
                                              ----------------------------
                                              John A. Feenan
                                              Executive Vice President and
                                              Chief Financial Officer
  
  
  
  
                                           FOAMEX CAPITAL CORPORATION
  
  
  
  Date:  November 20, 1998                 By:/s/ John A. Feenan
                                              ----------------------------
                                              John A. Feenan
                                              Executive Vice President and
                                              Chief Financial Officer
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text: SECURITIES AND EXCHANGE COMMISSION
  
                                      FORM 10-Q
  
                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                  For the quarterly period ended September 30, 1998
  
                      Commission file numbers 1-11432; 1-11436
  
                                     FOAMEX L.P.
                             FOAMEX CAPITAL CORPORATION
               (Exact name of registrant as specified in its charter)
  
            Delaware                                        05-0475617
            Delaware                                        22-3182164
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                        Identification Number)
  
  1000 Columbia Avenue
  Linwood, PA                                                    19061
  (Address of principal                                       (Zip Code)
  executive offices)
  
  Registrant's telephone number, including area code:  (610) 859-3000
  
  Indicate  by check mark  whether  the  registrants  (1) have  filed all  reports
  required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
  1934  during  the  preceding  12 months  (or for such  shorter  period  that the
  registrant  was required to file such reports) and (2) have been subject to such
  filing requirements for the past 90 days. YES X  NO ___
  
  Foamex L.P. and Foamex  Capital  Corporation  meet the  conditions  set forth in
  General  Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this
  form with the reduced disclosure format.
  
  The number of shares of Foamex Capital Corporation's common stock outstanding as
  of November 16, 1998 was 1,000.
  
                                    Page 1 of 30
                            Exhibit List on Page 24 of 30
  FOAMEX L.P.
                             FOAMEX CAPITAL CORPORATION
  
                                        INDEX
                                                                              Page
  Part I.  Financial Information:
  
            Item 1. Financial Statements
  
             Foamex L.P.
  
              Condensed Consolidated Statements of Operations -
                 Quarterly and Year to Date Periods Ended September
                 30, 1998 and September 28, 1997                                3
  
              Condensed Consolidated Balance Sheets as of September
                 30, 1998 and December 28, 1997                                 4
  
              Condensed Consolidated Statements of Cash Flows -
                 Year to Date Periods Ended September 30, 1998 and
                 September 28, 1997                                             5
  
              Notes to Condensed Consolidated Financial Statements              6
  
              Foamex Capital Corporation
  
              Balance Sheets as of September 30, 1998 and 
                  December 28, 1997                                            15
  
              Notes to Balance Sheets                                          16
  
            Item 2.  Management's Discussion and Analysis of Financial 
                     Condition and Results of Operations                       17
  
  Part II. Other Information                                                   24
  
           Exhibit List                                                        24
  
           Signatures                                                          30
  
                                  2
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                     FOAMEX L.P. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  Quarterly Periods Ended      Year to Date Periods Ended
                                         September 30,   September 28,  September 30, September 28,
                                              1998           1997           1998          1997
                                                                (thousands)
  NET SALES                                $ 300,274      $ 233,434     $ 873,555      $ 702,441
  
  COST OF GOODS SOLD                         252,072        195,395       730,266        576,825
                                           ---------      ---------     ---------      ---------
  
  GROSS PROFIT                                48,202         38,039       143,289        125,616
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                  14,109         15,562        51,472         46,893
                                           ---------      ---------     ---------      ---------
  
  INCOME FROM OPERATIONS                      34,093         22,477        91,817         78,723
  
  INTEREST AND DEBT ISSUANCE EXPENSE          16,956         11,846        49,936         33,355
  
  OTHER INCOME (EXPENSE), NET                 (1,146)           281        (1,765)         1,403
                                           ---------      ---------     ---------      ---------
  
  INCOME FROM CONTINUING OPERATIONS
     BEFORE PROVISION FOR INCOME TAXES        15,991         10,912        40,116         46,771
  
  PROVISION FOR INCOME TAXES                     165          1,359         2,049          4,618
                                           ---------      ---------     ---------      ---------
  
  INCOME BEFORE EXTRAORDINARY LOSS            15,826          9,553        38,067         42,153
  
  EXTRAORDINARY LOSS ON EARLY
     EXTINGUISHMENT OF DEBT                       --             --        (3,195)       (45,538)
                                           ---------      ---------     ---------      ---------
  
  NET INCOME (LOSS)                        $  15,826      $   9,553     $  34,872      $  (3,385)
                                           =========      =========     =========      =========
  The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                          3
  FOAMEX L.P. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
  
                                                      September 30,  December 28,
  ASSETS                                                  1998           1997
                                                       ---------      ---------
  CURRENT ASSETS:                                             (thousands)
       Cash and cash equivalents                       $   2,112      $   9,405
       Accounts receivable, net                          157,422        174,959
       Inventories                                       133,686        120,299
       Accounts receivable, related party                 21,836             --
       Other current assets                               37,654         47,554
                                                       ---------      ---------
          Total current assets                           352,710        352,217
  
  PROPERTY, PLANT AND EQUIPMENT, NET                     206,618        221,274
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                 181,094        219,699
  
  DEBT ISSUANCE COSTS, NET                                14,454         18,889
  
  OTHER ASSETS                                            22,409         21,989
                                                       ---------      ---------
  
  TOTAL ASSETS                                         $ 777,285      $ 834,068
                                                       =========      =========
  
  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
       Short-term borrowings                           $   6,058      $   6,598
       Current portion of long-term debt                   4,347         12,161
       Accounts payable                                  114,046        121,147
       Accounts payable - related parties                     --         11,662
       Accrued interest                                    9,670         10,655
       Other accrued liabilities                          31,646         63,920
                                                       ---------      ---------
          Total current liabilities                      165,767        226,143
  
  LONG-TERM DEBT                                         681,231        726,649
  
  LONG-TERM DEBT - RELATED PARTY                          34,000             --
  
  OTHER LIABILITIES                                       28,749         37,578
                                                       ---------      ---------
  
          Total liabilities                              909,747        990,370
                                                       ---------      ---------
  
  COMMITMENTS AND CONTINGENCIES                               --             --
                                                       ---------      ---------
  
  PARTNERS' EQUITY (DEFICIT):
       General partners                                    1,953       (122,304)
       Limited partners                                  (99,516)            --
       Notes receivable from partner                     (16,118)       (16,118)
       Accumulated other comprehensive income             (8,986)        (8,085)
       Other                                              (9,795)        (9,795)
                                                       ---------      ---------
          Total partners' equity (deficit)              (132,462)      (156,302)
                                                       ---------      ---------
  
  TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT)     $ 777,285      $ 834,068
                                                       =========      =========
  
            The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                          4
  FOAMEX L.P. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
  Year to Date Periods Ended
                                                                         September 30,  September 28,
                                                                             1998            1997
                                                                          ---------      ---------
  OPERATING ACTIVITIES:                                                          (thousands)
     Net income (loss)                                                    $  34,872      $  (3,385)
     Adjustments to reconcile  net income (loss) to net cash provided
         by operating activities:
         Depreciation and amortization                                       24,208         15,570
         Amortization of debt issuance costs and debt discount                 (114)         1,903
         Extraordinary loss on extinguishment of debt                         2,857         22,620
         Other operating activities                                           2,448         (1,696)
         Changes in operating assets and liabilities                        (91,259)       (26,203)
                                                                          ---------      ---------
  
            Net cash (used for) provided by operating activities            (26,988)         8,809
                                                                          ---------      ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                                   (21,853)       (25,444)
     Acquisition, net of cash acquired                                       (3,899)            --
     Divestiture of General Felt                                             (8,971)            --
     Purchase of FJPS senior secured discount debentures                         --       (105,829)
     Decrease in restricted cash                                                 --         12,143
     Loan to partner                                                             --         (5,000)
     Other investing activities                                              (1,465)          (930)
                                                                          ---------      ---------
  
            Net cash used for investing activities                          (36,188)      (125,060)
                                                                          ---------      ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from short-term borrowings                                    185          1,179
     Net proceeds from revolving loans                                       81,489         31,000
     Proceeds from long-term debt                                           129,000        453,500
     Repayment of long-term debt                                           (134,203)      (363,443)
     Debt issuance costs                                                     (1,598)       (15,617)
     Distributions to partners                                              (20,074)       (10,283)
     Other financing activities                                               1,084             25
                                                                          ---------      ---------
  
            Net cash provided by financing activities                        55,883         96,361
                                                                          ---------      ---------
  
  NET DECREASE IN CASH
     AND CASH EQUIVALENTS                                                    (7,293)       (19,890)
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                                   9,405         20,968
                                                                          ---------      ---------
  
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                     $   2,112      $   1,078
                                                                          =========      =========
  The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                         5
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  1.     ORGANIZATION AND BASIS OF PRESENTATION
  
         Foamex  L.P.'s  condensed  consolidated  balance sheet as of December 28,
  1997 has been  condensed  from the audited  consolidated  balance  sheet at that
  date. The condensed  consolidated balance sheet as of September 30, 1998 and the
  condensed consolidated statements of operations for the quarter and year to date
  periods  ended  September  30, 1998 and  September  28,  1997 and the  condensed
  consolidated  statements  of cash  flows  for the  year  to date  periods  ended
  September  30, 1998 and September 28, 1997 have been prepared by Foamex L.P. and
  subsidiaries and have not been audited by Foamex L.P.'s independent accountants.
  In the  opinion  of  management,  all  adjustments,  consisting  only of  normal
  recurring  adjustments,  considered  necessary  for a fair  presentation  of the
  consolidated financial position,  results of operations and cash flows have been
  included.
  
         During  September 1998,  management of Foamex L.P.  decided to change the
  year-end  reporting  requirement  of Foamex L.P. from a fifty-two or fifty-three
  week fiscal year ending on the Sunday closest to the end of the calendar year to
  a  calendar  year  ending  December  31st  to  improve  the  internal  reporting
  requirement of Foamex L.P. On November 3, 1998, Foamex  International's Board of
  Directors and other required third parties  approved the fiscal year-end change.
  This change is  effective  for the third  fiscal  quarter of 1998 which ended on
  September  30, 1998 and will  result in a 1998  fiscal year end of December  31,
  1998 as compared to January 3, 1999;  accordingly,  the  quarterly  period ended
  September 30, 1998 includes an additional three days with estimated  revenues of
  approximately $18.9 million.
  
         On December 23, 1997, Foamex International Inc. ("Foamex  International")
  acquired Crain Industries,  Inc.  ("Crain")  pursuant to a merger agreement with
  Crain  Holdings  Corp. for a purchase  price of  approximately  $213.7  million,
  including  the  assumption  of debt  with a face  value of  approximately  $98.6
  million (and an estimated fair value of approximately  $112.3  million),  Foamex
  International  then  contributed  the  assets  of  Crain  subject  to all of its
  liabilities  and  indebtedness  to Foamex  L.P.  (the "Crain  Acquisition").  In
  addition,   fees  and  expenses  associated  with  the  Crain  Acquisition  were
  approximately $13.2 million. (See Note 3).
  
         Certain  information  and  note  disclosures  normally  included  in  the
  financial  statements  prepared in accordance with generally accepted accounting
  principles  have been  condensed  or  omitted in  accordance  with the rules and
  regulations  of  the  Securities  and  Exchange   Commission.   These  condensed
  consolidated  financial  statements  should be read in  conjunction  with Foamex
  L.P.'s 1997 consolidated  financial statements and notes thereto as set forth in
  Foamex L.P.'s  Annual  Report on Form 10-K/A for the fiscal year ended  December
  28, 1997.
  
  2.     TRANSFER OF GENERAL FELT INDUSTRIES, INC.
  
         On February 27, 1998,  Foamex  International,  Foamex L.P. and certain of
  its affiliates  completed a series of  transactions  designed to simplify Foamex
  International's   corporate   structure  and  to  provide   future   operational
  flexibility.  Prior to the consummation of these  transactions,  (i) Foamex L.P.
  and  Foamex  L.P.'s  wholly-owned  subsidiary,  General  Felt  Industries,  Inc.
  ("General Felt"), entered into a Supply Agreement and an Administrative Services
  Agreement (see Note 7), (ii) Foamex L.P. repaid its outstanding  indebtedness to
  General  Felt with $4.8  million in cash and a $34.0  million  principal  amount
  promissory note (the  "Foamex/GFI  Note") supported by a $34.5 million letter of
  credit under the credit  facility,  (the "Credit  Facility"),  (iii) Foamex L.P.
  contributed  to  General  Felt $9.4  million  of  outstanding  net  intercompany
  payables and intercompany loans with General Felt, and (iv) Foamex L.P. defeased
  the $4.5 million outstanding principal amount of its 9 1/2% senior secured notes
  due 2000. The initial  transaction  resulted in the transfer from Foamex L.P. to
  Foam  Funding LLC of all of the  outstanding  common stock of General  Felt,  in
  exchange for (i) the  assumption  Foam  Funding LLC of $129.0  million of Foamex
  L.P.'s  indebtedness and (ii) the transfer by Foam Funding LLC to Foamex L.P. of
  a 1%  non-managing  general  partnership  interest  in Foamex  L.P. As a result,
  General Felt ceased being a subsidiary  of Foamex L.P. and was relieved from all
  obligations under Foamex L.P.'s 9 7/8% senior subordinated notes due 2007 and 13
  1/2% senior
  
                                         6
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  2.     TRANSFER OF GENERAL FELT INDUSTRIES, INC. (continued)
  
  subordinated  notes due 2005.  Upon  consummation  of the  initial  transaction,
  Foamex Carpet  Cushion,  Inc.  ("Foamex  Carpet"),  a newly formed  wholly-owned
  subsidiary of Foamex International,  Foamex International, Foam Funding LLC, and
  General Felt entered into an Asset Purchase  Agreement  dated February 27, 1998,
  in which  General  Felt sold  substantially  all of its assets  (other  than the
  Foamex/GFI Note and its operating facility in Pico Rivera, California) to Foamex
  Carpet in  exchange  for (i) $20.0  million in cash and (ii) a  promissory  note
  issued by Foamex Carpet to Foam Funding LLC in the amount of $70.2 million.  The
  $20.0 million cash payment was funded with a distribution by Foamex L.P. As part
  of these  transactions,  Foamex Fibers,  Inc. ("Foamex Fibers"),  a wholly-owned
  subsidiary  of General  Felt,  was merged with and into  General Felt and Foamex
  LLC, a  wholly-owned  subsidiary of Foamex L.P., was merged with and into Foamex
  L.P. In addition, FMXI, Inc. and Crain, both wholly-owned subsidiaries of Foamex
  International and general partners of Foamex L.P., were merged and Crain, as the
  surviving corporation, subsequently changed its name to FMXI, Inc. Foamex Carpet
  will conduct the carpet cushion business  previously  conducted by General Felt.
  Also, Foam Funding LLC has retained ownership of one of General Felt's operating
  facilities  which is  being  leased  to  Foamex  Carpet  and the  $34.0  million
  Foamex/GFI Note.
  
         No gain has been recognized on the General Felt net assets transferred to
  Foam Funding LLC and repurchased by Foamex  International.  Foamex International
  will  continue  to account  for these net assets  using the  carryover  basis of
  Foamex L.P.  The $129.0  million of debt  assumed by Foam Funding LLC in the GFI
  Transaction was accounted for as an  extinguishment of debt which resulted in an
  extraordinary  loss of approximately $2.0 million.  The 1% non-managing  general
  partnership  interest  acquired  in  connection  with  the GFI  Transaction  was
  accounted  for as a redemption  of equity.  By virtue of the transfer of General
  Felt stock and the subsequent  merger of General Felt into Foam Funding LLC, the
  Pico Rivera facility was transferred to Foam Funding LLC; no gain was recognized
  on the transfer since Foamex International leased-back the facility.
  
  3.     CRAIN ACQUISITION
  
         On December 23, 1997, Foamex  International  acquired Crain pursuant to a
  merger with Crain Holdings Corp.  for a purchase price of  approximately  $213.7
  million,  including the  assumption  of debt with a face value of  approximately
  $98.6 million (with an estimated fair value of  approximately  $112.3  million),
  Foamex  International  then contributed the assets of Crain,  subject to all its
  liabilities and  indebtedness  to Foamex L.P. Fees and expenses  associated with
  the Crain  Acquisition  are  approximately  $13.2 million.  The  acquisition was
  funded by $118.0  million in bank  borrowings  by Foamex  L.P.  under the Credit
  Facility.  The excess of the purchase price over the estimated fair value of the
  net assets acquired was approximately $152.5 million.
  
         The Crain  Acquisition was accounted for as a purchase and the operations
  of Crain are included in the  consolidated  statements  of  operations  and cash
  flows from the date of acquisition.  The cost of the Crain  Acquisition has been
  allocated  on the  basis  of the  fair  value  of the  assets  acquired  and the
  liabilities  assumed.  The excess of the purchase  price over the estimated fair
  value of the net assets  acquired  is being  amortized  using the  straight-line
  method over forty years.  The  allocation  of the  purchase  price for the Crain
  Acquisition is based upon  preliminary  estimates and assumptions and is subject
  to revision once  appraisals,  valuations and other studies of the fair value of
  the acquired assets and liabilities  have been completed.  The pro forma results
  listed below are unaudited and assume that the Crain Acquisition occurred at the
  beginning of fiscal year 1997.
  Quarterly Period Ended   Year to Date Period Ended
                                           September 28, 1997       September 28, 1997
                                                (thousands, except per share data)
  Net sales                                      $320,847                $946,927
                                                 ========                ========
  
  Income before extraordinary loss               $ 15,712                $ 39,009
                                                 ========                ========
  7
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  3.     CRAIN ACQUISITION (continued)
  
         The pro forma results are not  necessarily  indicative of what would have
  occurred  if the Crain  Acquisition  had been in effect for the  entire  periods
  presented nor are they necessarily indicative of future consolidated results.
  
  4.     INVENTORIES
  
         Inventories consist of:
  
                                         September 30,           December 28,
                                             1998                   1997
                                           --------               --------
                                                   (thousands)
  Raw materials and supplies               $ 84,637               $ 75,487
  Work-in-process                            19,051                 15,620
  Finished goods                             29,998                 29,192
                                           --------               --------
      Total                                $133,686               $120,299
                                           ========               ========
  
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  
         Long-term debt consists of:
  September 30,     December 28,
                                                                  1998              1997
                                                                --------          --------
  Credit Facility:                                                      (thousands)
    Term Loan A                                                 $     --          $ 76,700
    Term Loan B                                                   82,924           109,725
    Term Loan C                                                   75,385            99,750
    Term Loan D                                                  109,175           110,000
    Revolving credit facility                                    136,953            54,928
  9 7/8% Senior subordinated notes due 2007                      150,000           150,000
  13 1/2% Senior subordinated notes due 2005 (includes
    $12,824 and $13,720 of unamortized debt premium)             110,376           111,720
  9 1/2% Senior secured notes due 2000                                --             4,523
  Industrial revenue bonds                                         7,000             7,000
  Subordinated note payable (net of unamortized
    debt discount of $709 and $886)                                6,394             6,129
  Other                                                            7,371             8,335
                                                                --------          --------
                                                                 685,578           738,810
  
  Less current portion                                             4,347            12,161
                                                                --------          --------
  
  Long-term debt-unrelated parties                              $681,231          $726,649
                                                                ========          ========
  
  Long-term debt-related party consists of:
  
  Foamex/GFI Note                                               $ 34,000          $ 38,800
                                                                ========          ========
  8
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY (continued)
  
         Refinancing Associated with Transfer of General Felt Common Stock
  
         In  connection  with the  transfer of General Felt common stock (see Note
  2), Foamex L.P.  amended its agreements with lenders under the Credit  Facility,
  which  included  additional  borrowings  of $129.0  million  under new term loan
  agreements  that were assumed by Foam  Funding LLC (as  discussed in Note 2) and
  borrowings of $32.0 million under the existing revolving credit facility.  These
  funds were used to (i) repay approximately $125.1 million of existing term loans
  and accrued interest thereon of  approximately  $0.9 million,  (ii) deposit $4.8
  million  into an escrow  account in order to defease  the senior  secured  notes
  during June 1998, (iii) repay $4.8 million of indebtedness owed to General Felt,
  (iv) fund the $20.0 million  distribution  to Foamex  International  and (v) pay
  fees and expenses of approximately $5.4 million.  Also, this amendment increased
  the  availability  under the revolving  credit  facility from $150.0  million to
  $200.0 million;  however, $34.5 million of this increase is used for a letter of
  credit to support the Foamex/GFI Note.
  
         Foamex/GFI Note
  
         In connection  with the transfer of General  Felt's common stock,  Foamex
  L.P.  entered  into the $34.0  million  Foamex/GFI  Note to  settle an  existing
  intercompany  note payable to General Felt. The Foamex/GFI Note matures in March
  2000 with  interest  payable at LIBOR plus an applicable  margin.  The principal
  amount is due upon maturity in March 2000.
  
         Principal Payments
  
         Principal  payments on Foamex L.P.'s  long-term debt and long-term debt -
  related  party  for the  remainder  of 1998 and for the next  five  years are as
  follows:  1998 - $1.3 million; 1999 - $7.2 million; 2000 - $40.9 million; 2001 -
  $6.9 million; 2002 - $2.9 million; 2003 - $147.8 million and thereafter - $500.8
  million.
  
  6.    EARLY EXTINGUISHMENT OF DEBT
  
         In connection with the General Felt transaction,  Foamex L.P. incurred an
  extraordinary  loss on the early  extinguishment  of debt of approximately  $3.1
  million.  The extraordinary  loss is comprised of approximately $2.9 million for
  the  write-off  of  debt  issuance  costs  and  approximately  $0.2  million  of
  professional fees and other costs.
  
         During  1997,  in  connection  with  the   refinancing   plan  of  Foamex
  International's  indebtedness,  Foamex  International  incurred an extraordinary
  loss on the early  extinguishment of debt of approximately $42.0 million (net of
  income  taxes  of  $25.7  million).  The  extraordinary  loss  is  comprised  of
  approximately $39.0 million for premium and consent fee payments,  approximately
  $16.2  million  for the  write-off  of debt  issuance  costs and debt  discount,
  approximately   $8.2  million  for  the  loss   associated  with  the  effective
  termination and amendment of the interest rate swap agreements and approximately
  $4.3  million of  professional  fees and other costs.  In addition,  during 1997
  Foamex L.P. incurred  extraordinary losses of approximately $0.6 million (net of
  income  taxes of $0.4  million)  associated  with the  early  extinguishment  of
  approximately  $11.8 million of long-term debt funded with  approximately  $12.1
  million  of the  remaining  net  proceeds  from  the  sale  of its  Perfect  Fit
  Industries,   Inc.   subsidiary.   The   extraordinary   loss  is  comprised  of
  approximately  $0.4 million of premium payments and  approximately  $0.6 million
  for the write-off of debt issuance costs.
  
                                         9
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  7.      RELATED PARTY TRANSACTIONS
  
         Effective  February  27,  1998,  Foamex  L.P.  entered  into  the  Supply
  Agreement  (see Note 2) (i) whereby  Foamex Carpet may purchase from Foamex L.P.
  finished prime, rubber and rebond carpet cushion at the lessor of cost plus 4.7%
  or fair market value,  (ii) Foamex L.P. may purchase from Foamex Carpet nonwoven
  textile fiber products at the lessor of cost plus 15% or fair market value,  and
  (iii) either party may purchase from the other trim foam and other raw materials
  and  supplies  for the lessor of the price paid for such raw  materials  or fair
  market  value.  Prior to February 27, 1998,  Foamex L.P. had sales and purchases
  with General Felt based on an established  intercompany transfer price which was
  adjusted to comply with the transfer pricing regulations of the Internal Revenue
  Code, as amended, if necessary. During the quarterly periods ended September 30,
  1998 and September 28, 1997,  Foamex L.P. sold  approximately  $43.6 million and
  $37.1 million,  respectively,  to Foamex Carpet and purchased from Foamex Carpet
  approximately  $4.8 million and $0.3 million,  respectively.  During the year to
  date periods ended  September 30, 1998 and September 28, 1997,  Foamex L.P. sold
  approximately $110.0 million and $109.6 million,  respectively, to Foamex Carpet
  and purchased  from Foamex Carpet  approximately  $7.4 million and $1.1 million,
  respectively.
  
         In connection with the General Felt transaction (see Note 2), Foamex L.P.
  and Foamex Carpet entered into a Management  Services  Agreement  whereby Foamex
  L.P. will provide certain administrative functions on behalf of Foamex Carpet at
  a cost basis.  During the quarterly and year to date periods ended September 30,
  1998,  Foamex L.P.  received  $1.2 million and $1.8 million,  respectively,  for
  services provided to Foamex Carpet.
  
         During the year to date period  ended  September  30,  1998,  Foamex L.P.
  incurred  approximately $0.5 million of interest expense on a $38.8 million note
  due to General Felt. On February 27, 1998, Foamex L.P. repaid approximately $4.8
  million of this note, and the balance was replaced by the  Foamex/GFI  Note. The
  Foamex/GFI Note was retained by Foam Funding LLC in connection with the transfer
  of General Felt.  During the quarterly and year to date periods ended  September
  30, 1998,  Foamex L.P.  incurred  approximately  $0.6 million and $1.4  million,
  respectively, of interest expense on the Foamex/GFI Note (see Note 2).
  
         Foamex L.P. had a supply  agreement (the "Supply  Agreement") with Foamex
  International   pursuant  to  which,  at  the  option  of  Foamex  L.P.,  Foamex
  International would purchase certain raw materials,  which are necessary for the
  manufacture of Foamex L.P.'s products,  and resell such materials to Foamex L.P.
  at a price equal to net cost plus reasonable out of pocket expenses.  Management
  believed  that the terms of the Supply  Agreement  were no less  favorable  than
  those which Foamex L.P.  could have obtained from an  unaffiliated  third party.
  During the  quarterly  period ended  September 28, 1997,  Foamex L.P.  purchased
  approximately  $31.4 million of raw material under the Supply Agreement.  During
  the year to date periods ended September 30, 1998 and September 28, 1997, Foamex
  L.P. purchased approximately $15.0 million and $94.4 million,  respectively,  of
  raw materials under the Supply Agreement.  Effective March 30, 1998, Foamex L.P.
  had discontinued utilizing the Supply Agreement to purchase its raw materials.
  
         Foamex  L.P.  chartered  an  aircraft  (which is owned by a  wholly-owned
  subsidiary of Foamex International)  through a third party and incurred costs of
  approximately  $0.2 million and $0.3 million during the quarterly  periods ended
  September 30, 1998 and September 28, 1997,  respectively and approximately  $0.7
  million and $0.9 million  during the year to date periods  ended  September  30,
  1998 and September 28, 1997, respectively.
  
         On December 11, 1996, Foamex L.P. entered into a Tax Distribution Advance
  Agreement,  pursuant to which its partners are entitled to obtain  advances,  in
  the aggregate not to exceed $17.0 million,  against future  distributions  under
  Foamex L.P.'s tax distribution  agreement.  As of September 30, 1998, there were
  $13.6 million of advances to Foamex International under this agreement.
  
                                         10
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  8.     ENVIRONMENTAL MATTERS
  
         Foamex L.P. is subject to extensive and changing  federal,  state,  local
  and foreign environmental laws and regulations,  including those relating to the
  use, handling,  storage,  discharge and disposal of hazardous substances and the
  remediation of  environmental  contamination,  and as a result,  is from time to
  time involved in administrative and judicial  proceedings and inquiries relating
  to  environmental  matters.  During the year to date period ended  September 30,
  1998,  expenditures  in connection  with Foamex L.P.'s  compliance with federal,
  state,  local and  foreign  environmental  laws and  regulations  did not have a
  material adverse effect on Foamex L.P.'s operations, financial position, capital
  expenditures or competitive  position. As of September 30, 1998, Foamex L.P. has
  accruals of approximately $3.4 million for environmental  matters.  In addition,
  as of September 30, 1998 Foamex L.P. has net receivables of  approximately  $0.6
  million relating to indemnification for environmental  liabilities.  Foamex L.P.
  believes that realization of the receivables  established for indemnification is
  probable.
  
         The Clean Air Act Amendments of 1990 (the "1990 CAA Amendments")  provide
  for the establishment of federal emission standards for hazardous air pollutants
  including  methylene  chloride,  propylene oxide and TDI,  materials used in the
  manufacturing  of foam. On December 27, 1996,  the United  States  Environmental
  Protection Agency (the "EPA") proposed regulations under the 1990 CAA Amendments
  that  will  require  manufacturers  of slab  stock  polyurethane  foam  and foam
  fabrication  plants to reduce  emissions of methylene  chloride.  Because  these
  regulations  are subject to change  prior to  finalization,  Foamex L.P.  cannot
  accurately predict the actual cost of their implementation. Foamex L.P. does not
  believe  implementation  of the  regulations  will  require it to make  material
  expenditures  at  facilities  owned prior to December  23,  1997,  due to Foamex
  L.P.'s use of alternative  technologies  which do not utilize methylene chloride
  and its ability to shift current  production to the  facilities  which use these
  alternative technologies;  however, material expenditures may be required at the
  facilities  formerly  operated by Crain. The 1990 CAA Amendments also may result
  in  the  imposition  of  additional  standards  regulating  air  emissions  from
  polyurethane foam manufacturers,  but these standards have not yet been proposed
  or promulgated.
  
         In addition to general regulatory requirements,  state laws have resulted
  or will result in more stringent  regulations  regarding the use and emission of
  methylene  chloride.  Several former Crain facilities have been required to meet
  greater  restrictions  regarding  emission limits and/or quantities used of this
  chemical.
  
         On April 10,  1997,  the  Occupational  Health and Safety  Administration
  promulgated new standards  governing  employee  exposure to methylene  chloride,
  which is used as a blowing agent in some of Foamex International's manufacturing
  processes.  Foamex  International  does not believe  that it will be required to
  make any material expenditures to comply with these new standards due to its use
  of alternative  technologies which do not use methylene chloride and its ability
  to shift  production  to  facilities  which  use  these  technologies;  however,
  material  expenditures  may be required at the facilities  formerly  operated by
  Crain.
  
         Foamex L.P. has reported to  appropriate  state  authorities  that it has
  found soil and  groundwater  contamination  in excess of state standards at four
  facilities and soil  contamination  in excess of state  standards at three other
  facilities.  Foamex  L.P.  has  begun  remediation  and  is  conducting  further
  investigations  into the extent of the  contamination  at these  facilities and,
  accordingly,  the extent of the remediation that may ultimately be required. The
  actual cost and the timetable of any such  remediation  cannot be predicted with
  any degree of certainty at this time. As of September 30, 1998,  Foamex L.P. has
  accruals of approximately $2.8 million for the remaining  potential  remediation
  costs for these facilities based on estimates.
  
         Federal  regulations  require  that by the end of  1998  all  underground
  storage tanks  ("USTs") be removed or upgraded in all states to meet  applicable
  standards.  Foamex  L.P.  has two USTs that will  require  removal or  permanent
  in-place closure by the end of 1998. Due to the age of these tanks,  leakage may
  have occurred resulting in soil and possibly groundwater  contamination.  Foamex
  L.P. has accrued $0.1 million for the estimated removal and remediation, if any,
  associated with these USTs. However, the full extent of contamination and,
  
                                         11
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  8.     ENVIRONMENTAL MATTERS (continued)
  
  accordingly,  the actual cost of such  remediation  cannot be predicted with any
  degree of certainty at this time. Foamex L.P. believes that its USTs do not pose
  a  significant  risk  of  environmental   liability  because  of  Foamex  L.P.'s
  monitoring  practices  for  USTs  and  conditional  approval  for the  permanent
  in-place closure for certain USTs. However,  there can be no assurance that such
  USTs will not result in significant environmental liability in the future.
  
         Foamex  L.P.  has been  designated  as a  Potentially  Responsible  Party
  ("PRP") by the EPA with respect to nine sites, with an estimated total liability
  to Foamex  L.P.  for the nine  sites of less than  approximately  $0.5  million.
  Estimates of total clean-up  costs and  fractional  allocations of liability are
  generally  provided  by the EPA or the  committee  of PRP's with  respect to the
  specified site. In each case, the participation of Foamex L.P.
  is considered to be immaterial.
  
         Although it is possible that new information or future developments could
  require Foamex L.P. to reassess its potential  exposure  relating to all pending
  environmental  matters,  including those described herein,  management  believes
  that,  based upon all currently  available  information,  the resolution of such
  environmental  matters will not have a material  adverse effect on Foamex L.P.'s
  operations,  financial position,  capital expenditures or competitive  position.
  The possibility  exists,  however,  that new  environmental  legislation  and/or
  environmental  regulations may be adopted, or other environmental conditions may
  be found to exist, that may require  expenditures not currently  anticipated and
  that may be material.
  
  9.     LITIGATION
  
         As of November 16, 1998,  Foamex L.P. and Trace  International  Holdings,
  Inc.  ("Trace  Holdings")  were two of multiple  defendants  in actions filed on
  behalf of  approximately  5,000  recipients of breast implants in various United
  States federal and state courts and one Canadian provincial court. Some of these
  transactions  allege  substantial  damages,  but  most of these  actions  allege
  unspecified damages for personal injuries of various types. Three of these cases
  seek to  allege  claims  on behalf of all  breast  implant  recipients  or other
  allegedly  affected parties,  but no class has been approved or certified by the
  court.  In addition,  three cases have been filed  alleging  claims on behalf of
  approximately  700 residents of Australia,  New Zealand,  England,  and Ireland.
  Foamex L.P. believes that the number of suits may increase.  During 1995, Foamex
  L.P.  and Trace  Holdings  were  granted  summary  judgments  and  dismissed  as
  defendants  from all cases in the  federal  courts of the United  States and the
  state courts of California.  Appeals for these  decisions were withdrawn and the
  decisions  are final.  Although  breast  implants do not contain  foam,  certain
  silicone  gel  implants  were  produced  using  a  polyurethane   foam  covering
  fabricated by independent  distributors or fabricators  from bulk foam purchased
  from Foamex L.P.  or Trace  Holdings.  Neither  Foamex L.P.  nor Trace  Holdings
  recommended,  authorized  or  approved  the use of its foam for these  purposes.
  Foamex L.P. is indemnified by Trace Holdings for any such  liabilities  relating
  to foam  manufactured  prior to October 1990.  Although  Trace Holdings has paid
  Foamex  L.P.'s  litigation  expenses to date  pursuant to such  indemnification,
  there can be no absolute  assurance  that Trace Holdings will be able to provide
  such  indemnification  in the  future.  While it is not  feasible  to predict or
  determine  the  outcome  of  these  actions,  based  on  Foamex  L.P.'s  present
  assessment of the merits of pending claims,  after consultation with the general
  counsel of Trace Holdings,  and without taking into account potential  indemnity
  from the  manufacturers  of  polyurethane  covered breast  implants,  management
  believes that the disposition of matters that are pending or that may reasonably
  be  anticipated  to be  asserted  should not have a material  adverse  effect on
  either  Foamex  L.P.'s or Trace  Holdings'  consolidated  financial  position or
  results of operations.  If Foamex L.P.'s assessment of liability with respect to
  these actions is incorrect, such actions could have a material adverse effect on
  Foamex L.P.
  
         In November  1997, a complaint  was filed in the United  States  District
  Court for the  Southern  District of Texas  alleging  that  various  defendants,
  including Crain through the use of the CARDIO(R)  process  licensed from a third
  party, infringed on a patent held by plaintiff.  Foamex L.P. is negotiating with
  the licensor of the process for the  assumption  of the defense of the action by
  the licensor; however, the action is in the preliminary stages, and there can be
  no assurance as to the ultimate outcome of the action.
  
                                         12
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  9.     LITIGATION (continued)
  
         On or about March 17, 1998,  five  purported  class action  lawsuits were
  filed in the Delaware  Chancery Court, New Castle County (the "Court"),  against
  Foamex  International,  directors of Foamex International,  Trace Holdings,  and
  individual  officers  and  directors  of Trace  Holdings:  Brickell  Partners v.
  Marshall S. Cogan, et al., No. 16260NC;  Mimona Capital v. Salvatore J. Bonanno,
  et al., No.  16259NC;  Daniel Cohen v. Foamex  International  Inc.,  No.  16263;
  Eileen Karisinki v. Foamex  International  Inc., et al., No. 16261NC and John E.
  Funky Trust v. Salvatore J. Bonanno,  et al., No. 16267. A sixth purported class
  action lawsuit,  Barnett Stepak v. Foamex International Inc., et al., No. 16277,
  was filed on or about March 23, 1998 against the same defendants.  A stipulation
  and  order  consolidating  these six  actions  under  the  caption  In re Foamex
  International Inc. Shareholders Litigation Consolidation Action, No. 16259NC was
  entered  by the  Court on May 28,  1998  (the  "Shareholders  Litigation").  The
  complaints in the six actions  allege,  among other things,  that the defendants
  have violated  fiduciary and other common law duties  purportedly owed to Foamex
  International's stockholders in connection with Trace Holdings' initial proposal
  to acquire all of the outstanding shares of Foamex International's common stock.
  The complaints sought, among other things,  class  certification,  a declaration
  that  the  defendants  have  breached  their  fiduciary  duties  to  the  class,
  preliminary and permanent  injunctions  barring  implementation  of the proposed
  transaction,   rescission  of  the  transaction  if   consummated,   unspecified
  compensatory  damages,  and  costs  and  attorneys'  fees.  The  parties  to the
  Stockholder  Litigation  entered into a Memorandum of Understanding,  dated June
  25, 1998 to settle the Stockholder Litigation, subject to, inter alia, execution
  of a definitive  Stipulation of Settlement  and approval by the Court  following
  notice to the stockholders and a hearing,  and on September 9, 1998, the parties
  entered  into a  definitive  Stipulation  of  Settlement.  On November 10, 1998,
  counsel for certain of the defendants in the Stockholder  Litigation gave notice
  pursuant to the Stipulation of Settlement that such defendants were  withdrawing
  from the Stipulation of Settlement.  On November 12, 1998, the plaintiffs in the
  Stockholder  Litigation filed an amended class action  complaint  against Foamex
  International,  Trace  Holdings  and  certain  individual  directors  of  Foamex
  International  alleging that (i) they breached their  fiduciary and other common
  law duties purportedly owed to Foamex International's stockholders in connection
  with Trace Holding's  revised proposal to acquire all of the outstanding  shares
  of Foamex  International's common stock, (ii) the individual defendants violated
  the Delaware Code in approving the Merger  Agreement (as  hereinafter  defined),
  and (iii) Trace Holdings breached the Stipulation of Settlement.
  
         Foamex L.P. is party to various  other  lawsuits,  both as defendant  and
  plaintiff,  arising in the normal course of business.  Management  believes that
  the  disposition  of these lawsuits will not  individually  or in the aggregate,
  have a  material  adverse  effect  on  the  financial  position  or  results  of
  operations of Foamex L.P. If management's  assessment of Foamex L.P.'s liability
  with respect to these actions is  incorrect,  such actions could have a material
  adverse effect on Foamex L.P.'s consolidated financial position.
  
  10.     COMPREHENSIVE INCOME
  
         In June 1997, the Financial  Accounting  Standards Board issued Statement
  of  Financial  Accounting  Standards  No.  130  ("SFAS  No.  130"),   "Reporting
  Comprehensive  Income," which requires  disclosure of comprehensive  income,  as
  defined,  including  comprehensive  disclosure in interim financial  statements.
  Comprehensive  income for the quarterly and year to date periods ended September
  30, 1998 and September 28, 1997 is comprised of the following:
  
                                         13
  FOAMEX L.P. AND SUBSIDIARIES
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
  
  10.     COMPREHENSIVE INCOME (continued)
  Quarterly Period Ended          Year to Date Period Ended
                                                September 30,   September 28,    September 30,   September 28,
                                                    1998              1997             1998            1997
                                                                            (thousands)
  Net income                                      $ 15,826         $  9,553         $ 34,872        $ (3,385)
  Foreign currency translation adjustments          (1,130)             (62)            (900)           (230)
                                                  --------         --------         --------        --------
  Total comprehensive income                      $ 14,696         $  9,491         $ 33,972        $ (3,615)
                                                  ========         ========         ========        ========
  14
  FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                             BALANCE SHEETS (unaudited)
  September 30,    December 28,
                                                                    1998             1997
  ASSETS                                                                (thousands)
  
  CASH                                                               $1               $1
                                                                     ==               ==
  
  LIABILITIES AND STOCKHOLDER'S EQUITY
  
  COMMITMENTS AND CONTINGENCIES                                      $-               $-
                                                                     --               --
  
  STOCKHOLDER'S EQUITY:
       Common stock, par value $.01 per share;
       1,000 shares authorized, issued and outstanding                -                -
       Additional paid-in capital                                     1                1
                                                                     --               --
  
          TOTAL STOCKHOLDER'S EQUITY                                 $1               $1
                                                                     ==               ==
  The accompanying notes are an integral part of the balance sheets.
  
                                         15
  FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                         NOTES TO BALANCE SHEETS (unaudited)
  
  1.     ORGANIZATION
  
         Foamex Capital Corporation  ("FCC"), a wholly-owned  subsidiary of Foamex
  L.P.,  was formed for the sole  purpose of  obtaining  financing  from  external
  sources.
  
  2.     COMMITMENTS AND CONTINGENCIES
  
         FCC is a joint obligor and severally  liable on the following  borrowings
  of Foamex L.P.:
  
         9 7/8% Senior Subordinated Notes due 2007 ("Senior Subordinated Notes")
  
         The Senior  Subordinated  Notes  were  issued by Foamex  L.P.  and FCC in
  connection with the June 1997 refinancing  plan. The Senior  Subordinated  Notes
  bear interest at the rate of 9 7/8% per annum payable  semiannually on each June
  15 and December 15, commencing  December 15, 1997. The Senior Subordinated Notes
  mature on June 15, 2007.  The Senior  Subordinated  Notes may be redeemed at the
  option of Foamex  L.P.,  in whole or in part,  at any time on or after  June 15,
  2002, initially at 104.938% of their principal amount, plus accrued interest and
  liquidated  damages,  as defined,  if any, thereon to the date of redemption and
  declining to 100.0% on or after June 15, 2005. In addition, at any time prior to
  June 15, 2000,  Foamex L.P. may on one or more  occasions  redeem up to 35.0% of
  the initially outstanding principal amount of the Senior Subordinated Notes at a
  redemption  price  equal to  109.875%  of the  principal  amount,  plus  accrued
  interest and liquidated  damages, if any, thereon to the date of redemption with
  the cash proceeds of one or more Public Equity Offerings,  as defined.  Upon the
  occurrence  of  a  change  of  control,  as  defined,   each  holder  of  Senior
  Subordinated  Notes will have the right to require Foamex L.P. to repurchase the
  Senior  Subordinated  Notes at a price equal to 101.0% of the principal  amount,
  plus accrued interest and liquidated damages, if any, to the date of repurchase.
  Trace Holdings' proposed acquisition of Foamex International may constitute such
  a change of control.  The Senior Subordinated Notes are subordinated in right of
  payment to all senior indebtedness and are pari passu in right of payment to the
  13 1/2% Senior  Subordinated Notes and approximately  $7.0 million  subordinated
  promissory note.
  
         13 1/2% Senior  Subordinated Notes due 2005 ("13 1/2% Senior Subordinated
  Notes")
  
         The 13 1/2% Senior  Subordinated Notes were issued by Foamex L.P. and FCC
  in a  private  placement  on  December  23,  1997 in  connection  with the Crain
  Acquisition.  The 13 1/2% Senior Subordinated Notes bear interest at the rate of
  13 1/2% per annum  payable  semiannually  on each  February  15 and  August  15,
  commencing  February 15, 1998. The 13 1/2% Senior  Subordinated  Notes mature on
  August 15, 2005.  The 13 1/2% Senior  Subordinated  Notes may be redeemed at the
  option of Foamex L.P.,  in whole or in part,  at any time on or after August 15,
  2000,  initially at 106.75% of their principal amount, plus accrued interest and
  liquidated  damages,  as defined,  if any, thereon to the date of redemption and
  declining to 100.0% on or after August 15, 2004. Upon the occurrence of a change
  of control,  as defined,  each holder of the 13 1/2% Senior  Subordinated  Notes
  will have the right to require  Foamex  L.P.  to  repurchase  the 13 1/2% Senior
  Subordinated  Notes at a price  equal to 101.0% of the  principal  amount,  plus
  accrued  interest and  liquidated  damages,  if any, to the date of  repurchase.
  Trace Holdings' proposed acquisition of Foamex International may constitute such
  a change of control.  The 13 1/2% Senior  Subordinated Notes are subordinated in
  right of  payment  to all  senior  indebtedness  and are pari  passu in right of
  payment to the Senior  Subordinated  Notes and an approximately  $7.0 million of
  subordinated promissory note.
  
                                         16
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         Foamex L.P.  operates in the flexible  polyurethane  and advanced polymer
  foam products industry.  The following  discussion should be read in conjunction
  with the condensed  consolidated  financial statements and related notes thereto
  of Foamex  L.P.  included in this  report.  Certain  information  in this report
  contains  forward-looking  statements and should be read in conjunction with the
  discussion regarding forward-looking statements set forth on page five of Foamex
  L.P.'s 1997 Annual Report on Form 10-K/A.
  
         During 1997,  Foamex  L.P.'s  products  were  utilized  primarily in four
  businesses:  (i)  Foam  Products,  consisting  of  cushioning  foams,  including
  bedding, furniture, packaging, health care and foam-based consumer products such
  as futons,  pillows,  mattress pads and juvenile furniture,  (ii) Carpet Cushion
  Products,  consisting of carpet padding and related  products,  (iii) Automotive
  Products,  consisting of automotive trim,  laminates and other accessories,  and
  (iv) Technical  Products,  consisting of reticulated  and other  specialty foams
  used for reservoiring, gasketing and sealing.
  
         On November 5, 1998,  Trace  Holdings,  Trace Merger Sub, Inc. and Foamex
  International  entered  into an  Agreement  and  Plan  of  Merger  (the  "Merger
  Agreement").  Pursuant to the terms of the Merger  Agreement,  Trace  Merger Sub
  will be  merged  with and into  Foamex  International  (the  "Merger")  and each
  outstanding share of common stock (except for shares owned by the Trace Holdings
  shareholders,  shares  owned by Foamex  International  and  shares  owned by the
  stockholders  who  perfected  their  appraisal  rights  in  accordance  with the
  Delaware  law)  will be  converted  into the right to  received  $12.00 in cash,
  without interest.  Also on November 5, 1998, Trace Holdings terminated the prior
  Merger  Agreement  among the parties by  delivering a Notice of  Termination  to
  Foamex  International.  Trace  Holdings  terminated  the prior Merger  Agreement
  because the  financing  condition  contained in the prior Merger  Agreement  was
  incapable of being satisfied on or prior to December 31, 1998.
  
         Consummation of the Merger is subject to various  conditions,  including,
  among others:  (i) the approval and adoption of the Merger  Agreement by (A) the
  affirmative  vote of holders of a majority of the  outstanding  shares of Common
  Stock entitled to vote thereon,  and (B) the  affirmative  vote of a majority of
  the independent Shares (as defined) voting with respect to the Merger,  (ii) the
  absence of any  injunction  preventing  consummation  of the  Merger,  (iii) the
  obtaining of financing for the transactions contemplated by the Merger Agreement
  on terms and conditions and in amounts  reasonably  satisfactory  to Trace,  and
  (iv) other conditions that may be waived by the parties,  including: the absence
  of any action,  suit, claim or legal,  administrative or arbitral  proceeding or
  investigation  pending  before any  governmental  entity  seeking to restrain or
  prohibit,  or to obtain  damages in respect  of,  the  Merger  Agreement  or the
  consummation of the transactions contemplated thereby.
  
         In April 1998, Foamex L.P.'s facility in Orlando,  Florida was damaged by
  a fire which  recommenced the  manufacturing  of Foam Products in  mid-September
  1998.  During this idle period,  Foamex L.P. supplied local customers from other
  facilities.  Foamex L.P.  believes that it has adequate  insurance  coverage for
  business  interruption  and damages to the  facility  associated  with the fire;
  however,  there can be no  assurance  that the fire will not have a  significant
  impact on Foamex L.P.'s financial position or operations.
  
         On February 27, 1998,  Foamex  International,  Foamex L.P. and certain of
  its affiliates  completed a series of  transactions  designed to simplify Foamex
  International's   corporate   structure  and  to  provide   future   operational
  flexibility.  Prior to the consummation of these  transactions,  (i) Foamex L.P.
  and Foamex L.P.'s wholly-owned subsidiary, General Felt, entered into the Supply
  Agreement and the Administrative Services Agreement, (ii) Foamex L.P. repaid its
  outstanding  indebtedness  to  General  Felt with $4.8  million  in cash and the
  Foamex/GFI  Note  supported by a $34.5 million letter of credit under the Credit
  Facility,  (iii)  Foamex  L.P.  contributed  to  General  Felt $9.4  million  of
  outstanding net intercompany  payables and intercompany  loans with General Felt
  and (iv) Foamex L.P. defeased the $4.5 million  outstanding  principal amount of
  its 9 1/2% Senior  Secured Notes due 2000. The initial  transaction  resulted in
  the  transfer  from Foamex L.P.  to Foam  Funding LLC of all of the  outstanding
  common stock of General Felt, in exchange for (i) the assumption by Foam Funding
  LLC of $129.0  million of Foamex  L.P.'s  indebtedness  and (ii) the transfer by
  Foam  Funding  LLC to  Foamex  L.P.  of a 1%  non-managing  general  partnership
  interest  in Foamex  L.P. As a result,  each of General  Felt and Foamex  Fibers
  ceased being a subsidiary of Foamex L.P. and was relieved  from all  obligations
  under  Foamex  L.P.'s  9 7/8%  Senior  Subordinated  Notes  and 13  1/2%  senior
  subordinated  notes due 2005.  Upon  consummation  of the  initial  transaction,
  Foamex Carpet, a newly formed wholly-owned  subsidiary of Foamex  International,
  Foamex  International,  Foam Funding LLC, and General Felt
  
                                         17
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  entered into an Asset  Purchase  Agreement,  pursuant to which General Felt sold
  substantially  all of its  assets  (other  than  the  Foamex/GFI  Note  and  its
  operating facility in Pico Rivera,  California) to Foamex Carpet in exchange for
  (i) $20.0 million in cash and (ii) a promissory  note issued by Foamex Carpet to
  Foam Funding LLC in the amount of $70.2 million.  The $20.0 million cash payment
  was funded with a  distribution  by Foamex  L.P. As part of these  transactions,
  Foamex Fibers,  a  wholly-owned  subsidiary of General Felt, was merged with and
  into General Felt and Foamex LLC, a wholly-owned  subsidiary of Foamex L.P., was
  merged with and into  Foamex  L.P.  In  addition,  FMXI,  Inc.  and Crain,  both
  wholly-owned subsidiaries of Foamex International and general partners of Foamex
  L.P., were merged and Crain, as the surviving corporation,  subsequently changed
  its name to FMXI,  Inc.  Foamex Carpet will conduct the carpet cushion  business
  previously  conducted  by General  Felt.  Also,  Foam  Funding LLC has  retained
  ownership of one of General Felt's operating facilities which is being leased to
  Foamex Carpet and the Foamex/GFI Note.
  
         No gain has been recognized on the General Felt net assets transferred to
  Foam Funding LLC and repurchased by Foamex  International.  Foamex International
  will  continue  to account  for these net assets  using the  carryover  basis of
  Foamex L.P.  The $129.0  million of debt  assumed by Foam Funding LLC in the GFI
  Transaction was accounted for as an  extinguishment of debt which resulted in an
  extraordinary  loss of approximately $2.0 million.  The 1% non-managing  general
  partnership  interest  acquired  in  connection  with  the GFI  Transaction  was
  accounted  for as a redemption  of equity.  By virtue of the transfer of General
  Felt stock and the subsequent  merger of General Felt into Foam Funding LLC, the
  Pico Rivera facility was transferred to Foam Funding LLC; no gain was recognized
  on the transfer since Foamex International leased-back the facility.
  
         On December 23, 1997, Foamex  International  acquired Crain pursuant to a
  merger  agreement  with Crain  Holdings  for a purchase  price of  approximately
  $213.7  million,  including  the  assumption  of  debt  with  a  face  value  of
  approximately $98.6 million (and an estimated fair value of approximately $112.3
  million).  Foamex  International then contributed the assets of Crain subject to
  all of its  liabilities and  indebtedness  to Foamex L.P. In addition,  fees and
  expenses associated with the Crain Acquisition are approximately $13.2 million.
  
         Operating  results  for 1998 are  expected  to be  influenced  by various
  internal and external factors.  These factors include,  among other things,  (i)
  consolidation of the Crain  Acquisition,  (ii) continued  implementation  of the
  continuous  improvement  program to improve Foamex L.P.'s  profitability,  (iii)
  additional  raw  material  cost  increases,  if any, by Foamex  L.P.'s  chemical
  suppliers,  (iv) Foamex L.P.'s  success in passing on to its  customers  selling
  price increases to recover such raw material cost increases and (v) fluctuations
  in interest rates.
  
  Quarterly  Period Ended  September 30, 1998  Compared to Quarterly  Period Ended
  September 28, 1997
  
  Results of Operations
  
         Net sales for the third  quarter of 1998 were $300.3  million as compared
  to $233.4  million in the third quarter of 1997, an increase of $66.9 million or
  28.7%. Foam Products net sales for the third quarter of 1998 increased to $155.6
  million from $89.8  million in the third  quarter of 1997  primarily  due to net
  sales from the Crain  operations  and increased  volume to our national  bedding
  customers  and  fabricators.  Carpet  Cushion  Products  net sales for the third
  quarter of 1998 decreased 28.8% to $51.3 million from $72.0 million in the third
  quarter of 1997  primarily due to the transfer of General Felt offset by the net
  sales from the Crain  Acquisition.  Automotive  Products net sales for the third
  quarter of 1998 increased 40.6% to $73.6 million from $52.3 million in the third
  quarter of 1997 primarily due to increased  volume  associated with above normal
  volume to General Motors and General Motor suppliers following the settlement of
  the  General  Motor  labor  dispute.  This above  normal  level of volume is not
  expected to continue. Technical Products net sales for the third quarter of 1998
  increased  2.6% to $19.8 million from $19.3 million in the third quarter of 1997
  primarily due to increased net sales volume for felted,  gasketing,  and sealing
  products.
  
         Gross  profit as a  percentage  of net sales  decreased  to 16.1% for the
  third quarter of 1998 from 16.3% in the third quarter of 1997 primarily due to a
  shift in product mix for 1998 as a result of the Crain  Acquisition and transfer
  of General  Felt offset by  increased  purchasing  leverage.  Crain's  principal
  product lines,  bedding,  furniture and carpet cushion,  have  inherently  lower
  gross profit margins than Foamex L.P.'s historical gross
  
                                         18
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  profit margins.
  
         Selling,  general and administrative  expenses decreased primarily due to
  the  transfer  of  General  Felt  offset by  additional  expenses  from  Crain's
  operations.
  
         Income from  operations  increased to $34.1 million for the third quarter
  of 1998 from $22.5  million in the third  quarter of 1997  primarily  due to the
  Crain Acquisition and other items discussed above..
  
         Income before extraordinary loss increased to $15.8 million for the third
  quarter of 1998 as compared to $9.5 million for the third  quarter of 1997.  The
  increase is primarily  due to the increase in income from  operations  discussed
  above offset by an increase of  approximately  $5.0 million in interest and debt
  issuance expense and an increase of $1.4 million in other income (expense),  net
  associated   with  certain   financial   and  legal   advisors  used  by  Foamex
  International  in the buyout  proposal and foreign  currency  loss in Mexico and
  Canada.  The increase in interest and debt issuance  expense is primarily due to
  the additional  debt incurred in connection  with the Crain  Acquisition and the
  June 1997 refinancing plan.
  
  Year to Date Period Ended September 30, 1998 Compared to Year to Date Period
  Ended September 28, 1997
  
  Results of Operations
  
         Net sales  for the year to date  period  ended  September  30,  1998 were
  $873.6  million as compared to $702.4  million for the year to date period ended
  September  28, 1997, an increase of $171.2  million or 24.4%.  Foam Products net
  sales for the year to date period ended  September 30, 1998  increased to $450.6
  million from $259.7 million for the year to date period ended September 28, 1997
  primarily due to the net sales from the Crain operations and increased volume to
  our national  bedding  customers and  fabricators.  Carpet Cushion  Products net
  sales for the year to date period ended  September 30, 1998  decreased  24.3% to
  $162.6 million from $214.9  million for the year to date period ended  September
  28, 1997  primarily  due to the transfer of General Felt and reduction of rebond
  selling  prices as compared to 1997 and product mix offset by net sales from the
  Crain  operations.  Automotive  Products  net sales for the year to date  period
  ended  September 30, 1998 increased  16.3% to $199.3 million from $171.4 million
  for the year to date period ended  September 28, 1997 primarily due to increased
  volume. Technical Products net sales for the year to date period ended September
  30, 1998 increased 8.2% to $61.1 million from $56.4 million for the year to date
  period ended  September 28, 1997 primarily due to increased net sales volume for
  felted, gasketing, and sealing products.
  
         Gross profit as a percentage of net sales decreased to 16.4% for the year
  to date period  ended  September  30, 1998 from 17.9% in the year to date period
  ended September 28, 1997 primarily due to the shift in product mix for 1998 as a
  result of the Crain  Acquisition.  Crain's  principal  product  lines,  bedding,
  furniture and carpet cushion,  have  inherently  lower gross profit margins than
  Foamex  International's  historical gross profit margins. Also, the gross profit
  was lower since Foamex International carried the full individual operating costs
  of both organizations during the first half of 1998.
  
         Income from  operations  increased to $91.8  million for the year to date
  period ended  September  30, 1998 from $78.7  million in the year to date period
  ended September 28, 1997 primarily due to the Crain Acquisition.
  
         Income before  extraordinary loss decreased to $38.1 million for the year
  to date period  ended  September  30, 1998 as compared to $42.2  million for the
  year to date period ended  September 28, 1997. The decrease is primarily due the
  increase in income from operations, offset by an increase of approximately $12.0
  million in interest and debt issuance expense and an increase of $3.2 million of
  other income (expense), net associated with certain fees and financial and legal
  advisors  used by  Foamex  International  in the  buyout  proposal  and  foreign
  currency losses in Mexico and Canada. The increase in interest and debt issuance
  expense is primarily due to the additional  debt incurred in connection with the
  Crain Acquisition and the June 1997 refinancing plan.
  
                                         19
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $3.2 million  during the year to date period ended  September 30, 1998 primarily
  relates to the  write-off of debt  issuance  costs with debt  extinguishment  in
  connection  with the GFI  Transaction  and the  redemption of the senior secured
  notes. The extraordinary  loss on early  extinguishment of debt of approximately
  $45.5 million during the year to date period ended  September 28, 1997 primarily
  relates  to the  write-off  of debt  issuance  costs with debt  extinguished  in
  connection with the June 1997 refinancing plan.
  
  Foamex Capital Corporation ("FCC")
  
         FCC is solely a co-issuer of certain  indebtedness of Foamex L.P. and has
  no other material operations.
  
  Liquidity and Capital Resources
  
         Foamex L.P.'s operating cash requirements  consist principally of working
  capital   requirements,   scheduled   payments  of  principal  and  interest  on
  outstanding  indebtedness and capital  expenditures.  Foamex L.P.  believes that
  cash flow from operating activities,  cash on hand and periodic borrowings under
  the Credit  Facility,  if  necessary,  will be adequate to meet  operating  cash
  requirements. The ability to meet the operating cash requirements of Foamex L.P.
  could be impaired if Foamex L.P. was to fail to comply with any of the covenants
  contained in the Credit Facility and such  noncompliance was not cured by Foamex
  L.P. or waived by the lenders.  Foamex L.P. was in compliance with the covenants
  in the Credit  Facility as of September 30, 1998 and expects to be in compliance
  with the covenants for the foreseeable future.
  
         Cash and cash  equivalents  decreased  $7.3  million  during 1998 to $2.1
  million at September  30, 1998 from $9.4 million at December 28, 1997  primarily
  due to an increase of cash used by the operating assets and liabilities and cash
  used for capital expenditures,  offset by increased revolving credit borrowings.
  Working  capital  increased  $60.8  million  during  1998 to $186.9  million  at
  September  30, 1998 from $126.1  million at December 28, 1997  primarily  due to
  changes in net  operating  assets (as  discussed  below),  a decrease in current
  portion  of  long-term  debt and a net  increase  in other  current  assets  and
  liabilities.  The decrease in current portion of long-term debt is primarily due
  to the  assumption  of  Foamex  L.P.'s  long-term  debt by Foam  Funding  LLC in
  connection with the General Felt transaction.  The net increase in other current
  assets and  liabilities is primarily  associated with the timing of payments for
  prepaid  expenses and the receipt of cash for other  receivables.  Net operating
  assets and liabilities  (comprised of accounts receivable,  accounts receivables
  from related parties, inventories, accounts payable and accounts payable related
  parties)  increased $14.6 million during 1998 to $177.1 million at September 30,
  1998 from $162.5  million at December  28, 1997  primarily  due to  increases in
  accounts  receivable,  accounts receivable related party,  decreases in accounts
  payable  and  accounts  receivable  related  party.  The  increase  in  accounts
  receivable is primarily  due to an increase in net sales for  September  1998 as
  compared  to December  1997.  The  decrease  in accounts  payable and in account
  payable related party is primarily due to the timing of payments.
  
         As of September 30, 1998,  there were $137.0 million of revolving  credit
  borrowings under the Credit Facility and approximately  $50.0 million associated
  with letters of credit  outstanding  which are supported by the Credit  Facility
  with unused  availability of approximately  $13.1 million.  Borrowings by Foamex
  Canada as of  September  30,  1998  were  $3.6  million  under  Foamex  Canada's
  revolving  credit  agreement  with unused  availability  of  approximately  $1.7
  million.
  
         Cash flow used for operating activities was $27.0 million for the year to
  date period  ended  September  30, 1998 as compared to cash  provided by of $8.8
  million for the year to date period ended  September 28, 1997.  This decrease is
  primarily due to (i) a reduction in operating  cash results,  (ii) cash used for
  an increase in accounts  receivable and other  receivables  associated  with the
  timing of receipts  and (iii) a  reduction  in  accounts  payable  and  accounts
  payable related party associated with the timing of payments.
  
         Cash flow used for  investing  activities  decreased to $36.2 million for
  the year to date period  ended  September  30, 1998 from $125.1  million for the
  year to date period ended  September 28, 1997 primarily due to the use of $105.8
  million of cash during 1997 to purchase the outstanding FJPS discount debentures
  in connection
  
                                         20
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  with the refinancing plan.
  
         Cash flow provided by financing activities decreased to $55.9 million for
  the year to date period ended September 30, 1998 as compared to cash provided of
  $96.4 million for the year to date period ended September 28, 1997. The decrease
  is due to greater net borrowings  during the year to date period ended September
  28, 1997 primarily relating to the June 1997 refinancing plan as compared to net
  cash  borrowings  during  the  year to date  period  ended  September  30,  1998
  primarily for working  capital needs and to fund  distributions  relating to the
  General Felt transaction.
  
         Certain  credit  agreements and  promissory  notes of Foamex L.P.  and/or
  Foamex Carpet  pursuant to which  approximately  $500.0 million of debt has been
  issued,  contain  provisions  that  would  result  in the  acceleration  of such
  indebtedness  if Trace  were to cease  to own at  least  30% of the  outstanding
  common stock.  Similarly,  certain  indentures of Foamex L.P. and Foamex Capital
  Corporation  relating to  approximately  $248.0  million of Senior  Subordinated
  Notes contain  provisions  that provide the holders of such Senior  Subordinated
  Notes with the right to require the issuers  thereof to  repurchase  such Senior
  Subordinated  Notes at a price in cash equal to 101% of the aggregate  principal
  amount  thereof,  plus accrued and unpaid  interest  thereon,  if Trace Holdings
  falls below certain specified ownership levels of common stock and other persons
  or group owns a greater  percentage of common stock than Trace  Holdings.  Trace
  Holdings  has  informed  Foamex  International  that  it  has  substantial  debt
  obligations  due at the end of  December  1998 and  currently  does not have the
  financial  resources to pay these  obligations.  Trace Holdings  intends to seek
  waivers and/or  modifications  of such  indebtedness;  however,  there can be no
  assurance  that such waivers  and/or  modifications  will be achieved.  If Trace
  Holdings  were  to  default  on  its   indebtedness  and  the  holders  of  such
  indebtedness or other Trace Holdings creditors were to foreclose on or otherwise
  attach the common  stock held by Trace  Holdings,  such event could  trigger the
  acceleration and put rights described above.  Although  management believes that
  all such debt obligations  would be refinanced under such  circumstances,  there
  can be no assurance that Foamex  International or its subsidiaries would be able
  to do so. Trace Holdings has informed Foamex  International  that it anticipates
  that if the  proposed  merger  is  consummated  it will  be able to  satisfy  or
  restructure its outstanding obligations.
  
         Interest Rate Swaps
  
         In September 1998, Foamex  International  sold its existing interest rate
  swap  agreements  for a net gain of  approximately  $1.0 million  which is being
  amortized over the life of the debt.
  
         The effect of Foamex International's  interest rate swap agreements was a
  favorable  adjustment to interest and debt issuance  expense of $0.3 million and
  $0.5 million for the quarterly  periods  ended  September 30, 1998 and September
  28,  1997,  respectively  and $0.7 million and $2.2 million for the year to date
  periods ended September 30, 1998 and September 28, 1997, respectively.
  
  Environmental Matters
  
         Foamex L.P. is subject to extensive and changing  environmental  laws and
  regulations.  Expenditures to date in connection  with Foamex L.P.'s  compliance
  with  such  laws and  regulations  did not have a  material  adverse  effect  on
  operations,  financial position,  capital expenditures or competitive  position.
  The  amount  of  liabilities   recorded  by  Foamex  L.P.  in  connection   with
  environmental matters as of September 30, 1998 was $3.4 million. In addition, as
  of  September  30, 1998  Foamex L.P.  has net  receivables  of $0.6  million for
  indemnification of environmental  liabilities from former owners. Although it is
  possible that new information or future  developments  could require Foamex L.P.
  to  reassess  its  potential  exposure  to all  pending  environmental  matters,
  including  those  described  in the  footnotes  to  Foamex  L.P.'s  consolidated
  financial  statements,  management  believes  that,  based  upon  all  currently
  available information,  the resolution of all such pending environmental matters
  will not have a material adverse effect on Foamex L.P.'s  operations,  financial
  position, capital expenditures or competitive position.
  
                                         21
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  Inflation and Other Matters
  
         There was no significant  impact on Foamex L.P.'s  operations as a result
  of  inflation  during  the  periods  presented.  In some  circumstances,  market
  conditions or customer  expectations may prevent Foamex L.P. from increasing the
  price of its products to offset the inflationary pressures that may increase its
  costs in the future.
  
         Foamex L.P.'s automotive products customers are predominantly  automotive
  original  equipment  manufacturers or other automotive  suppliers.  As such, the
  sales of these  product  lines are  directly  related  to the  overall  level of
  passenger car and light truck production in North America.  Also,  Foamex L.P.'s
  sales are  sensitive  to sales of new and  existing  homes,  changes in personal
  disposable  income  and  seasonality.  Foamex  L.P.  typically  experiences  two
  seasonally  slow periods  during each year, in early July and in late  December,
  due to scheduled plant shutdowns and holidays.
  
  Year 2000 Compliance
  
         Foamex  International uses multiple business  information systems as well
  as  manufacturing  support  systems  that  could be  impacted  by the "Year 2000
  problem".  The Year 2000 problem  arises from  computer  programs that have been
  written using two digits rather than four to designate the year.  Date-sensitive
  computer  software may  recognize a date using "00" as the year 1900 rather than
  the year 2000, resulting in system failures or miscalculations,  which may cause
  operational disruptions.
  
         Foamex  International  is in the  process  of the  remediation  of  their
  business  information  computer  systems.  Foamex  International  is also in the
  process of the conversion of the former Crain systems to Foamex  International's
  standard business information computer systems. The replacement of these systems
  will  increase  the  integration  of systems and allow  employees  at  different
  locations  to  share  financial  information  and  operations  information  more
  effectively.  Remediation of Foamex International  business information computer
  systems and the  conversion of the former Crain  systems  should be completed in
  1998.  These  systems and software are Year 2000  compliant,  thus  handling the
  majority of Foamex International's Year 2000 business systems requirements.
  
         Foamex  International  has  a  Year  2000  Executive  Sponsor  Team  with
  representatives of Foamex International. The Year 2000 Executive Sponsor Team is
  providing direction to the Year 2000 Steering Committee within the organization.
  The Steering  Committee is in the process of  completing  an  assessment  of the
  state of readiness of the  Information  Technology  ("IT") and non-IT systems of
  Foamex International.  These assessments cover manufacturing systems,  including
  laboratory information systems and field instrumentation,  and significant third
  party vendor and supplier systems,  including employee  compensation and benefit
  plan  maintenance  systems.  The  Steering  Committee  is also in the process of
  assessing the readiness of significant customers and suppliers.
  
         The Year  2000  assessment  process  for  each  facility  consists  of an
  inventory  of Year 2000  sensitive  equipment,  an  assessment  of the impact of
  possible  failures,  determination  of the  required  remediation  actions,  and
  testing and implementation of solutions. The inventory, assessment,  remediation
  and testing phases should be completed in 1998, with fail safe testing and final
  implementation  taking  place in  1999.  The  progress  of  these  phases  as of
  September 30, 1998 is summarized as follows:
  
         The total  estimated  spending of $2.4  million for Foamex  International
  represents  a midpoint  of an  estimated  range  between  $2.1  million and $2.7
  million.  These  spending  estimates will be refined as phases of the assessment
  are completed. Spending is funded by cash generated from operations. Preliminary
  estimates  indicate  that from 25 to 35 percent  of the  estimated  costs  could
  qualify for capitalization.
  
         Management  believes that all  significant  systems  controlled by Foamex
  International  will be Year  2000  ready in the last  half of  1999.  While  the
  Steering  Committee  is  communicating  readiness to third party  customers,  as
  requested, and is assessing the readiness of critical suppliers, there can be no
  assurance  that third  parties with a  significant  business  relationship  will
  successfully test, reprogram,  and replace all of their IT and non-IT systems on
  a timely basis. As part of the overall readiness, Foamex International is in the
  process of developing contingency plans in the event of Year 2000 non-compliance
  of certain systems or third parties.  Details of such contingency
  
                                         22
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  plans  will be  determined  after  the  Steering  Committee  has  completed  its
  assessment  of both  internal  and third  party  systems and the  potential  for
  possible failures.
  
         There  is  inherent  uncertainty  in the  Year  2000  problem  due to the
  possibility of  unanticipated  failures by third party  customers and suppliers.
  Accordingly,  Foamex International is unable, at this time, to assess the extent
  and  resulting  materiality  of the impact of possible Year 2000 failures on its
  operations, liquidity or financial position. The Year 2000 assessment process is
  expected  to provide  information  that will  significantly  reduce the level of
  uncertainty  regarding  the  Year  2000  impact.  Management  believes  that the
  completion of the assessment as scheduled will help minimize the  possibility of
  any significant disruptions of Company operations.
  
  New Accounting Standards
  
         Statement of Financial  Accounting  Standards  No. 130 ("SFAS No.  130"),
  "Reporting  Comprehensive  Income,"  was  issued  by  the  Financial  Accounting
  Standards  Board in June 1997.  This  statement  requires all items that must be
  recognized under accounting  standards as components of comprehensive  income to
  be reported in a financial  statement that is displayed with the same prominence
  as other financial statements. Foamex L.P. adopted SFAS No. 130 during the first
  quarter of 1998 (see Note 10).
  
         Statement of Financial  Accounting  Standards  No. 131 ("SFAS No.  131"),
  "Disclosures  about  Segments of an Enterprise  and Restated  Information,"  was
  issued by the Financial  Accounting Standards Board in June 1997. This statement
  establishes  standards for reporting  information  about  operating  segments in
  annual  financial  statements  and  requires  reporting  of  selected  financial
  information  about  operating  segments in interim  financial  reports issued to
  stockholders.  It also  establishes  standards  for  related  disclosures  about
  products and services,  geographic areas, and major customers.  Foamex L.P. will
  adopt SFAS No. 131 for year end 1998  reporting.  Management is  evaluating  the
  impact,  if any,  the  standard  will  have on  Foamex  L.P.'s  present  segment
  reporting.
  
         In February 1998 the Financial Accounting Standards Board issued SFAS No.
  132, "Employers'  Disclosures about Pension and Other  Postretirement  Benefits"
  ("SFAS No. 132"),  which is effective for fiscal years  beginning after December
  15, 1997. SFAS No. 132 revised the required  disclosures about pension and other
  postretirement  benefit  plans.  Foamex L.P.  plans to adopt SFAS No. 132 in the
  fourth quarter of 1998.
  
         In June 1998 the Financial Accounting Standards Board issued SFAS No. 133
  ("SFAS  No.  133"),   "Accounting   for  Derivative   Instruments   and  Hedging
  Activities."  SFAS  No.  133  established  new  procedures  for  accounting  for
  derivatives  and  hedging  activities  and  supercedes  and  amends a number  of
  existing standards.  The statement is effective for fiscal years beginning after
  June 15, 1999.
  
                                         23
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
           Reference is made to the description of the legal proceedings contained
           in the Foamex  L.P.  Annual  Report on Form  10-K/A for the fiscal year
           ended December 28, 1997 and in Foamex L.P.'s  Quarterly  Report for the
           fiscal quarter ended June 28, 1998.
  
           The  information  from  Notes  8 and 9 of  the  condensed  consolidated
           financial  statements  of Foamex L.P. and  subsidiaries  as of June 28,
           1998 (unaudited) is incorporated herein by reference.
  
  Item 2.  Changes in Securities.
  
           None.
  
  Item 3.  Defaults Upon Senior Securities.
  
           None.
  
  Item 4.  Submission of Matters to a Vote of Securities Holders.
  
           None.
  
  Item 5.  Other Information.
  
           None.
  
  Item 6.  Exhibits and Financial Statement Schedules.
  
           (a)  Exhibits
  
  2.1(x)        -  Transfer  Agreement,  dated as of  February  27,  1998,  by and
                between Foam Funding LLC ("Foam LLC") and Foamex L.P.
  3.1(a)        - Certificate of Limited Partnership of Foamex L.P.
  3.2.1(a)      - Fourth Amended and Restated Agreement of Limited  Partnership of
                Foamex L.P., dated as of December 14, 1993, by and among FMXI Inc.
                ("FMXI") and Trace Foam Company,  Inc. ("Trace Foam"),  as general
                partners,  and Foamex L.P., as a limited partner (the "Partnership
                Agreement").
  3.2.2(b)      - First  Amendment to the  Partnership  Agreement,  dated June 28,
                1994.
  3.2.3(c)      - Second  Amendment to the Partnership  Agreement,  dated June 12,
                1997.
  3.2.4(v)      - Third Amendment to the Partnership Agreement, dated December 23,
                1997.
  3.2.5(x)      - Fourth  Amendment to the Partnership  Agreement,  dated February
                27, 1998.  
  3.3(y)        - Certificate of Incorporation of FMXI.
  3.4(y)        - By-laws of FMXI.
  3.5(k)        -  Certificate  of  Incorporation  of Foamex  Capital  Corporation
                ("FCC").
  3.6(k)        - By-laws of FCC.
  4.1.1(d)      - Indenture,  dated as of June 12, 1997, by and among Foamex L.P.,
                FCC,  the  Subsidiary  Guarantors  and The  Bank of New  York,  as
                Trustee,  relating  to  $150,000,000  principal  amount  of 9 7/8%
                Senior  Subordinated Notes due 2007,  including the form of Senior
                Subordinated Note and Subsidiary Guarantee.
  4.1.2(v)      - First  Supplemental  Indenture,  dated as of December  23, 1997,
                between  Foamex LLC ("FLLC") and The Bank of New York, as trustee,
                relating to the 9 7/8% Notes.
  
                                         24
  4.1.3(x)      - Second  Supplemental  Indenture,  dated as of February 27, 1998,
                among Foamex L.P. and FCC, as joint and several obligors,  General
                Felt  Industries,  Inc.  ("General  Felt"),  Foamex  Fibers,  Inc.
                ("Foamex Fibers"),  and FLLC, as withdrawing  guarantors,  and The
                Bank of New York, as trustee, relating to the 9 7/8% Notes.
  4.2.1(v)      - Indenture,  dated as of December  23, 1997,  by and among Foamex
                L.P.,  FCC, the Subsidiary  Guarantors,  Crain Holdings  Corp., as
                Intermediate  obligator,  and The Bank of New  York,  as  trustee,
                relating  to  $98,000,000  principal  amount  of  13  1/2%  Senior
                Subordinated  Notes due 2005 (the "13 1/2% Notes"),  including the
                form of Senior Subordinated Note and Subsidiary Guarantee.
  4.2.2(x)      - First  Supplemental  Indenture,  dated as of February  27, 1998,
                among Foamex L.P. and FCC, as joint and several obligors,  General
                Felt,  Foamex Fibers and FLLC, as  withdrawing  guarantors,  Crain
                Industries,  Inc., as withdrawing  intermediate  obligor,  and The
                Bank of New York, as trustee, relating to the 13 1/2% Notes.
  4.3(x)        - Discharge of  Indenture,  dated as of February 27, 1998,  by and
                among  Foamex  L.P.,  General  Felt,  Foamex   International  Inc.
                ("Foamex  International") and State Street Bank and Trust Company,
                as trustee, relating to the 9 1/2% Senior Secured Notes due 2000.
  4.4.1(x)      - Credit  Agreement,  dated as of June 12,  1997,  as amended  and
                restated as of February  27, 1998,  by and among Foamex L.P.,  and
                FMXI, the institutions from time to time party thereto as lenders,
                the institutions from time to time party thereto as issuing banks,
                and  Citicorp  USA,   Inc.  and  The  Bank  of  Nova  Scotia,   as
                Administrative Agents.
  4.4.2(x)      - Second Amended and Restated Foamex International Guaranty, dated
                as of February 27, 1998, made by Foamex  International in favor of
                Citicorp USA, Inc., as Collateral Agent.
  4.4.3(x)      - Amended and Restated Partnership Guaranty,  dated as of February
                27,  1998,  made  by FMXI in  favor  of  Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.4(p)      - Foamex Guaranty,  dated as of June 12, 1997, made by Foamex L.P.
                in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.5(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Latin America,  Inc. in favor of Citicorp USA, Inc., as Collateral
                Agent.
  4.4.6(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
                
  4.4.7(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by FCC in
                favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.8(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Mexico II, Inc.  in favor of Citicorp  USA,  Inc.,  as  Collateral
                Agent.
  4.4.9(p)      - Subsidiary  Guaranty,  dated as of June 12, 1997, made by Foamex
                Asia, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.10(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.11(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex Latin  America,  Inc. in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.12(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex Asia,  Inc. in favor of Citicorp  USA,  Inc., as Collateral
                Agent.
  4.4.13(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex Mexico,  Inc. in favor of Citicorp USA, Inc., as Collateral
                Agent.
  4.4.14(p)     - Subsidiary Pledge Agreement,  dated as of June 12, 1997, made by
                Foamex  Mexico  II,  Inc.  in  favor of  Citicorp  USA,  Inc.,  as
                Collateral Agent.             
  4.4.15(p)     - Foamex  Security  Agreement,  dated as of June 12, 1997, made by
                Foamex L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.16(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by Foamex Latin  America,  Inc. in favor of Citicorp USA, Inc., as
                Collateral Agent.
  4.4.17(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by  Foamex  Mexico,  Inc.  in  favor of  Citicorp  USA,  Inc.,  as
                Collateral Agent.
  
                                         25
  4.4.18(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by Foamex  Mexico II,  Inc.  in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.19(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by Foamex Asia, Inc. in favor of Citicorp USA, Inc., as Collateral
                Agent.
  4.4.20(p)     - Subsidiary Security  Agreement,  dated as of June 12, 1997, made
                by FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.21(r)     - Foamex  Pledge  Agreement,  dated as of June 12,  1997,  made by
                Foamex L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.22(w)     - First Amendment to Foamex Pledge Agreement, dated as of December
                23,  1997,  by Foamex  L.P.  in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.23(w)     - First  Amendment  to  Foamex  Security  Agreement,  dated  as of
                December 23, 1997, by Foamex L.P. in favor of Citicorp USA,  Inc.,
                as Collateral Agent.
  4.4.24(w)     - First Amendment to Foamex Patent Agreement, dated as of December
                23,  1997,  by Foamex  L.P.  in favor of Citicorp  USA,  Inc.,  as
                Collateral Agent.
  4.4.25(w)     - First  Amendment to Trademark  Security  Agreement,  dated as of
                December 23, 1997, by Foamex L.P. in favor of Citicorp USA,  Inc.,
                as Collateral Agent.
  4.4.26(w)     -  Acknowledgment  of  Guaranty  by  each of the  guarantors  to a
                Guaranty dated June 12, 1997 in favor of Citicorp USA, Inc.
  4.4.27(w)     - First  Amendment to Pledge  Agreement,  dated as of December 23,
                1997, by pledgors in favor of Citicorp USA, Inc.
  4.4.28(w)     - Crain Industries  Guaranty,  dated as of December 23, 1997, made
                by Crain in favor of Citicorp USA, Inc.
  4.4.29(x)     -  Partnership  Pledge  Agreement,  dated as of February 27, 1998,
                made by Foamex  International  and FMXI in favor of Citicorp  USA,
                Inc., as Collateral Agent.
  4.6(j)        -  Commitment  letter,  dated July 9, 1996,  from The Bank of Nova
                Scotia to Foamex Canada Inc.
  4.7(a)        - Subordinated  Promissory  Note,  dated as of May 6, 1993, in the
                original principal amount of $7,014,864 executed by Foamex L.P. to
                John Rallis ("Rallis").
  4.8(a)        - Marely Loan Commitment Agreement, dated as of December 14, 1993,
                by and between Foamex L.P. and Marely s.a. ("Marely").
  4.9(a)        - DLJ Loan Commitment Agreement, dated as of December 14, 1993, by
                and between Foamex L.P. and DLJ Funding, Inc. ("DLJ Funding").
  4.10(p)       - Promissory Note, dated June 12, 1997, in the aggregate principal
                amount of $5,000,000, executed by Trace Holdings to Foamex.
  4.10.1(p)     - Promissory Note, dated June 12, 1997, in the aggregate principal
                amount of $4,794,828, executed by Trace Holdings to Foamex.
  4.11.1(x)     -  Promissory  Note of  Foamex  L.P.  in  favor of Foam LLC in the
                principal amount of $34 million, dated February 27, 1998.      
  10.1.1(p)     - Amendment to Master Agreement, dated as of June 5, 1997, between
                Citibank, N.A. and Foamex.
  10.1.2(p)     -  Amended  confirmation,  dated  as of  June  13,  1997,  between
                Citibank, N.A. and Foamex L.P.
  10.1.3(w)     - Amended  confirmation,  dated as of  February  2, 1998,  between
                Citibank, N.A. and Foamex L.P. 
  10.2(h)       -  Reimbursement  Agreement,  dated as of March 23, 1993,  between
                Trace Holdings and General Felt.
  10.3(h)       - Shareholder Agreement,  dated December 31, 1992, among Recticel,
                s.a.  ("Recticel"),  Recticel  Holding  Noord B.V.,  Foamex  L.P.,
                Beamech Group Limited,  LME-Beamech,  Inc., James Brian Blackwell,
                and Prefoam AG relating to foam technology sharing arrangement.
  10.4.1(k)     - Asset Transfer  Agreement,  dated as of October 2, 1990, between
                Trace  Holdings  and Foamex (the "Trace  Holdings  Asset  Transfer
                Agreement").
  10.4.2(k)     - First  Amendment,  dated as of December 19,  1991,  to the Trace
                Holdings Asset Transfer Agreement.
  
                                         26
  10.4.3(k)     - Amended and  Restated  Guaranty,  dated as of December 19, 1991,
                made by Trace Foam in favor of Foamex L.P.
  10.5.1(k)     - Asset Transfer  Agreement,  dated as of October 2, 1990, between
                RFC and Foamex L.P. (the "RFC Asset Transfer Agreement").
  10.5.2(k)     - First Amendment, dated as of December 19, 1991, to the RFC Asset
                Transfer Agreement.
  10.5.3(k)     - Schedule  5.03 to the RFC Asset  Transfer  Agreement  (the "5.03
                Protocol").
  10.5.4(h)     - The 5.03 Protocol Assumption Agreement,  dated as of October 13,
                1992, between RFC and Foamex L.P.
  10.5.5(h)     - Letter Agreement  between Trace Holdings and Recticel  regarding
                the Recticel Guaranty, dated as of July 22, 1992.
  10.6(l)       - Supply Agreement,  dated June 28, 1994,  between Foamex L.P. and
                Foamex International.
  10.7.1(l)     - First  Amended and Restated Tax Sharing  Agreement,  dated as of
                December 14, 1993, among Foamex, Trace Foam, FMXI and Foamex L.P.
  10.7.2(d)     - First Amendment to Amended and Restated Tax Sharing Agreement of
                Foamex,  dated as of June 12, 1997,  by and among  Foamex,  Foamex
                L.P., FMXI, Inc. and Trace Foam.
  10.7.3(w)     - Second  Amendment to Amended and Restated Tax Sharing  Agreement
                of Foamex L.P., dated as of December 23, 1997, by and among Foamex
                L.P., Foamex International, FMXI, and Trace Foam.
  10.7.4(y)     - Third Amendment to Amended and Restated Tax Sharing Agreement of
                Foamex L.P.,  dated as of February 27, 1998, by and between Foamex
                L.P., Foamex International and FMXI.
  10.8.1(m)     - Tax  Distribution  Advance  Agreement,  dated as of December 11,
                1996, by and between Foamex and Foamex-JPS Automotive.
  10.8.2(d)     - Amendment No. 1 to Tax Distribution Advance Agreement,  dated as
                of June 12, 1997, by and between Foamex L.P. and Foamex.
  10.9.1(h)     - Trace Foam Management  Agreement  between Foamex and Trace Foam,
                dated as of October 13, 1992.
  10.9.2(l)     - Affirmation  Agreement  re:  Management  Agreement,  dated as of
                December 14, 1993, between Foamex and Trace Foam.
  10.9.3(d)     - First  Amendment to Management  Agreement,  dated as of June 12,
                1997, by and between Foamex and Trace Foam.
  10.10.1(k)    - Salaried Incentive Plan of Foamex and Subsidiaries.
  10.10.2(k)    - Trace Holdings 1987 Nonqualified Stock Option Plan.
  10.10.3(k)    - Equity Growth Participation Program.
  10.10.4(e)(o) - Foamex L.P.  Salaried  Retirement  Plan  (formerly  known as the
                Foamex L.P. Products,  Inc. Salaried Employee Retirement Plan), as
                amended, effective July 1, 1994.
  10.10.5(u)    - Foamex L.P. 401(k) Savings Plan effective October 1, 1997.
  10.10.6(a)    - Foamex L.P.'s 1993 Stock Option Plan.
  10.10.7(a)    - Foamex L.P.'s Non-Employee Director Compensation Plan.
  10.11.1(o)    -  Employment  Agreement,  dated as of  February  1, 1994,  by and
                between Foamex L.P. and William H. Bundy.
  10.12(a)      - Warrant  Exchange  Agreement,  dated as of December 14, 1993, by
                and between Foamex L.P. and Marely.
  10.13(a)      - Warrant  Exchange  Agreement,  dated as of December 14, 1993, by
                and between Foamex L.P. and DLJ Funding.
  10.14(o)      - Stock Purchase Agreement,  dated as of December 23, 1993, by and
                between   Transformacion   de  Espumas  y  Fieltros,   S.A.,   the
                stockholders which are parties thereto, and Foamex L.P.
  10.15.1(r)    - Asset  Purchase  Agreement,  dated as of August 29, 1997, by and
                among  General  Felt,  Foamex  L.P.,  Bretlin,  Inc. and The Dixie
                Group.
  10.15.2(s)    - Addendum  to Asset  Purchase  Agreement,  dated as of October 1,
                1997, by and among General Felt,  Foamex L.P.,  Bretlin,  Inc. and
                The Dixie Group.
  
                                         27
  10.16.1(x)    - Supply Agreement,  dated as of February 27, 1998, by and between
                Foamex L.P. and General Felt (as assigned to Foamex Carpet).
  10.16.2(x)    -  Administrative  Services  Agreement,  dated as of February  27,
                1998, by and between  Foamex L.P. and General Felt (as assigned to
                Foamex Carpet).
  10.17.1(w)    - Joint  Venture  Agreement  between Hua Kee  Company  Limited and
                Foamex Asia, Inc., dated July 8, 1997.
  10.17.2(w)    - Loan Agreement  between Hua Kee Company Limited and Foamex Asia,
                Inc.,  dated July 8, 1997. 
  27            - Financial Data Schedule for the period ended March 29, 1998.
  ----------------------------
  (a)  Incorporated   herein  by  reference  to  the  Exhibit  to  Foamex   L.P.'s
       Registration Statement on Form S-1, Registration No. 33-69606.
  
  (b)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       for the fiscal year ended January 1, 1995.
  
  (c)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred May 28, 1997.
  
  (d)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred June 12, 1997.
  
  (e)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex and FCC on Form S-4, Registration No. 33-65158.
  
  (f) Intentionally omitted.
  
  (g) Intentionally omitted.
  
  (h)  Incorporated  herein by reference to the Exhibit to the Form 10-K Statement
       of Foamex and FCC for fiscal 1992.
  
  (i) Intentionally omitted.
  
  (j)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended September 30, 1996.
  
  (k)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement  of Foamex and FCC on Form S-1,  Registration  Nos.  33-49976 and
       33-49976-01.
  
  (l)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement  of FJPS,  FJCC and Foamex  L.P.  on Form S-4,  Registration  No.
       33-82028.
  
  (m)  Incorporated  herein by  reference  to the Exhibit to the Annual  Report on
       Form 10-K of Foamex for the fiscal year ended December 29, 1996.
  
  (n)  Intentionally omitted.
  
  (o)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       L.P. for fiscal 1993.
  
  (p)  Incorporated  herein  by  reference  to the  Exhibit  in  the  Registration
       Statement of Foamex on Form S-4, Registration No. 333-30291.
  
                                         28
  (q)  Intentionally omitted.
  
  (r)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on August 29, 1997.
  
  (s)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on October 6, 1997.
  
  (t)  Intentionally omitted.
  
  (u)  Incorporated  by  reference  to the Exhibit to the Form 10-Q of Foamex L.P.
       for the quarterly period ended September 28, 1997.
  
  (v)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form  8-K  of  Foamex  L.P.,   Foamex   Capital   Corporation   and  Foamex
       International reporting an event that occurred December 23, 1997.
  
  (w)  Incorporated  herein  by  reference  to the  Exhibit  in  the  Registration
       Statement of Foamex L.P. and FCC on Form S-4, Registration No. 333-45733.
  
  (x)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex International reporting an event that occurred on February 27, 1998.
  
  (y)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
  International for fiscal 1997.
  
           Certain  instruments  defining the rights of security holders have been
  excluded herefrom in accordance with Item  601(b)(4)(iii) of Regulation S-K. The
  registrant  hereby  agrees  to  furnish  a copy of any  such  instrument  to the
  Commission upon request.
  
           (b) Foamex L.P. filed the following Current Reports on Form 8-K:
  
                                         29
  SIGNATURES
  
     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  the
  registrants  have duly caused  this  report to be signed on their  behalf by the
  undersigned thereunto duly authorized.
  
                                           FOAMEX L.P.
  
                                           By:  FMXI, INC.
                                           General Partner
  
  Date:  November 20, 1998                 By:/s/ John A. Feenan
                                              ----------------------------
                                              John A. Feenan
                                              Executive Vice President and
                                              Chief Financial Officer
  
                                           FOAMEX CAPITAL CORPORATION
  
  Date:  November 20, 1998                 By:/s/ John A. Feenan
                                              ----------------------------
                                              John A. Feenan
                                              Executive Vice President and
                                              Chief Financial Officer