content: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
                                      FORM 10-Q
  
                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 29, 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 Capital Corporation meets 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 May 15, 1998 was 1,000.
  
                                    Page 1 of 26
                            Exhibit List on Page 20 of 26
  
  
  <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 - Thirteen
                Week Periods Ended March 29, 1998 and March 30, 1997           3
  
             Condensed Consolidated  Balance Sheets as of March 29, 1998
                and December 28, 1997                                          4
  
             Condensed Consolidated  Statements of Cash Flows - Thirteen
                Week Periods Ended March 29, 1998 and March 30, 1997           5
  
             Notes to Condensed Consolidated Financial Statements              6
  
             Foamex Capital Corporation
  
             Balance Sheets as of March 29, 1998 and  December  28, 1997      14
  
             Notes to Balance Sheets                                          15
  
            Item 2.  Management's  Discussion and Analysis of Financial
                Condition and Results of Operations                           16
  
  Part II. Other Information                                                  20
  
           Exhibit List                                                       20
  
           Signatures                                                         26
  
  
  
                                    2
  <PAGE>
  
  
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                            FOAMEX L.P. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  
                                                  13 Week Periods Ended
                                                March 29,       March 30,
                                                  1998            1997
                                               ---------      ---------
                                                      (thousands)
  NET SALE                                      $284,545       $194,134
  
  COST OF GOODS SOLD                             240,982        157,293
                                               ---------      ---------
  
  GROSS PROFIT                                    43,563         36,841
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                      17,766         11,123
                                               ---------      ---------
  
  INCOME FROM OPERATIONS                          25,797         25,718
  
  INTEREST AND DEBT ISSUANCE EXPENSE              17,675         10,666
  
  OTHER INCOME (EXPENSE), NET                       (274)           821
                                               ---------      ---------
  
  INCOME BEFORE PROVISION FOR INCOME TAXES         7,848         15,873
  
  PROVISION FOR INCOME TAXES                         725            368
                                               ---------      ---------
  
  INCOME BEFORE EXTRAORDINARY LOSS                 7,123         15,505
  
  EXTRAORDINARY LOSS ON EARLY
     EXTINGUISHMENT OF DEBT                       (3,123)          (679)
                                               ---------      ---------
  
  NET INCOME                                      $4,000        $14,826
                                               =========      =========
  
            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)
  <TABLE>
  <CAPTION>
                                                                            March 29,             December 28,
  ASSETS                                                                        1998                  1997
                                                                            ------------          -----------
  CURRENT ASSETS:                                                                       (thousands)
  <S>                                                                       <C>                     <C>       
       Cash and cash equivalents                                            $    2,972              $    8,982
       Accounts receivable, net                                                150,687                 138,571
       Inventories                                                             112,532                 112,094
       Accounts receivable, related party                                       15,970                  12,823
       Other current assets                                                     45,803                  32,519
                                                                             ---------               ---------
          Total current assets                                                 327,964                 304,989
  
  PROPERTY, PLANT AND EQUIPMENT, NET                                           206,383                 205,705
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                                       183,925                 184,523
  
  DEBT ISSUANCE COSTS, NET                                                      15,420                  18,889
  
  OTHER ASSETS                                                                  24,806                  21,831
                                                                             ---------               ---------
  
  TOTAL ASSETS                                                                $758,498                $735,937
                                                                              ========                ========
  
  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
       Short-term borrowings                                                 $   5,882               $   6,598
       Current portion of long-term debt                                         4,009                  12,161
       Accounts payable                                                        115,044                 110,640
       Accounts payable - related parties                                        1,598                  11,662
       Accrued interest                                                          8,029                  10,655
       Other accrued liabilities                                                45,338                  47,119
                                                                             ---------               ---------
          Total current liabilities                                            179,900                 198,835
  
  LONG-TERM DEBT                                                               677,582                 726,649
  
  LONG-TERM DEBT - RELATED PARTY                                                34,000                  38,800
  
  OTHER LIABILITIES                                                             30,984                  31,076
  
  COMMITMENTS AND CONTINGENCIES                                                      -                       -
  
  PARTNERS' EQUITY (DEFICIT):
       General partners                                                       (127,706)               (122,304)
       Limited partners                                                              -                       -
       Note receivable from partner                                            (18,608)                (16,118)
       Investment in General Felt                                                    -                (103,121)
       Other                                                                   (17,654)                (17,880)
                                                                             ---------               ---------
          Total partners' equity (deficit)                                    (163,968)               (259,423)
                                                                              --------                --------
  TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT)                            $758,498                $735,937
                                                                              ========                ========
  </TABLE>
  
            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>
                                                                        13 Week Periods Ended
                                                                      March 29,      March 30,
                                                                        1998          1997
                                                                     ---------      ---------
  OPERATING ACTIVITIES:                                                      (thousands)
  <S>                                                                   <C>           <C>    
     Net income                                                         $4,000        $14,826
     Adjustments to reconcile net income to net cash provided
         by operating activities:
         Depreciation and amortization                                   7,588          3,908
         Amortization of debt issuance costs and debt discount             247            703
         Extraordinary loss on extinguishment of debt                    2,857            679
         Other operating activities                                      1,937            227
         Changes in operating assets and liabilities                   (46,164)         1,874
                                                                     ---------      ---------
  
            Net cash provided by (used for) operating activities       (29,535)        22,217
                                                                     ---------      ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                               (6,972)        (6,817)
     Acquisition, net of cash acquired                                  (3,321)            --
     Purchase of note from partner                                      (2,490)            --
     Deposit for defeasence of indebtedness                             (4,809)            --
     Decrease in restricted cash                                            --          5,239
     Other investing activities                                           (424)            --
                                                                     ---------      ---------
  
            Net cash used for investing activities                     (18,016)        (1,578)
                                                                     ---------      ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from (repayments of) short-term borrowings              (716)           293
     Net proceeds from revolving loans                                  69,973             --
     Proceeds from long-term debt                                      129,000            500
     Repayment of long-term debt                                      (126,827)        (9,038)
     Repayment of long-term debt - related party                        (4,800)            --
     Debt issuance costs                                                (1,149)            --
     Distributions to partners                                         (20,000)          (124)
     Transfer of General Felt common stock                              (3,898)            --
     Other financing activities                                            (42)          (410)
                                                                     ---------      ---------
  
            Net cash provided by (used for) financing activities        41,541         (8,779)
                                                                     ---------      ---------
  
  NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                               (6,010)        11,860
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                              8,982         20,632
                                                                     ---------      ---------
  
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                   $2,972        $32,492
                                                                     =========      =========
  </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
  after being restated for the transfer of General Felt Industries, Inc. ("General
  Felt") common stock (see Note 2). The condensed consolidated balance sheet as of
  March 29, 1998 and the condensed  consolidated  statements of operations for the
  thirteen  week periods ended March 29, 1998 and March 30, 1997 and the condensed
  consolidated  statements of cash flows for the thirteen week periods ended March
  29, 1998 and March 30, 1997 have been  prepared by Foamex L.P. and  subsidiaries
  and have not been audited by Foamex L.P.'s independent accountants. In addition,
  the condensed  consolidated  statement of operations and statement of cash flows
  for the  thirteen  week period  ended March 30, 1997 has been  restated  for the
  transfer  of  General  Felt  common  stock  (see  Note  2).  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.
  
         On  December  23,  1997,  Foamex L.P.  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) (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 Inc. ("Foamex International),  Foamex
  L.P. and certain of its affiliates  completed a series of transactions  designed
  to simplify Foamex  International's  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 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 Trace Foam LLC of all
  of the  outstanding  common  stock of  General  Felt,  in  exchange  for (i) the
  assumption by Trace Foam LLC of $129.0 million of Foamex L.P.'s indebtedness and
  (ii) the transfer by Trace Foam 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 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,  Trace Foam 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 Trace  Foam 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
  
                                         6
  <PAGE>
  2.     TRANSFER OF GENERAL FELT INDUSTRIES, INC. (continued)
  
  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, Trace Foam 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.
  
         These transactions have been reflected as a transfer and accounted for in
  a manner  similar to a pooling of interests  since the entities are under common
  control.   Accordingly,   prior  periods  have  been  restated  to  exclude  the
  consolidated  operations  of General Felt and  partners'  equity  (deficit)  was
  charged  to  reflect  the net  effect of these  transactions.  The  consolidated
  balance  sheet as of  December  28,  1997  has  been  restated  to  exclude  the
  consolidated  assets and  liabilities  of General Felt and reflect Foamex L.P.'s
  investment  in General Felt of  approximately  $103.1  million as a reduction of
  partners' equity (deficit). Upon consummation of these transactions, Foamex L.P.
  recorded an increase in  partners'  equity  (deficit)  of  approximately  $113.2
  million  associated  with the  assumption  of  indebtedness  by Trace  Foam LLC,
  related expenses and fees and other matters.  In addition,  Foamex L.P. recorded
  the $20.0 million distribution to Foamex International as discussed above.
  
         In connection with these transactions,  the consolidated balance sheet as
  of December  28,  1997 and the  consolidated  statement  of  operations  for the
  thirteen week period ended March 30, 1997 have been restated as follows:
  <TABLE>
  <CAPTION>
                                                                         As previously     General          As
                                                                            Reported          Felt       Restated
         Balance Sheet:
  <S>                                                                       <C>           <C>            <C>     
           Current assets                                                   $352,217      $(47,228)      $304,989
           Total assets                                                      834,068       (98,131)       735,937
           Current liabilities                                               226,143       (27,308)       198,835
           Total liabilities                                                 990,370        (4,990)       995,360
           Equity                                                           (156,302)     (103,121)      (259,423)
  
         Statement of Operations:
           Net sales                                                        $229,120      $(34,986)      $194,134
           Income before extraordinary loss                                   16,216          (711)        15,505
           Net income (loss)                                                  15,537          (711)        14,826
  </TABLE>
  
  3.     CRAIN ACQUISITION
  
         On December 23, 1997,  Foamex L.P.  acquired  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 (with an estimated fair value of approximately $112.3 million). In
  addition,   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 its respective 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 the period presented.
  
                                         7
  <PAGE>
  3.     CRAIN ACQUISITION (continued)
  
                                                        1997
                                                    (thousands)
         Net sales                                    $271,782
                                                      ========
         Income before extraordinary loss             $ 12,072
                                                      ========
  
         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:
  <TABLE>
  <CAPTION>
                                                                           March 29,          December 28,
                                                                             1998                 1997
                                                                         ------------         -----------
                                                                                    (thousands)
  <S>                                                                      <C>                    <C>     
         Raw materials and supplies                                        $ 70,099               $ 70,071
         Work-in-process                                                     16,561                 15,406
         Finished goods                                                      25,872                 26,617
                                                                          ---------              ---------
             Total                                                         $112,532               $112,094
                                                                           ========               ========
  
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  
         Long-term debt consists of:
  
                                                                           March 29,          December 28,
                                                                             1998                 1997
         Credit Facility:                                                           (thousands)
           Term Loan A                                                    $       -              $  76,700
           Term Loan B                                                       83,553                109,725
           Term Loan C                                                       75,958                 99,750
           Term Loan D                                                      110,000                110,000
           Revolving credit facility                                        124,901                 54,928
         9 7/8% Senior subordinated notes due 2007                          150,000                150,000
         13 1/2% Senior subordinated notes due 2005 (includes
           $13,272 and $13,720 of unamortized debt premiums)                111,272                111,720
         9 1/2% Senior secured notes due 2000                                 4,523                  4,523
         Industrial revenue bonds                                             7,000                  7,000
         Subordinated note payable (net of unamortized
           debt discount of $804 and $886)                                    6,211                  6,129
         Other                                                                8,173                  8,335
                                                                           --------               --------
                                                                            681,591                738,810
  
         Less current portion                                                 4,009                 12,161
                                                                           --------               --------
  
         Long-term debt-unrelated parties                                  $677,582               $726,649
                                                                           ========               ========
  </TABLE>
                                         8
  <PAGE>
  
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  <TABLE>
  <CAPTION>
                                                                           March 29,          December 28,
                                                                             1998                 1997
                                                                         ------------         -----------
                                                                                    (thousands)
  <S>                                                                     <C>                    <C>      
         Long-term debt-related party consists of:
  
         Foamex/GFI Note                                                  $  34,000              $  38,800
                                                                          =========              =========
  </TABLE>
  
  
         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 Trace Foam 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 redeem the Senior  Secured  Notes in
  June 1998,  (iii) repay $4.8 million on the Foamex/GFI Note, (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 for the remainder of
  1998 and for the next five years are as  follows:  1998 - $3.9  million;  1999 -
  $7.3 million;  2000 - $11.5 million;  2001 - $6.9 million;  2002 - $2.9 million;
  and thereafter - $636.6 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,  Foamex L.P. used  approximately  $8.4 million of restricted
  cash to repurchase outstanding indebtedness of approximately $8.0 million, which
  resulted in an extraordinary loss of approximately $0.7 million.
  
  7.      RELATED PARTY TRANSACTIONS
  
         During the thirteen week periods ended March 29, 1998 and March 30, 1997,
  Foamex L.P. sold approximately $29.2 million and $35.0 million of carpet cushion
  to Foamex Carpet pursuant to a Supply  Agreement  between Foamex L.P. and Foamex
  Carpet.
  
                                         9
  <PAGE>
  7.      RELATED PARTY TRANSACTIONS (continued)
  
         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 thirteen week period ended March 29, 1998, Foamex L.P.
  received $0.1 million for services provided to Foamex Carpet.
  
         During the thirteen  week period ended March 29, 1998,  Foamex L.P.  paid
  approximately  $0.5  million to Foamex  Carpet for  interest  expense on a $38.8
  million principal note due to Foamex Carpet. This note was subsequently replaced
  by the Foamex/GFI  Note, which was retained by Trace Foam LLC in connection with
  the transfer of General Felt (see Note 2).
  
         On December 28, 1997,  Foamex L.P.  entered into a promissory note with a
  principal  amount of  approximately  $2.5 million.  The note bears interest at a
  rate per annum  equal to LIBOR  plus 2 3/8%.  The note and  interest  are due on
  demand, or if no demand is made, then on December 31, 2001.
  
         During the thirteen  week period ended March 29, 1998,  Foamex L.P.  paid
  approximately  $0.2 million to Trace Foam LLC for interest on the $34.0  million
  Foamex/GFI Note (see Note 2).
  
         On July 1, 1997,  Trace  Holdings  borrowed  $5.0  million  pursuant to a
  promissory  note with an aggregate  principal  amount of $5.0 million  issued to
  Foamex L.P. on June 12, 1997. The  promissory  note is due and payable on demand
  or, if no demand is made,  on July 7, 2001,  and bears  interest  at 2 3/8% plus
  three-month LIBOR, as defined, per annum payable quarterly in arrears commencing
  October 1, 1997.  The  promissory  note is  included in the other  component  of
  partners' equity (deficit).
  
         On June 12,  1997,  a  promissory  note  issued to Foamex  L.P.  by Trace
  International  Holdings,  Inc.  ("Trace  Holdings")  was  amended.  The  amended
  promissory  note is an extension of a promissory note of Trace Holdings that was
  due in July 1997. The aggregate  principal amount of the amended promissory note
  was increased to  approximately  $4.8 million and the maturity of the promissory
  note was extended.  The  promissory  note is due and payable on demand or, if no
  demand is made, on July 7, 2001, and bears  interest at 2 3/8% plus  three-month
  LIBOR, as defined,  per annum payable quarterly in arrears.  The promissory note
  is included in the other component of partners' equity (deficit).
  
         Foamex L.P. has a supply  agreement (the "Supply  Agreement") with Foamex
  International   pursuant  to  which,  at  the  option  of  Foamex  L.P.,  Foamex
  International  will 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
  believes that the terms of the Supply Agreement are no less favorable than those
  which Foamex L.P. could have obtained from an unaffiliated  third party.  During
  the thirteen week periods  ended March 29, 1998 and March 30, 1997,  Foamex L.P.
  purchased  approximately $15.0 million and $11.6 million,  respectively,  of raw
  materials under the Supply Agreement.  Effective March 31, 1998, Foamex L.P. has
  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 $0.4 million  during the thirteen  week periods
  ended March 29, 1998 and March 30, 1997, respectively.
  
         On December 26, 1997, Foamex L.P. entered into a $2.5 million  promissory
  note with  Foamex  International.  The note bears  interest at the rate of LIBOR
  plus 2 3/8%.  The note and  interest  are payable on demand,  or if no demand is
  made, then on December 31, 2001.
  
                                         10
  <PAGE>
  7.      RELATED PARTY TRANSACTIONS (continued)
  
         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 March 29, 1998, there were $13.6
  million of advances to Foamex International under this agreement.
  
  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 1997,  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 March
  29, 1998, Foamex L.P. has environmental  accruals of approximately  $3.9 million
  for environmental matters. In addition, as of March 29, 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.
  
         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 March 29,  1998,  Foamex L.P. has
  environmental accruals of approximately $3.4 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,
  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.  
  
                                         11
  <PAGE>
  
  8.     ENVIRONMENTAL MATTERS (continued)
  
         Foamex  L.P.  has been  designated  as a  Potentially  Responsible  Party
  ("PRP")  by the EPA with  respect  to  twelve  sites,  with an  estimated  total
  liability to Foamex L.P. for the twelve  sites of less than  approximately  $0.4
  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 May 15, 1998,  Foamex L.P. and 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 which allege substantial damages, but most of
  which 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.
  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.  In addition,  two of the cases filed on
  behalf of 903 foreign  plaintiffs  were  dismissed on the grounds that the cases
  could not be brought in the United  States  courts.  This decision is subject to
  appeal.  Foamex  L.P.  believes  that the  number  of suits  and  claimants  may
  increase.  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.  While it is not
  feasible  to  predict  or  determine  the  outcome  of these  actions,  based on
  management'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.  In addition,  Foamex L.P. is also
  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  and
  management  believes Trace Holdings  likely will be in a position to continue to
  pay such expenses,  there can be no absolute  assurance that Trace Holdings will
  be able to provide such indemnification.  Based on information available at this
  time with respect to the potential  liability,  and without  taking into account
  the  indemnification  provided by Trace  Holdings and the  coverage  provided by
  Trace Holdings' and Foamex L.P.'s liability insurance, Foamex L.P. believes that
  the proceedings  should not ultimately result in any liability that would 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.
  
         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
  
                                         12
  <PAGE>
  
  
  9.     LITIGATION (continued)
  
  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.
  
         On or about March 17, 1998,  five  purported  class action  lawsuits were
  filed  in the  Delaware  Chancery  Court,  New  Castle  County,  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.  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   proposal  to  acquire  all  of  the  shares  of  Foamex
  International's  common stock. The complaints  seek,  among other things,  class
  certification,  a declaration  that the defendants have breached their fiduciary
  duties to the class, preliminary and permanent injunctions baring implementation
  of the proposed  transaction,  rescission  of the  transaction  if  consummated,
  unspecified compensatory damages, and costs and attorneys' fees.
  
         Foamex L.P. is party to various  other  lawsuits,  both as defendant  and
  plaintiff,  arising  in the  normal  course of  business.  It is the  opinion of
  management  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.
  
                                         13
  <PAGE>
                             FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                             BALANCE SHEETS (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                              March 29,            December 28,
                                                                                1998                   1997
                                                                              -------                -------
  ASSETS                                                                                   (thousands)
  <S>                                                                          <C>                    <C>   
  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.
  
                                         14
  <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  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.
  The Senior Subordinated Notes are subordinated in right of payment to all senior
  indebtedness and are pari passu in right of payment to the subordinated 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  under  Rule  144A of the  Securities  Act of 1933,  as
  amended,  on December 23, 1997 in connection with the Crain Acquisition.  The 13
  1/2% Senior Subordinated Notes represent unsecured general obligations of Foamex
  L.P. and are subordinated to all Senior Debt (as defined in the Indenture).
  
         The 13 1/2% Senior Subordinated Notes mature on August 15, 2005. Interest
  on the 13  1/2%  Senior  Subordinated  Notes  is  payable  semiannually  on each
  February 15 and August 15. The 13 1/2% Senior  Subordinated  Notes bear interest
  at the rate of 13 1/2% per annum. The 13 1/2% Senior  Subordinated Notes may not
  be redeemed prior to August 15, 2002, except in the event of a Change of Control
  (as defined) or Foamex L.P. may,  subject to certain  requirements (as defined),
  on or prior to August 15,  1998 redeem up to 33 1/3% of the  aggregate  original
  principal amount with proceeds from an Equity Offering (as defined).
  
         Foamex L.P. has filed a  registration  statement  relating to an exchange
  offer  in  which  Foamex  L.P.  will  offer  to  exchange  the  13  1/2%  Senior
  Subordinated  Notes issued in the private  placement for new notes. The terms of
  the new  notes  will  be  substantially  identical  in all  respects  (including
  principal  amount,  interest rate,  maturity and ranking) to the terms of the 13
  1/2% Senior  Subordinated  Notes, except that the new notes will be transferable
  by holders  thereof  without  further  registration  under the Securities Act of
  1933, as amended (except in the case of 13 1/2% Senior  Subordinated  Notes held
  by affiliates of Foamex L.P. and for certain other holders), and are not subject
  to any covenant  regarding  registration  under the  Securities  Act of 1933, as
  amended.
  
                                         15
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         Foamex L.P. operates primarily 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 five
  end-markets;  (i) carpet  cushion and other  carpet  products,  (ii)  cushioning
  foams,  including  bedding  products,  (iii)  furniture  products for  furniture
  manufacturers and distributors, (iv) automotive applications, including trim and
  accessories,  and (v) specialty and technical applications,  including those for
  filtration,  gasketing and sealing. As a result of the Crain Acquisition, Foamex
  L.P. has added a sixth end market: consumer products.
  
         On March  16,  1998,  Foamex  International  announced  that its Board of
  Directors  received an unsolicited  buyout proposal from Trace Holdings,  Foamex
  International's principal stockholder. Trace Holdings proposed to acquire all of
  the  outstanding  common stock of Foamex  International  not currently  owned by
  Trace Holdings and its subsidiaries for a cash price of $17.00 per share.  Also,
  Trace  Holdings  informed the Board of Directors  that  financing for the buyout
  transaction would be arranged through  Donaldson,  Lufkin & Jenrette  Securities
  Corporation and The Bank of Nova Scotia/Scotia  Capital Markets. As of March 16,
  1998,  Trace  Holdings and its  subsidiaries  beneficially  owned  approximately
  11,475,000 shares or approximately 46% of the outstanding common stock of Foamex
  International.  In response to Trace  Holding's  offer,  Foamex  International's
  Board  of  Directors  has  appointed  a  special   committee  to  determine  the
  advisability  and  fairness  of the  proposed  buyout to Foamex  International's
  stockholders  other than Trace Holdings and its  subsidiaries.  Trace  Holding's
  proposed buyout is subject to a number of conditions, including the negotiations
  of  definitive  documents  (which  are  expected  to contain  customary  closing
  conditions);  the filing of a disclosure  statement and other documents with the
  Securities  and Exchange  Commission;  regulatory  filings;  and approval of the
  transaction by a majority of Foamex International's stockholders.
  
         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  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 a Supply Agreement and an
  Administrative  Services  Agreement,  (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 Foamex L.P.  Credit Facility and (iii) 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 Trace Foam LLC of all of the outstanding  common stock of General
  Felt, in exchange for (i) the  assumption by Trace Foam LLC of $129.0 million of
  Foamex  L.P.'s  indebtedness  and (ii) the  transfer by Trace Foam 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  subordinated  notes due 2005. Upon  consummation of the
  initial  transaction,  Foamex Carpet, a newly formed wholly-owned  subsidiary of
  Foamex  International,  Foamex  International,  Trace Foam 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 Trace  Foam 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.  Upon  consummation  of  these
  transactions contemplated by the Asset Purchase Agreement, Foamex Carpet entered
  into a credit agreement with 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, which
  provides for up to $20.0 million in revolving credit borrowings. These
  
                                         16
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  transactions  will  be  accounted  for as a  transfer  and  future  Foamex  L.P.
  financial  statements will exclude the operations of General Felt. Foamex Carpet
  will conduct the carpet cushion business  previously  conducted by General Felt.
  Also,  Trace Foam 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.
  
         On December 23, 1997,  Foamex L.P.  acquired  Crain  pursuant to a merger
  agreement with Crain Holdings  Corp. 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).  In
  addition,   fees  and  expenses   associated  with  the  Crain  Acquisition  are
  approximately $13.2 million.
  
         On October 6, 1997, Foamex L.P. sold  substantially all of the net assets
  of its needlepunch  carpeting,  tufted  carpeting and artificial  grass products
  business  located at its  facilities  in Dalton,  Georgia  ("Dalton").  Dalton's
  revenues were $10.7 million for the thirteen week period ended March 30, 1997.
  
         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.
  
  13 Week Period  Ended March 29, 1998  Compared to 13 Week Period Ended March 30,
  1997
  
  Results of Operations
  
         Net sales for the first  quarter of 1998 were $313.8  million as compared
  to $229.1  million in the first quarter of 1997, an increase of $84.7 million or
  37.0%. Carpet cushion products net sales for the first quarter of 1998 increased
  3.8% to $70.5 million from $67.9  million in the first  quarter of 1997.  Carpet
  cushion is exclusively sold to Foamex Carpet. Cushioning  products net sales for
  the first quarter of 1998 increased 86.3% to $97.8 million from $52.5 million in
  the first quarter of 1997  primarily due to net sales from the Crain  operations
  and  increased  volume  to  our  national  bedding  customers  and  fabricators.
  Furniture  products net sales for the first quarter of 1998  increased  36.8% to
  $43.1 million as compared to net sales of $31.5 million for the first quarter of
  1997 primarily due to net sales from the Crain operations.  Automotive  products
  net sales for the first  quarter of 1998  increased  10.0% to $65.7 million from
  $59.7  million in the first quarter of 1997  primarily due to increased  volume.
  Technical  products net sales for the first quarter of 1998  increased  20.6% to
  $21.1 million from $17.5  million in the first quarter of 1997  primarily due to
  increased net sales volume for felted, gasketing, and sealing products. Consumer
  products  net  sales for the  first  quarter  of 1998 was  $156.9  million.  The
  consumer products category was acquired in the December 1997 Crain Acquisition.
  
         Gross  profit as a  percentage  of net sales  decreased  to 15.3% for the
  first quarter of 1998 from 19.0% in the first  quarter of 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 versus Foamex L.P.'s historical gross profit margins.
  Also,  the gross profit was lower in the first quarter of 1998 since Foamex L.P.
  carried the full start-up costs related to both organizations.
  
         Income from  operations  was $25.8  million for the first quarter of 1998
  compared to $25.7 million in the first  quarter of 1997  primarily due the Crain
  Acquisition  (discussed  above)  offset by an increase  in selling,  general and
  administrative expenses primarily due to the Crain Acquisition.
  
         Income before extraordinary loss decreased to $17.1 million for the first
  quarter of 1998 as compared to $15.5 million for the first quarter of 1997.  The
  decrease is primarily due increased interest and debt issuance costs
  
                                         17
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  and the discussion  above. The increase in interest and debt issuance expense is
  primarily  due to the debt  incurred in  connection  with the Crain  Acquisition
  offset by the favorable effects of the June 1997 refinancing plan.
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $3.1 million during the first quarter of 1998 primarily relates to the write-off
  of debt issuance costs associated with the GFI Transaction.
  
  Foamex Capital Corporation ("FCC")
  
         FCC is solely a co-issuer of certain  indebtedness  of Foamex L.P. 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 of the operating subsidiaries.
  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 December 28,
  1997 and expects to be in  compliance  with the  covenants  for the  foreseeable
  future.
  
         Cash and cash  equivalents  decreased  $6.0  million  during 1998 to $3.0
  million at March 29, 1998 from $9.0 million at December 28, 1997  primarily  due
  to a decrease in cash  operating  results and used by the  operating  assets and
  liabilities.  Working  capital  increased  $41.9  million  during 1998 to $148.1
  million at March 29, 1998 from $106.2 million at December 28, 1997 primarily due
  changes in net operating assets. Net operating assets and liabilities (comprised
  of accounts receivable,  inventories, accounts payable and accounts payable from
  affiliates)  increased  $21.3 million during 1998 to $162.5 million at March 29,
  1998 from $141.2  million at December  28, 1997  primarily  due to  increases in
  accounts receivable.
  
         As of March 29,  1998,  there were  $124.9  million of  revolving  credit
  borrowings  under the Credit Facility with unused  availability of approximately
  $25.6 million which includes approximately $49.5 million associated with letters
  of credit outstanding which are supported by the Credit Facility.  Borrowings by
  Foamex  Canada as of March 29,  1998 were $5.1  million  under  Foamex  Canada's
  revolving  credit  agreement  with unused  availability  of  approximately  $0.9
  million.
  
         Interest Rate Swaps
  
         Foamex L.P. enters into interest rate swaps to lower funding costs and/or
  to manage interest costs and exposure to changing  interest  rates.  Foamex L.P.
  does not hold or issue financial instruments for trading purposes.
  
         On January 8, 1998,  Foamex L.P.  entered into an amended  interest  rate
  swap  agreement  which  provides  for an  interest  rate swap  agreement  with a
  notional  amount of $150.0  million  through  June 2002.  Under this  agreement,
  Foamex  L.P. is  obligated  to make fixed  payments  of 5.78% per annum  through
  December 1998 and variable  payments based on LIBOR at the beginning of each six
  month period for the remainder of the agreement,  in exchange for fixed payments
  by the swap  partner at 6.44% per annum for the life of the  agreement,  payable
  semiannually in arrears.  The newly amended  interest rate swap agreement can be
  terminated  by the swap partner at the end of each six month  period  commencing
  December 1999.
  
                                         18
  <PAGE>
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         Foamex L.P. is exposed to credit loss in the event of a nonperformance by
  the swap partner; however, the occurrence of this event is not anticipated.  The
  effect of interest  rate swaps was a favorable  adjustment  to interest and debt
  issuance  expense of $0.3  million,  $0.9 million for the  thirteen  week period
  ended March 29, 1998 and March 30, 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 March 29, 1998 was $3.9 million. In addition, as of
  March  29,  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.
  
  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.  has and will  continue to make  certain  investments  in its
  software systems and applications to ensure Foamex L. P. is Year 2000 compliant.
  Foamex L.P. plans to continue to make  modifications to the identified  software
  during 1998 and test the during 1998.  The  financial  impact to Foamex L.P. has
  not been and is not  anticipated  to be  material to its  financial  position or
  results of operation in any given year.
  
         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.
  
  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. will adopt SFAS No. 130 for 1998.
  
         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.
  
                                         19
  <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.
  
           The  information  from  Notes  6 and 7 of  the  condensed  consolidated
           financial  statements of Foamex L.P. and  subsidiaries  as of March 29,
           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
  
  3.1(a)    - Certificate of Limited Partnership of Foamex L.P. ("Foamex")
  
  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.
  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,
            Foamex Fibers,  and FLLC, as withdrawing  guarantors,  and The Bank of
            New York, as trustee, relating to the 9 7/8% Notes.
  
  
                                         20
  <PAGE>
  4.1.4(d)  -  Registration  Rights  Agreement,  dated as of June 12, 1997, by and
            among Foamex,  FCC, General Felt, Foamex Fibers, and all future direct
            or indirect  domestic  subsidiaries  of Foamex or FCC, and  Donaldson,
            Lufkin & Jenrette  Securities  Corporation,  Salomon Brothers Inc. and
            Scotia Capital Markets, as Initial Purchasers.
  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 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.
  
                                         21
  <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    - Intentionally omitted.
  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 Trace 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.
  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.
  10.4.3(k) - Amended and Restated  Guaranty,  dated as of December 19, 1991, made
            by Trace Foam in favor of Foamex L.P.
  
                                         22
  <PAGE>
  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
  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.
  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).
  
  
                                         23
  <PAGE>
  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)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended June 30, 1996.
  
  (g)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex,  FCC and General Felt on Form S-1,  Registration  Nos.
       33-60888, 33-60888-01, and 33-60888-02.
  
  (h)  Incorporated  herein by reference to the Exhibit to the Form 10-K Statement
       of Foamex and FCC for fiscal 1992.
  
  (i)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       L.P. for fiscal 1994.
  
  (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)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended July 2, 1995.
  
  (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.
  
  (q)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       L.P. for the fiscal year ended December 31, 1995.
  
                                         24
  <PAGE>
  (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)  Incorporated  by  reference  to the  Exhibit  to the  Form  10-Q of  Foamex
       International for the quarterly period ended July 3, 1994.
  
  (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 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:
  
                Form 8-K/A,  dated March 9, 1998,  providing  pro forma  financial
                information relating to the acquisition of Crain Industries, Inc.
  
                Form  8-K,  dated  February  28,  1998,  reporting  the  change in
                corporate structure.
  
                                         25
  <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:  May 12, 1998                By: /s/ Kenneth R. Fuette
                                         Kenneth R. Fuette
                                         Executive Vice President and
                                         Chief Financial Officer
  
  
  
  
                                     FOAMEX CAPITAL CORPORATION
  
  
  
  Date:  May 12, 1998                By: /s/ Kenneth R. Fuette
                                         Kenneth R. Fuette
                                         Vice President, Treasurer and
                                         Chief Financial Officer
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 94635}]
metadata_filer: [{"company-data": {"conformed-name": "FOAMEX L P", "cik": "0000890080", "assigned-sic": "3086", "irs-number": "050475617", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-11432", "film-number": "98627457"}, "business-address": {"street1": "1000 COLUMBIA AVENUE", "city": "LINEWOOD", "state": "PA", "zip": "19061", "phone": "6103593000"}, "mail-address": {"street1": "1000 COLUMBIA AVE", "city": "LINWOOD", "state": "PA", "zip": "19061"}}, {"company-data": {"conformed-name": "FOAMEX CAPITAL CORP", "cik": "0000890081", "assigned-sic": "3086", "irs-number": "223182164", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "333-45733-03", "film-number": "98627458"}, "business-address": {"street1": "1000 COLUMBIA AVE", "city": "LINWOOD", "state": "PA", "zip": "19061", "phone": "6108593000"}, "mail-address": {"street1": "1000 COLUMBIA AVE", "city": "LINWOOD", "state": "PA", "zip": "19061"}}]
text: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
                                      FORM 10-Q
  
                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 29, 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 Capital Corporation meets 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 May 15, 1998 was 1,000.
  
                                    Page 1 of 26
                            Exhibit List on Page 20 of 26
  FOAMEX L.P.
                             FOAMEX CAPITAL CORPORATION
  
                                        INDEX
                                                                             Page
  Part I.  Financial Information:
  
            Item 1. Financial Statements
  
             Foamex L.P.
  
             Condensed Consolidated  Statements of Operations - Thirteen
                Week Periods Ended March 29, 1998 and March 30, 1997           3
  
             Condensed Consolidated  Balance Sheets as of March 29, 1998
                and December 28, 1997                                          4
  
             Condensed Consolidated  Statements of Cash Flows - Thirteen
                Week Periods Ended March 29, 1998 and March 30, 1997           5
  
             Notes to Condensed Consolidated Financial Statements              6
  
             Foamex Capital Corporation
  
             Balance Sheets as of March 29, 1998 and  December  28, 1997      14
  
             Notes to Balance Sheets                                          15
  
            Item 2.  Management's  Discussion and Analysis of Financial
                Condition and Results of Operations                           16
  
  Part II. Other Information                                                  20
  
           Exhibit List                                                       20
  
           Signatures                                                         26
  
                                    2
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                            FOAMEX L.P. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  
                                                  13 Week Periods Ended
                                                March 29,       March 30,
                                                  1998            1997
                                               ---------      ---------
                                                      (thousands)
  NET SALE                                      $284,545       $194,134
  
  COST OF GOODS SOLD                             240,982        157,293
                                               ---------      ---------
  
  GROSS PROFIT                                    43,563         36,841
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                      17,766         11,123
                                               ---------      ---------
  
  INCOME FROM OPERATIONS                          25,797         25,718
  
  INTEREST AND DEBT ISSUANCE EXPENSE              17,675         10,666
  
  OTHER INCOME (EXPENSE), NET                       (274)           821
                                               ---------      ---------
  
  INCOME BEFORE PROVISION FOR INCOME TAXES         7,848         15,873
  
  PROVISION FOR INCOME TAXES                         725            368
                                               ---------      ---------
  
  INCOME BEFORE EXTRAORDINARY LOSS                 7,123         15,505
  
  EXTRAORDINARY LOSS ON EARLY
     EXTINGUISHMENT OF DEBT                       (3,123)          (679)
                                               ---------      ---------
  
  NET INCOME                                      $4,000        $14,826
                                               =========      =========
  
            The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                         3
  FOAMEX L.P. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
  March 29,             December 28,
  ASSETS                                                                        1998                  1997
                                                                            ------------          -----------
  CURRENT ASSETS:                                                                       (thousands)
  Cash and cash equivalents                                            $    2,972              $    8,982
       Accounts receivable, net                                                150,687                 138,571
       Inventories                                                             112,532                 112,094
       Accounts receivable, related party                                       15,970                  12,823
       Other current assets                                                     45,803                  32,519
                                                                             ---------               ---------
          Total current assets                                                 327,964                 304,989
  
  PROPERTY, PLANT AND EQUIPMENT, NET                                           206,383                 205,705
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                                       183,925                 184,523
  
  DEBT ISSUANCE COSTS, NET                                                      15,420                  18,889
  
  OTHER ASSETS                                                                  24,806                  21,831
                                                                             ---------               ---------
  
  TOTAL ASSETS                                                                $758,498                $735,937
                                                                              ========                ========
  
  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
       Short-term borrowings                                                 $   5,882               $   6,598
       Current portion of long-term debt                                         4,009                  12,161
       Accounts payable                                                        115,044                 110,640
       Accounts payable - related parties                                        1,598                  11,662
       Accrued interest                                                          8,029                  10,655
       Other accrued liabilities                                                45,338                  47,119
                                                                             ---------               ---------
          Total current liabilities                                            179,900                 198,835
  
  LONG-TERM DEBT                                                               677,582                 726,649
  
  LONG-TERM DEBT - RELATED PARTY                                                34,000                  38,800
  
  OTHER LIABILITIES                                                             30,984                  31,076
  
  COMMITMENTS AND CONTINGENCIES                                                      -                       -
  
  PARTNERS' EQUITY (DEFICIT):
       General partners                                                       (127,706)               (122,304)
       Limited partners                                                              -                       -
       Note receivable from partner                                            (18,608)                (16,118)
       Investment in General Felt                                                    -                (103,121)
       Other                                                                   (17,654)                (17,880)
                                                                             ---------               ---------
          Total partners' equity (deficit)                                    (163,968)               (259,423)
                                                                              --------                --------
  TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT)                            $758,498                $735,937
                                                                              ========                ========
  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)
  13 Week Periods Ended
                                                                      March 29,      March 30,
                                                                        1998          1997
                                                                     ---------      ---------
  OPERATING ACTIVITIES:                                                      (thousands)
  Net income                                                         $4,000        $14,826
     Adjustments to reconcile net income to net cash provided
         by operating activities:
         Depreciation and amortization                                   7,588          3,908
         Amortization of debt issuance costs and debt discount             247            703
         Extraordinary loss on extinguishment of debt                    2,857            679
         Other operating activities                                      1,937            227
         Changes in operating assets and liabilities                   (46,164)         1,874
                                                                     ---------      ---------
  
            Net cash provided by (used for) operating activities       (29,535)        22,217
                                                                     ---------      ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                               (6,972)        (6,817)
     Acquisition, net of cash acquired                                  (3,321)            --
     Purchase of note from partner                                      (2,490)            --
     Deposit for defeasence of indebtedness                             (4,809)            --
     Decrease in restricted cash                                            --          5,239
     Other investing activities                                           (424)            --
                                                                     ---------      ---------
  
            Net cash used for investing activities                     (18,016)        (1,578)
                                                                     ---------      ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from (repayments of) short-term borrowings              (716)           293
     Net proceeds from revolving loans                                  69,973             --
     Proceeds from long-term debt                                      129,000            500
     Repayment of long-term debt                                      (126,827)        (9,038)
     Repayment of long-term debt - related party                        (4,800)            --
     Debt issuance costs                                                (1,149)            --
     Distributions to partners                                         (20,000)          (124)
     Transfer of General Felt common stock                              (3,898)            --
     Other financing activities                                            (42)          (410)
                                                                     ---------      ---------
  
            Net cash provided by (used for) financing activities        41,541         (8,779)
                                                                     ---------      ---------
  
  NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                               (6,010)        11,860
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                              8,982         20,632
                                                                     ---------      ---------
  
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                   $2,972        $32,492
                                                                     =========      =========
  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
  after being restated for the transfer of General Felt Industries, Inc. ("General
  Felt") common stock (see Note 2). The condensed consolidated balance sheet as of
  March 29, 1998 and the condensed  consolidated  statements of operations for the
  thirteen  week periods ended March 29, 1998 and March 30, 1997 and the condensed
  consolidated  statements of cash flows for the thirteen week periods ended March
  29, 1998 and March 30, 1997 have been  prepared by Foamex L.P. and  subsidiaries
  and have not been audited by Foamex L.P.'s independent accountants. In addition,
  the condensed  consolidated  statement of operations and statement of cash flows
  for the  thirteen  week period  ended March 30, 1997 has been  restated  for the
  transfer  of  General  Felt  common  stock  (see  Note  2).  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.
  
         On  December  23,  1997,  Foamex L.P.  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) (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 Inc. ("Foamex International),  Foamex
  L.P. and certain of its affiliates  completed a series of transactions  designed
  to simplify Foamex  International's  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 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 Trace Foam LLC of all
  of the  outstanding  common  stock of  General  Felt,  in  exchange  for (i) the
  assumption by Trace Foam LLC of $129.0 million of Foamex L.P.'s indebtedness and
  (ii) the transfer by Trace Foam 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 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,  Trace Foam 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 Trace  Foam 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
  
                                         6
  2.     TRANSFER OF GENERAL FELT INDUSTRIES, INC. (continued)
  
  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, Trace Foam 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.
  
         These transactions have been reflected as a transfer and accounted for in
  a manner  similar to a pooling of interests  since the entities are under common
  control.   Accordingly,   prior  periods  have  been  restated  to  exclude  the
  consolidated  operations  of General Felt and  partners'  equity  (deficit)  was
  charged  to  reflect  the net  effect of these  transactions.  The  consolidated
  balance  sheet as of  December  28,  1997  has  been  restated  to  exclude  the
  consolidated  assets and  liabilities  of General Felt and reflect Foamex L.P.'s
  investment  in General Felt of  approximately  $103.1  million as a reduction of
  partners' equity (deficit). Upon consummation of these transactions, Foamex L.P.
  recorded an increase in  partners'  equity  (deficit)  of  approximately  $113.2
  million  associated  with the  assumption  of  indebtedness  by Trace  Foam LLC,
  related expenses and fees and other matters.  In addition,  Foamex L.P. recorded
  the $20.0 million distribution to Foamex International as discussed above.
  
         In connection with these transactions,  the consolidated balance sheet as
  of December  28,  1997 and the  consolidated  statement  of  operations  for the
  thirteen week period ended March 30, 1997 have been restated as follows:
  As previously     General          As
                                                                            Reported          Felt       Restated
         Balance Sheet:
  Current assets                                                   $352,217      $(47,228)      $304,989
           Total assets                                                      834,068       (98,131)       735,937
           Current liabilities                                               226,143       (27,308)       198,835
           Total liabilities                                                 990,370        (4,990)       995,360
           Equity                                                           (156,302)     (103,121)      (259,423)
  
         Statement of Operations:
           Net sales                                                        $229,120      $(34,986)      $194,134
           Income before extraordinary loss                                   16,216          (711)        15,505
           Net income (loss)                                                  15,537          (711)        14,826
  3.     CRAIN ACQUISITION
  
         On December 23, 1997,  Foamex L.P.  acquired  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 (with an estimated fair value of approximately $112.3 million). In
  addition,   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 its respective 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 the period presented.
  
                                         7
  3.     CRAIN ACQUISITION (continued)
  
                                                        1997
                                                    (thousands)
         Net sales                                    $271,782
                                                      ========
         Income before extraordinary loss             $ 12,072
                                                      ========
  
         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:
  March 29,          December 28,
                                                                             1998                 1997
                                                                         ------------         -----------
                                                                                    (thousands)
  Raw materials and supplies                                        $ 70,099               $ 70,071
         Work-in-process                                                     16,561                 15,406
         Finished goods                                                      25,872                 26,617
                                                                          ---------              ---------
             Total                                                         $112,532               $112,094
                                                                           ========               ========
  
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  
         Long-term debt consists of:
  
                                                                           March 29,          December 28,
                                                                             1998                 1997
         Credit Facility:                                                           (thousands)
           Term Loan A                                                    $       -              $  76,700
           Term Loan B                                                       83,553                109,725
           Term Loan C                                                       75,958                 99,750
           Term Loan D                                                      110,000                110,000
           Revolving credit facility                                        124,901                 54,928
         9 7/8% Senior subordinated notes due 2007                          150,000                150,000
         13 1/2% Senior subordinated notes due 2005 (includes
           $13,272 and $13,720 of unamortized debt premiums)                111,272                111,720
         9 1/2% Senior secured notes due 2000                                 4,523                  4,523
         Industrial revenue bonds                                             7,000                  7,000
         Subordinated note payable (net of unamortized
           debt discount of $804 and $886)                                    6,211                  6,129
         Other                                                                8,173                  8,335
                                                                           --------               --------
                                                                            681,591                738,810
  
         Less current portion                                                 4,009                 12,161
                                                                           --------               --------
  
         Long-term debt-unrelated parties                                  $677,582               $726,649
                                                                           ========               ========
  8
  5.     LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  March 29,          December 28,
                                                                             1998                 1997
                                                                         ------------         -----------
                                                                                    (thousands)
  Long-term debt-related party consists of:
  
         Foamex/GFI Note                                                  $  34,000              $  38,800
                                                                          =========              =========
  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 Trace Foam 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 redeem the Senior  Secured  Notes in
  June 1998,  (iii) repay $4.8 million on the Foamex/GFI Note, (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 for the remainder of
  1998 and for the next five years are as  follows:  1998 - $3.9  million;  1999 -
  $7.3 million;  2000 - $11.5 million;  2001 - $6.9 million;  2002 - $2.9 million;
  and thereafter - $636.6 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,  Foamex L.P. used  approximately  $8.4 million of restricted
  cash to repurchase outstanding indebtedness of approximately $8.0 million, which
  resulted in an extraordinary loss of approximately $0.7 million.
  
  7.      RELATED PARTY TRANSACTIONS
  
         During the thirteen week periods ended March 29, 1998 and March 30, 1997,
  Foamex L.P. sold approximately $29.2 million and $35.0 million of carpet cushion
  to Foamex Carpet pursuant to a Supply  Agreement  between Foamex L.P. and Foamex
  Carpet.
  
                                         9
  7.      RELATED PARTY TRANSACTIONS (continued)
  
         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 thirteen week period ended March 29, 1998, Foamex L.P.
  received $0.1 million for services provided to Foamex Carpet.
  
         During the thirteen  week period ended March 29, 1998,  Foamex L.P.  paid
  approximately  $0.5  million to Foamex  Carpet for  interest  expense on a $38.8
  million principal note due to Foamex Carpet. This note was subsequently replaced
  by the Foamex/GFI  Note, which was retained by Trace Foam LLC in connection with
  the transfer of General Felt (see Note 2).
  
         On December 28, 1997,  Foamex L.P.  entered into a promissory note with a
  principal  amount of  approximately  $2.5 million.  The note bears interest at a
  rate per annum  equal to LIBOR  plus 2 3/8%.  The note and  interest  are due on
  demand, or if no demand is made, then on December 31, 2001.
  
         During the thirteen  week period ended March 29, 1998,  Foamex L.P.  paid
  approximately  $0.2 million to Trace Foam LLC for interest on the $34.0  million
  Foamex/GFI Note (see Note 2).
  
         On July 1, 1997,  Trace  Holdings  borrowed  $5.0  million  pursuant to a
  promissory  note with an aggregate  principal  amount of $5.0 million  issued to
  Foamex L.P. on June 12, 1997. The  promissory  note is due and payable on demand
  or, if no demand is made,  on July 7, 2001,  and bears  interest  at 2 3/8% plus
  three-month LIBOR, as defined, per annum payable quarterly in arrears commencing
  October 1, 1997.  The  promissory  note is  included in the other  component  of
  partners' equity (deficit).
  
         On June 12,  1997,  a  promissory  note  issued to Foamex  L.P.  by Trace
  International  Holdings,  Inc.  ("Trace  Holdings")  was  amended.  The  amended
  promissory  note is an extension of a promissory note of Trace Holdings that was
  due in July 1997. The aggregate  principal amount of the amended promissory note
  was increased to  approximately  $4.8 million and the maturity of the promissory
  note was extended.  The  promissory  note is due and payable on demand or, if no
  demand is made, on July 7, 2001, and bears  interest at 2 3/8% plus  three-month
  LIBOR, as defined,  per annum payable quarterly in arrears.  The promissory note
  is included in the other component of partners' equity (deficit).
  
         Foamex L.P. has a supply  agreement (the "Supply  Agreement") with Foamex
  International   pursuant  to  which,  at  the  option  of  Foamex  L.P.,  Foamex
  International  will 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
  believes that the terms of the Supply Agreement are no less favorable than those
  which Foamex L.P. could have obtained from an unaffiliated  third party.  During
  the thirteen week periods  ended March 29, 1998 and March 30, 1997,  Foamex L.P.
  purchased  approximately $15.0 million and $11.6 million,  respectively,  of raw
  materials under the Supply Agreement.  Effective March 31, 1998, Foamex L.P. has
  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 $0.4 million  during the thirteen  week periods
  ended March 29, 1998 and March 30, 1997, respectively.
  
         On December 26, 1997, Foamex L.P. entered into a $2.5 million  promissory
  note with  Foamex  International.  The note bears  interest at the rate of LIBOR
  plus 2 3/8%.  The note and  interest  are payable on demand,  or if no demand is
  made, then on December 31, 2001.
  
                                         10
  7.      RELATED PARTY TRANSACTIONS (continued)
  
         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 March 29, 1998, there were $13.6
  million of advances to Foamex International under this agreement.
  
  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 1997,  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 March
  29, 1998, Foamex L.P. has environmental  accruals of approximately  $3.9 million
  for environmental matters. In addition, as of March 29, 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.
  
         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 March 29,  1998,  Foamex L.P. has
  environmental accruals of approximately $3.4 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,
  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.  
  
                                         11
  8.     ENVIRONMENTAL MATTERS (continued)
  
         Foamex  L.P.  has been  designated  as a  Potentially  Responsible  Party
  ("PRP")  by the EPA with  respect  to  twelve  sites,  with an  estimated  total
  liability to Foamex L.P. for the twelve  sites of less than  approximately  $0.4
  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 May 15, 1998,  Foamex L.P. and 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 which allege substantial damages, but most of
  which 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.
  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.  In addition,  two of the cases filed on
  behalf of 903 foreign  plaintiffs  were  dismissed on the grounds that the cases
  could not be brought in the United  States  courts.  This decision is subject to
  appeal.  Foamex  L.P.  believes  that the  number  of suits  and  claimants  may
  increase.  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.  While it is not
  feasible  to  predict  or  determine  the  outcome  of these  actions,  based on
  management'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.  In addition,  Foamex L.P. is also
  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  and
  management  believes Trace Holdings  likely will be in a position to continue to
  pay such expenses,  there can be no absolute  assurance that Trace Holdings will
  be able to provide such indemnification.  Based on information available at this
  time with respect to the potential  liability,  and without  taking into account
  the  indemnification  provided by Trace  Holdings and the  coverage  provided by
  Trace Holdings' and Foamex L.P.'s liability insurance, Foamex L.P. believes that
  the proceedings  should not ultimately result in any liability that would 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.
  
         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
  
                                         12
  9.     LITIGATION (continued)
  
  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.
  
         On or about March 17, 1998,  five  purported  class action  lawsuits were
  filed  in the  Delaware  Chancery  Court,  New  Castle  County,  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.  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   proposal  to  acquire  all  of  the  shares  of  Foamex
  International's  common stock. The complaints  seek,  among other things,  class
  certification,  a declaration  that the defendants have breached their fiduciary
  duties to the class, preliminary and permanent injunctions baring implementation
  of the proposed  transaction,  rescission  of the  transaction  if  consummated,
  unspecified compensatory damages, and costs and attorneys' fees.
  
         Foamex L.P. is party to various  other  lawsuits,  both as defendant  and
  plaintiff,  arising  in the  normal  course of  business.  It is the  opinion of
  management  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.
  
                                         13
  FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                             BALANCE SHEETS (unaudited)
  March 29,            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.
  
                                         14
  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  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.
  The Senior Subordinated Notes are subordinated in right of payment to all senior
  indebtedness and are pari passu in right of payment to the subordinated 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  under  Rule  144A of the  Securities  Act of 1933,  as
  amended,  on December 23, 1997 in connection with the Crain Acquisition.  The 13
  1/2% Senior Subordinated Notes represent unsecured general obligations of Foamex
  L.P. and are subordinated to all Senior Debt (as defined in the Indenture).
  
         The 13 1/2% Senior Subordinated Notes mature on August 15, 2005. Interest
  on the 13  1/2%  Senior  Subordinated  Notes  is  payable  semiannually  on each
  February 15 and August 15. The 13 1/2% Senior  Subordinated  Notes bear interest
  at the rate of 13 1/2% per annum. The 13 1/2% Senior  Subordinated Notes may not
  be redeemed prior to August 15, 2002, except in the event of a Change of Control
  (as defined) or Foamex L.P. may,  subject to certain  requirements (as defined),
  on or prior to August 15,  1998 redeem up to 33 1/3% of the  aggregate  original
  principal amount with proceeds from an Equity Offering (as defined).
  
         Foamex L.P. has filed a  registration  statement  relating to an exchange
  offer  in  which  Foamex  L.P.  will  offer  to  exchange  the  13  1/2%  Senior
  Subordinated  Notes issued in the private  placement for new notes. The terms of
  the new  notes  will  be  substantially  identical  in all  respects  (including
  principal  amount,  interest rate,  maturity and ranking) to the terms of the 13
  1/2% Senior  Subordinated  Notes, except that the new notes will be transferable
  by holders  thereof  without  further  registration  under the Securities Act of
  1933, as amended (except in the case of 13 1/2% Senior  Subordinated  Notes held
  by affiliates of Foamex L.P. and for certain other holders), and are not subject
  to any covenant  regarding  registration  under the  Securities  Act of 1933, as
  amended.
  
                                         15
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         Foamex L.P. operates primarily 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 five
  end-markets;  (i) carpet  cushion and other  carpet  products,  (ii)  cushioning
  foams,  including  bedding  products,  (iii)  furniture  products for  furniture
  manufacturers and distributors, (iv) automotive applications, including trim and
  accessories,  and (v) specialty and technical applications,  including those for
  filtration,  gasketing and sealing. As a result of the Crain Acquisition, Foamex
  L.P. has added a sixth end market: consumer products.
  
         On March  16,  1998,  Foamex  International  announced  that its Board of
  Directors  received an unsolicited  buyout proposal from Trace Holdings,  Foamex
  International's principal stockholder. Trace Holdings proposed to acquire all of
  the  outstanding  common stock of Foamex  International  not currently  owned by
  Trace Holdings and its subsidiaries for a cash price of $17.00 per share.  Also,
  Trace  Holdings  informed the Board of Directors  that  financing for the buyout
  transaction would be arranged through  Donaldson,  Lufkin & Jenrette  Securities
  Corporation and The Bank of Nova Scotia/Scotia  Capital Markets. As of March 16,
  1998,  Trace  Holdings and its  subsidiaries  beneficially  owned  approximately
  11,475,000 shares or approximately 46% of the outstanding common stock of Foamex
  International.  In response to Trace  Holding's  offer,  Foamex  International's
  Board  of  Directors  has  appointed  a  special   committee  to  determine  the
  advisability  and  fairness  of the  proposed  buyout to Foamex  International's
  stockholders  other than Trace Holdings and its  subsidiaries.  Trace  Holding's
  proposed buyout is subject to a number of conditions, including the negotiations
  of  definitive  documents  (which  are  expected  to contain  customary  closing
  conditions);  the filing of a disclosure  statement and other documents with the
  Securities  and Exchange  Commission;  regulatory  filings;  and approval of the
  transaction by a majority of Foamex International's stockholders.
  
         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  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 a Supply Agreement and an
  Administrative  Services  Agreement,  (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 Foamex L.P.  Credit Facility and (iii) 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 Trace Foam LLC of all of the outstanding  common stock of General
  Felt, in exchange for (i) the  assumption by Trace Foam LLC of $129.0 million of
  Foamex  L.P.'s  indebtedness  and (ii) the  transfer by Trace Foam 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  subordinated  notes due 2005. Upon  consummation of the
  initial  transaction,  Foamex Carpet, a newly formed wholly-owned  subsidiary of
  Foamex  International,  Foamex  International,  Trace Foam 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 Trace  Foam 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.  Upon  consummation  of  these
  transactions contemplated by the Asset Purchase Agreement, Foamex Carpet entered
  into a credit agreement with 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, which
  provides for up to $20.0 million in revolving credit borrowings. These
  
                                         16
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  transactions  will  be  accounted  for as a  transfer  and  future  Foamex  L.P.
  financial  statements will exclude the operations of General Felt. Foamex Carpet
  will conduct the carpet cushion business  previously  conducted by General Felt.
  Also,  Trace Foam 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.
  
         On December 23, 1997,  Foamex L.P.  acquired  Crain  pursuant to a merger
  agreement with Crain Holdings  Corp. 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).  In
  addition,   fees  and  expenses   associated  with  the  Crain  Acquisition  are
  approximately $13.2 million.
  
         On October 6, 1997, Foamex L.P. sold  substantially all of the net assets
  of its needlepunch  carpeting,  tufted  carpeting and artificial  grass products
  business  located at its  facilities  in Dalton,  Georgia  ("Dalton").  Dalton's
  revenues were $10.7 million for the thirteen week period ended March 30, 1997.
  
         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.
  
  13 Week Period  Ended March 29, 1998  Compared to 13 Week Period Ended March 30,
  1997
  
  Results of Operations
  
         Net sales for the first  quarter of 1998 were $313.8  million as compared
  to $229.1  million in the first quarter of 1997, an increase of $84.7 million or
  37.0%. Carpet cushion products net sales for the first quarter of 1998 increased
  3.8% to $70.5 million from $67.9  million in the first  quarter of 1997.  Carpet
  cushion is exclusively sold to Foamex Carpet. Cushioning  products net sales for
  the first quarter of 1998 increased 86.3% to $97.8 million from $52.5 million in
  the first quarter of 1997  primarily due to net sales from the Crain  operations
  and  increased  volume  to  our  national  bedding  customers  and  fabricators.
  Furniture  products net sales for the first quarter of 1998  increased  36.8% to
  $43.1 million as compared to net sales of $31.5 million for the first quarter of
  1997 primarily due to net sales from the Crain operations.  Automotive  products
  net sales for the first  quarter of 1998  increased  10.0% to $65.7 million from
  $59.7  million in the first quarter of 1997  primarily due to increased  volume.
  Technical  products net sales for the first quarter of 1998  increased  20.6% to
  $21.1 million from $17.5  million in the first quarter of 1997  primarily due to
  increased net sales volume for felted, gasketing, and sealing products. Consumer
  products  net  sales for the  first  quarter  of 1998 was  $156.9  million.  The
  consumer products category was acquired in the December 1997 Crain Acquisition.
  
         Gross  profit as a  percentage  of net sales  decreased  to 15.3% for the
  first quarter of 1998 from 19.0% in the first  quarter of 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 versus Foamex L.P.'s historical gross profit margins.
  Also,  the gross profit was lower in the first quarter of 1998 since Foamex L.P.
  carried the full start-up costs related to both organizations.
  
         Income from  operations  was $25.8  million for the first quarter of 1998
  compared to $25.7 million in the first  quarter of 1997  primarily due the Crain
  Acquisition  (discussed  above)  offset by an increase  in selling,  general and
  administrative expenses primarily due to the Crain Acquisition.
  
         Income before extraordinary loss decreased to $17.1 million for the first
  quarter of 1998 as compared to $15.5 million for the first quarter of 1997.  The
  decrease is primarily due increased interest and debt issuance costs
  
                                         17
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
  and the discussion  above. The increase in interest and debt issuance expense is
  primarily  due to the debt  incurred in  connection  with the Crain  Acquisition
  offset by the favorable effects of the June 1997 refinancing plan.
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $3.1 million during the first quarter of 1998 primarily relates to the write-off
  of debt issuance costs associated with the GFI Transaction.
  
  Foamex Capital Corporation ("FCC")
  
         FCC is solely a co-issuer of certain  indebtedness  of Foamex L.P. 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 of the operating subsidiaries.
  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 December 28,
  1997 and expects to be in  compliance  with the  covenants  for the  foreseeable
  future.
  
         Cash and cash  equivalents  decreased  $6.0  million  during 1998 to $3.0
  million at March 29, 1998 from $9.0 million at December 28, 1997  primarily  due
  to a decrease in cash  operating  results and used by the  operating  assets and
  liabilities.  Working  capital  increased  $41.9  million  during 1998 to $148.1
  million at March 29, 1998 from $106.2 million at December 28, 1997 primarily due
  changes in net operating assets. Net operating assets and liabilities (comprised
  of accounts receivable,  inventories, accounts payable and accounts payable from
  affiliates)  increased  $21.3 million during 1998 to $162.5 million at March 29,
  1998 from $141.2  million at December  28, 1997  primarily  due to  increases in
  accounts receivable.
  
         As of March 29,  1998,  there were  $124.9  million of  revolving  credit
  borrowings  under the Credit Facility with unused  availability of approximately
  $25.6 million which includes approximately $49.5 million associated with letters
  of credit outstanding which are supported by the Credit Facility.  Borrowings by
  Foamex  Canada as of March 29,  1998 were $5.1  million  under  Foamex  Canada's
  revolving  credit  agreement  with unused  availability  of  approximately  $0.9
  million.
  
         Interest Rate Swaps
  
         Foamex L.P. enters into interest rate swaps to lower funding costs and/or
  to manage interest costs and exposure to changing  interest  rates.  Foamex L.P.
  does not hold or issue financial instruments for trading purposes.
  
         On January 8, 1998,  Foamex L.P.  entered into an amended  interest  rate
  swap  agreement  which  provides  for an  interest  rate swap  agreement  with a
  notional  amount of $150.0  million  through  June 2002.  Under this  agreement,
  Foamex  L.P. is  obligated  to make fixed  payments  of 5.78% per annum  through
  December 1998 and variable  payments based on LIBOR at the beginning of each six
  month period for the remainder of the agreement,  in exchange for fixed payments
  by the swap  partner at 6.44% per annum for the life of the  agreement,  payable
  semiannually in arrears.  The newly amended  interest rate swap agreement can be
  terminated  by the swap partner at the end of each six month  period  commencing
  December 1999.
  
                                         18
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATIONS
  
         Foamex L.P. is exposed to credit loss in the event of a nonperformance by
  the swap partner; however, the occurrence of this event is not anticipated.  The
  effect of interest  rate swaps was a favorable  adjustment  to interest and debt
  issuance  expense of $0.3  million,  $0.9 million for the  thirteen  week period
  ended March 29, 1998 and March 30, 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 March 29, 1998 was $3.9 million. In addition, as of
  March  29,  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.
  
  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.  has and will  continue to make  certain  investments  in its
  software systems and applications to ensure Foamex L. P. is Year 2000 compliant.
  Foamex L.P. plans to continue to make  modifications to the identified  software
  during 1998 and test the during 1998.  The  financial  impact to Foamex L.P. has
  not been and is not  anticipated  to be  material to its  financial  position or
  results of operation in any given year.
  
         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.
  
  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. will adopt SFAS No. 130 for 1998.
  
         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.
  
                                         19
  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.
  
           The  information  from  Notes  6 and 7 of  the  condensed  consolidated
           financial  statements of Foamex L.P. and  subsidiaries  as of March 29,
           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
  
  3.1(a)    - Certificate of Limited Partnership of Foamex L.P. ("Foamex")
  
  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.
  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,
            Foamex Fibers,  and FLLC, as withdrawing  guarantors,  and The Bank of
            New York, as trustee, relating to the 9 7/8% Notes.
  
                                         20
  4.1.4(d)  -  Registration  Rights  Agreement,  dated as of June 12, 1997, by and
            among Foamex,  FCC, General Felt, Foamex Fibers, and all future direct
            or indirect  domestic  subsidiaries  of Foamex or FCC, and  Donaldson,
            Lufkin & Jenrette  Securities  Corporation,  Salomon Brothers Inc. and
            Scotia Capital Markets, as Initial Purchasers.
  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 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.
  
                                         21
  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    - Intentionally omitted.
  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 Trace 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.
  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.
  10.4.3(k) - Amended and Restated  Guaranty,  dated as of December 19, 1991, made
            by Trace Foam in favor of Foamex L.P.
  
                                         22
  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
  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.
  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).
  
                                         23
  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)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended June 30, 1996.
  
  (g)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex,  FCC and General Felt on Form S-1,  Registration  Nos.
       33-60888, 33-60888-01, and 33-60888-02.
  
  (h)  Incorporated  herein by reference to the Exhibit to the Form 10-K Statement
       of Foamex and FCC for fiscal 1992.
  
  (i)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       L.P. for fiscal 1994.
  
  (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)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended July 2, 1995.
  
  (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.
  
  (q)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       L.P. for the fiscal year ended December 31, 1995.
  
                                         24
  (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)  Incorporated  by  reference  to the  Exhibit  to the  Form  10-Q of  Foamex
       International for the quarterly period ended July 3, 1994.
  
  (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 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:
  
                Form 8-K/A,  dated March 9, 1998,  providing  pro forma  financial
                information relating to the acquisition of Crain Industries, Inc.
  
                Form  8-K,  dated  February  28,  1998,  reporting  the  change in
                corporate structure.
  
                                         25
  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:  May 12, 1998                By: /s/ Kenneth R. Fuette
                                         Kenneth R. Fuette
                                         Executive Vice President and
                                         Chief Financial Officer
  
                                     FOAMEX CAPITAL CORPORATION
  
  Date:  May 12, 1998                By: /s/ Kenneth R. Fuette
                                         Kenneth R. Fuette
                                         Vice President, Treasurer and
                                         Chief Financial Officer