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 June 29, 1997
  
                      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 August 8, 1997 was 1,000.
  
                                    Page 1 of 30
                            Exhibit List on Page 25 of 30
  
  
                                         1
  <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 and  Twenty-Six  Week Periods  Ended June 29, 1997
                 and June 30, 1996                                           3
  
              Condensed Consolidated  Balance Sheets as of June 29, 1997
                 and December 29, 1996                                       4
  
              Condensed   Consolidated   Statements   of  Cash  Flows  -
                 Twenty-Six  Week  Periods  Ended June 29, 1997 and June
                 30, 1996                                                    5
  
              Notes to Condensed Consolidated Financial Statements           6
  
              Foamex Capital Corporation
  
              Balance Sheets as of June 29, 1997 and  December  29, 1996    15
  
              Notes to Balance Sheets                                       16
  
            Item 2. Management's  Discussion and Analysis of Financial
                    Condition and Results of Operations                     18
  
  Part II.  Other Information                                               24
  
            Exhibit List                                                    25
  
            Signatures                                                      30
  
                                    2
  
  <PAGE>
  
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                            FOAMEX L.P. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  <TABLE>
  <CAPTION>
                                            13 Week Periods Ended          26 Week Periods Ended
                                            June 29,       June 30,        June 29,       June 30,
                                              1997          1996             1997          1996
                                                                 (thousands)
  <S>                                       <C>            <C>            <C>            <C>     
  NET SALES                                 $239,887       $240,447       $469,007       $459,578
  
  COST OF GOODS SOLD                         195,107        202,280        381,430        385,380
                                           ---------      ---------      ---------      ---------
  
  GROSS PROFIT                                44,780         38,167         87,577         74,198
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                  15,646         13,526         31,331         27,127
                                           ---------      ---------      ---------      ---------
  
  INCOME FROM OPERATIONS                      29,134         24,641         56,246         47,071
  
  INTEREST AND DEBT ISSUANCE EXPENSE          10,805         10,311         21,509         20,724
  
  OTHER INCOME, NET                              472            337          1,122            537
                                           ---------      ---------      ---------      ---------
  
  INCOME FROM CONTINUING OPERATIONS
     BEFORE PROVISION FOR INCOME TAXES        18,801         14,667         35,859         26,884
  
  PROVISION FOR INCOME TAXES                   2,417          2,699          3,259          3,718
                                           ---------      ---------      ---------      ---------
  
  INCOME FROM CONTINUING OPERATIONS           16,384         11,968         32,600         23,166
  
  LOSS FROM DISCONTINUED OPERATIONS               --        (40,164)            --        (39,527)
  
  EXTRAORDINARY LOSS ON EARLY
     EXTINGUISHMENT OF DEBT                  (44,859)            --        (45,538)            --
                                           ---------      ---------      ---------      ---------
  
  NET INCOME (LOSS)                         $(28,475)      $(28,196)      $(12,938)      $(16,361)
                                           =========      =========      =========      =========
  </TABLE>
  
       The accompanying notes are an integral part of the condensed
                    consolidated financial statements.
  
                                    3
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
  
                                                         June 29,    December 29,
  ASSETS                                                   1997         1996
  
  CURRENT ASSETS:                                              (thousands)
       Cash and cash equivalents                          $4,508        $20,968
       Accounts receivable, net                          136,211        125,847
       Inventories                                       106,723        102,610
       Other current assets                               45,483         39,495
                                                       ---------      ---------
          Total current assets                           292,925        288,920
  
  PROPERTY, PLANT AND EQUIPMENT, NET                     190,631        182,427
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                  82,732         83,991
  
  DEBT ISSUANCE COSTS, NET                                18,428         14,902
  
  OTHER ASSETS                                            15,978         15,917
                                                       ---------      ---------
  
  TOTAL ASSETS                                          $600,694       $586,157
                                                       =========      =========
  
  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
       Short-term borrowings                              $3,960         $3,692
       Current portion of long-term debt                   8,351         13,735
       Accounts payable                                   67,659         75,621
       Accounts payable to related parties                12,347          8,803
       Accrued interest                                    3,172          8,871
       Other accrued liabilities                          47,588         41,108
                                                       ---------      ---------
          Total current liabilities                      143,077        151,830
                                                       ---------      ---------
  
  LONG-TERM DEBT                                         537,951        392,617
                                                       ---------      ---------
  
  OTHER LIABILITIES                                       37,883         28,878
                                                       ---------      ---------
  
  COMMITMENTS AND CONTINGENCIES                               --             --
                                                       ---------      ---------
  
  PARTNERS' EQUITY (DEFICIT):
       Partners' capital accounts                       (107,774)        58,286
       Note receivable from partner                           --        (33,180)
       Other                                             (10,443)       (12,274)
                                                       ---------      ---------
          Total partners' equity (deficit)              (118,217)        12,832
                                                       ---------      ---------
  
  TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT)      $600,694       $586,157
                                                       =========      =========
  
            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>
                                                                           26 Week Periods Ended
                                                                          June 29,      June 30,
                                                                            1997          1996
  
  OPERATING ACTIVITIES:                                                         (thousands)
  <S>                                                                    <C>            <C>      
     Net income (loss)                                                   $(12,938)      $(16,361)
     Adjustments  to  reconcile  net  income  to net cash  provided
         by  operating activities:
         Depreciation and amortization                                     10,301         10,711
         Amortization of debt issuance costs and debt discount              1,370          1,433
         Extraordinary loss on extinguishment of debt                      45,538             --
         Loss from discontinued operations                                     --         39,527
         Other operating activities                                           798           (597)
         Changes in operating assets and liabilities                      (47,256)       (19,815)
                                                                        ---------      ---------
  
            Net cash provided by (used for) continuing operations          (2,187)        14,898
            Net cash used for discontinued operations                          --         (1,017)
                                                                        ---------      ---------
            Net cash provided by (used for) operating activities           (2,187)        13,881
                                                                        ---------      ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                                 (16,369)        (7,798)
     Purchase of FJPS senior secured discount debentures                 (105,829)            --
     Decrease in restricted cash                                           12,143             --
     Other investing activities                                                35          1,399
     Discontinued operations investing activities                              --           (900)
                                                                        ---------      ---------
  
            Net cash used for investing activities                       (110,020)        (7,299)
                                                                        ---------      ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from short-term borrowings                                  256          1,976
     Proceeds from revolving loans                                         49,000             --
     Proceeds from long-term debt                                         453,500             --
     Repayment of long-term debt                                         (363,392)        (4,272)
     Premiums and costs associated with debt extinguishment               (22,918)            --
     Debt issuance costs                                                  (14,746)            --
     Distributions to partners                                             (5,949)        (2,478)
     Other financing activities                                                (4)            (8)
                                                                        ---------      ---------
  
            Net cash provided by (used for) financing activities           95,747         (4,782)
                                                                        ---------      ---------
  
  NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                                 (16,460)         1,800
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                                20,968            638
                                                                        ---------      ---------
  
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                      $4,508         $2,438
                                                                        =========      =========
  </TABLE>
  
            The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
  
                                         5
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  1. ORGANIZATION AND BASIS OF PRESENTATION
  
         Foamex  L.P.'s  condensed  consolidated  balance sheet as of December 29,
  1996 has been  condensed  from the audited  consolidated  balance  sheet at that
  date.  The  condensed  consolidated  balance  sheet as of June 29,  1997 and the
  condensed  consolidated  statements  of  operations  for the  thirteen  week and
  twenty-six  periods  ended  June 29,  1997 and June 30,  1996 and the  condensed
  consolidated statements of cash flows for the twenty-six week periods ended June
  29, 1997 and June 30, 1996 have been  prepared by Foamex L.P.  and  subsidiaries
  and have not been audited by Foamex L.P.'s  independent  accountants.  Also, the
  condensed  consolidated  statement  of  operations  for the  thirteen  week  and
  twenty-six  week  periods  ended June 30,  1996 and the  condensed  consolidated
  statement of cash flows for the twenty-six  week period ended June 30, 1996 have
  been restated for discontinued  operations (see Note 2 below). 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 June 12, 1997,  Foamex  International  Inc.  ("Foamex  International")
  substantially  completed  a  refinancing  plan  (the  "Refinancing  Plan")  that
  included the  refinancing  of certain  long-term  indebtedness  to reduce Foamex
  International's   interest  expense  and  improve  financing   flexibility.   In
  connection with the Refinancing Plan, Foamex L.P. purchased approximately $342.3
  million  of  aggregate  principal  amount of its public  debt and  approximately
  $116.7 million of aggregate  principal  amount of Foamex-JPS  Automotive  L.P.'s
  ("FJPS") senior secured discount debentures due 2004 (the "Discount Debentures")
  and repaid $5.2 million of term loan borrowings  under its old credit  facility.
  Foamex L.P. incurred an extraordinary  loss on the early  extinguishment of debt
  associated with the Refinancing Plan of approximately $44.5 million. (See Note 5
  below for further discussion.) The Refinancing Plan was funded by $347.0 million
  of  borrowings  under a new $480.0  million  credit  facility  (the "New  Credit
  Facility")  and the net proceeds  from the issuance of $150.0  million of 9 7/8%
  senior subordinated notes due 2007.
  
         In addition,  Foamex L.P.  intends to call for  redemption  on October 1,
  1997  approximately  $26.0  million of the  approximately  $30.0  million of its
  outstanding  public debt that was not tendered as part of the Refinancing  Plan.
  The  redemption  is  expected  to be funded  from the New  Credit  Facility.  In
  connection  with  this   redemption,   Foamex  L.P.  is  expected  to  incur  an
  extraordinary  loss on the early  extinguishment  of debt of approximately  $2.6
  million in the fourth quarter of 1997.
  
         Upon  consummation  of the  Refinancing  Plan on June 12, 1997,  FJPS was
  merged into  Foamex  International,  which thus became a 98% limited  partner of
  Foamex L.P. FMXI, Inc.  ("FMXI") is a 1% managing general partner of Foamex L.P.
  and Trace Foam Company, Inc. ("Trace Foam") is a 1% non-managing general partner
  of Foamex L.P. FMXI is a wholly-owned subsidiary of Foamex International.
  
         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 1996 consolidated  financial statements and notes thereto as set forth in
  Foamex L.P.'s Annual Report on Form 10-K for the fiscal year ended  December 29,
  1996.
  
  2. DISCONTINUED OPERATIONS
  
         During 1996, Foamex L.P. sold the outstanding common stock of Perfect Fit
  Industries,  Inc.  ("Perfect Fit"), a wholly-owned  subsidiary,  for an adjusted
  sale price of approximately  $44.2 million.  The sale included the net assets of
  Foamex L.P.'s home comfort products business segment.
  
                                         6
  
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  2. DISCONTINUED OPERATIONS (continued)
  
         Foamex  L.P.'s  condensed  consolidated  financial  statements  have been
  restated to reflect the  discontinuation  of the home comfort products  business
  segment.  A summary of the operating results for the discontinued  operations is
  as follows:
  <TABLE>
  <CAPTION>
                                                13 Week Period Ended   26 Week Period Ended
                                                     June 30, 1996        June 30, 1996
                                                                (thousands)
  <S>                                                   <C>                <C>    
  Net sales                                             $24,935            $50,097
  Gross profit                                            3,815              8,065
  Income (loss) from operations                            (101)             1,123
  Interest and debt issuance expense                      1,190              2,384
  Other expense                                             348                348
  Loss on disposal of discontinued operations           (39,297)           (39,297)
  Loss from discontinued operations
  before (benefit) from income taxes                    (40,936)           (40,906)
  Benefit for income taxes                                 (772)            (1,379)
  Loss from discontinued operations,
         net of income taxes                            (40,164)           (39,527)
  </TABLE>
  
  3. INVENTORIES
  
         The components of inventories consist of:
  
                                       June 29,        December 29,
                                         1997             1996
                                              (thousands)
  Raw materials and supplies           $59,070           $61,559
  Work-in-process                       17,305            13,453
  Finished goods                        30,348            27,598
                                      --------          --------
         Total                        $106,723          $102,610
                                      ========          ========
  
  4. RELATED PARTY TRANSACTIONS
  
         In  connection  with  the  Refinancing   Plan,   Foamex  L.P.   purchased
  approximately   $116.7  million  of  aggregate   principal  amount  of  Discount
  Debentures for  approximately  $105.8  million  including  transaction  costs of
  approximately $0.8 million.  Foamex L.P.  subsequently  distributed the Discount
  Debentures to FJPS and FMXI.
  
         On June 12, 1997,  Foamex L.P.  distributed  its $2.0  million  aggregate
  principal amount promissory note due from Foamex International to FJPS and FMXI.
  
         Also  on June  12,  1997,  Foamex  L.P.  distributed  its  $56.2  million
  aggregate  principal  amount note,  as amended,  due 2006 (the "FJPS Note") from
  FJPS with an  accreted  value as of June 12,  1997 of $35.6  million to FJPS and
  FMXI.  The  accretion  of the original  issue  discount of $2.4 million and $3.5
  million for the  twenty-six  week periods ended June 29, 1997 and June 30, 1996,
  respectively,  was reflected as a direct increase in the FJPS Note and partners'
  capital account, and thereby excluded from the condensed consolidated statements
  of operations.
  
                                         7
  <PAGE>
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  4. RELATED PARTY TRANSACTIONS (continued)
  
         In  connection  with  the  Refinancing  Plan,  Foamex  L.P.  made  a cash
  distribution of  approximately  $1.5 million to Trace Foam as a result of Foamex
  L.P.'s distribution to FJPS and FMXI of the Discount  Debentures,  the FJPS Note
  and the $2.0 million aggregate  principal amount promissory note due from Foamex
  International.
  
         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  $4.9 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).
  
         During June 1997,  Foamex L.P.  and Trace Foam amended  their  management
  services  agreement  to  increase  the  annual  fee from  $1.75  million to $3.0
  million, plus reimbursement of expenses incurred.
  
         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 June 29, 1997 and June 30, 1996,  Foamex L.P.
  purchased  approximately $35.3 million and $30.0 million,  respectively,  of raw
  materials under the Supply  Agreement.  During the twenty-six week periods ended
  June 29, 1997 and June 30,  1996,  Foamex  L.P.  purchased  approximately  $63.0
  million  and $54.1  million,  respectively,  of raw  materials  under the Supply
  Agreement.  As of June 29, 1997 and December 29, 1996,  Foamex L.P. had accounts
  payable to Foamex International of approximately $12.3 million and $8.8 million,
  respectively, associated with the Supply Agreement.
  
         Foamex  L.P.  chartered  an  aircraft  (which is owned by a  wholly-owned
  subsidiary of Foamex International)  through a third party and incurred costs of
  approximately  $0.2  million and $0.3 million  during the thirteen  week periods
  ended June 29, 1997 and June 30, 1996,  respectively,  and $0.6 million and $0.5
  million for the  twenty-six  week periods ended June 29, 1997 and June 30, 1996,
  respectively.
  
         On July 1, 1997,  Trace Holdings  issued to Foamex L.P. a promissory note
  for an aggregate  principal  amount of $5.0 million.  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.
  
                                         8
  
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT
  
  Long-term debt consists of:
  <TABLE>
  <CAPTION>
                                                                             June 29,        December 29,
                                                                               1997              1996
                                                                                    (thousands)
  <S>                                                                           <C>               <C>  
  9 7/8% senior subordinated notes due 2007 (1)                              $150,000          $     --
  Foamex L.P. term loan facilities (7.95% interest rate
      at June 29, 1997) (2)                                                   298,000                --
  Foamex L.P. revolving loan (7.65% interest rate
      at June 29, 1997) (3)                                                    49,000                --
  9 1/2% senior secured notes due 2000 (4)                                      4,523           106,793
  11 1/4% senior notes due 2002 (4)                                             5,825           141,400
  11 7/8% senior subordinated debentures due 2004 (net of
      unamortized debt discount of $119 and $769) (4)                          20,224           125,056
  11 7/8% senior subordinated debentures due 2004, Series B (5)                    45             7,000
  Industrial revenue bonds (6)                                                  7,000             7,000
  Foamex L.P. term loan (8.54% interest rate as of
      December 29, 1996) (6)                                                       --            11,000
  Subordinated note (net of debt discount of $1,047 and $1,198) (6)             5,968             5,817
  Other                                                                         5,717             2,286
                                                                             --------          --------
                                                                              546,302           406,352
  
  Less current portion                                                          8,351            13,735
                                                                             --------          --------
  
  Long-term debt                                                             $537,951          $392,617
                                                                             ========          ========
  </TABLE>
  (1)  Debt of Foamex L.P. and Foamex Capital  Corporation  ("FCC")  (together the
       "Issuers")  and  guaranteed  by General  Felt  Industries,  Inc.  ("General
       Felt"),  Foamex Fibers,  Inc.  ("Foamex  Fibers") and all other current and
       future domestic subsidiaries of the Issuers.
  
  (2)  Debt of Foamex L.P. and  guaranteed by Foamex  International,  General Felt
       and Foamex Fibers.
  
  (3)  Debt of Foamex L.P. and General Felt and guaranteed by Foamex International
       and Foamex Fibers.
  
  (4)  Debt of the  Issuers and  guaranteed  by Foamex  International  and General
       Felt.
  
  (5)  Debt of the Issuers and guaranteed by General Felt.
  
  (6)  Debt of Foamex L.P.
  
         Term Loans and Revolving Loan
  
         On June 12, 1997, Foamex L.P. entered into the New Credit Facility with a
  group of banks that provides for term loans of up to $330.0 million which expire
  from June 2003 to June 2006 and up to $150.0  million under a revolving  line of
  credit which  expires in June 2003.  In connection  with the  Refinancing  Plan,
  Foamex L.P. entered into term loans of $298.0 million and borrowed $49.0 million
  under the revolving line of credit.
  
                                         9
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT (continued)
  
         The term  loans  are  comprised  of a (i) term A loan  ("Term  A")  which
  provides up to $120.0 million of borrowings of which Foamex L.P.  borrowed $88.0
  million in connection with the Refinancing  Plan, (ii) term B loan ("Term B") of
  $110.0 million and (iii) term C loan ("Term C") of $100.0 million. The remaining
  $32.0 million  available  under the Term A is restricted and can only be used by
  Foamex  L.P.  to retire its public  debt not  tendered  in  connection  with the
  Refinancing Plan with such unused availability terminating June 15, 1998.
  
         Borrowings   under  the  New  Credit  Facility  are   collateralized   by
  substantially  all of the assets of Foamex L.P.,  General Felt and Foamex Fibers
  on a pari passu basis with the 9 1/2% senior secured notes due 2000, the 11 1/4%
  senior  notes  due 2002 and the  industrial  revenue  bonds  (collectively,  the
  "Notes"); however, the rights of the holders of the applicable issue of Notes to
  receive  payment upon the  disposition of the collateral  securing such issue of
  Notes has been preserved.
  
         Pursuant  to the terms of the New Credit  Facility,  borrowed  funds will
  bear interest at a floating rate equal to an applicable margin, as defined, plus
  the higher of (i) the base rate of The Bank of Nova Scotia,  in effect from time
  to time,  or (ii) a rate that is equal to 0.5% per annum plus the federal  funds
  rate in effect  from time to time.  The  applicable  margin is  determined  by a
  calculation  of the total net debt to EBDAIT  ratio,  as defined,  and can range
  from no margin up to 1.125%  per  annum  for Term A and  revolving  loans,  from
  0.875%  per annum to 1.375%  per annum for Term B and from  1.125%  per annum to
  1.625%  per annum for Term C. At the  option of  Foamex  L.P.,  portions  of the
  outstanding loans under the New Credit Facility are convertible into LIBOR based
  loans which bear interest at a floating  rate equal to an applicable  margin for
  LIBOR  based  loans,  as  defined,  plus the  average  LIBOR,  as  defined.  The
  applicable  margin for LIBOR based loans is a rate that will generally equal the
  applicable margin (discussed above) plus 1.0% per annum.
  
         9 7/8% Senior Subordinated Notes due 2007 ("Senior Subordinated Notes")
  
         The 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
  June 12, 1997 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 redemption.
  The Senior Subordinated Notes are subordinated in right of payment to all senior
  indebtedness  and are pari  passu in right of  payment  to two  issues of senior
  subordinated   debentures  due  2004  and  the  subordinated  note.  The  Senior
  Subordinated  Notes  contain  certain  covenants  that will  limit,  among other
  things,  the  ability  of  Foamex  L.P.  (i)  to  pay  distributions  or  redeem
  partnership interests, (ii) to make certain restrictive payments or investments,
  (iii) to incur additional  indebtedness or issue Preferred  Equity Interest,  as
  defined,  (iv) to merge,  consolidate  or sell all or  substantially  all of its
  assets,  or (vi) to enter into certain  transactions  with affiliates or related
  persons. The Senior Subordinated Notes are guaranteed by General Felt and Foamex
  Fibers and all other current and future domestic subsidiaries of the Issuers.
  
                                         10
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  
  5. LONG-TERM DEBT (continued)
  
         Foamex L.P. and FCC have filed a  registration  statement  relating to an
  exchange  offer in which  Foamex L.P.  and FCC will offer to exchange the 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
  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 Senior  Subordinated  Notes held by affiliates
  of the  Issuers  and for  certain  other  holders),  and are not  subject to any
  covenant  regarding  registration  under the Securities Act of 1933, as amended.
  The exchange  offer is expected to be  consummated  during the third  quarter of
  1997.
  
         Principal  payments on Foamex L.P.'s  long-term debt for the remainder of
  1997 and for the next five years are as  follows:  1997 - $4.2  million;  1998 -
  $11.9 million; 1999 - $20.9 million; 2000 - $31.3 million; 2001 - $31.3 million;
  2002 - $32.7 million; and thereafter - $415.2 million.
  
         Early Extinguishment of Debt - Refinancing Plan
  
         In  connection  with  the  Refinancing  Plan,  Foamex  L.P.  incurred  an
  extraordinary  loss on the early  extinguishment of debt of approximately  $44.5
  million.  The extraordinary loss is comprised of approximately $20.2 million for
  premium and consent fee payments,  approximately $12.6 million for the write-off
  of debt issuance  costs and debt  discount,  approximately  $8.2 million for the
  loss  associated  with the effective  termination  and amendment of the interest
  rate swap agreements and  approximately  $3.5 million of  professional  fees and
  other costs. In connection with the  Refinancing  Plan,  Foamex L.P. repaid $5.2
  million in term loan  borrowings  under its old credit  facility  and  purchased
  approximately  $459.0  million  of  aggregate  principal  amount of public  debt
  comprised of:
  
  *      $99.8 million of aggregate  principal amount of its 9 1/2% senior secured
         notes due 2000 for an  aggregate  consideration  of 104.193% of principal
         plus  accrued  interest,  comprised  of a tender  price of 102.193% and a
         consent fee of 2.0%;
  
  *      $130.1 million of aggregate  principal amount of its 11 1/4% senior notes
         due 2002 for an aggregate  consideration  of 105.709% of  principal  plus
         accrued  interest,  comprised of a tender price of 103.709% and a consent
         fee of 2.0%;
  
  *      $105.5  million  of  aggregate  principal  amount  of its 11 7/8%  senior
         subordinated  debentures  due  2004  for an  aggregate  consideration  of
         107.586% of principal plus accrued interest,  comprised of a tender price
         of 105.586% and a consent fee of 2.0%;
  
  *      $6.9  million  of  aggregate  principal  amount  of  its 11  7/8%  senior
         subordinated debentures, series B due 2004 for an aggregate consideration
         of 107.586% of  principal  plus accrued  interest,  comprised of a tender
         price of 105.586% and a consent fee of 2.0%; and
  
  *      $116.7 million of aggregate  principal amount of the Discount  Debentures
         for an  aggregate  consideration  of 90.0%  of  principal  amount,  which
         represents approximately 121.9% of the accreted book value as of June 12,
         1997,  comprised  of a tender  price of 88.0% of  principal  amount and a
         consent fee of 2.0%.
  
                                         11
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT (continued)
  
         In addition,  Foamex L.P.  intends to call for  redemption  on October 1,
  1997  approximately  $26.0  million of the  approximately  $30.0  million of its
  outstanding  public debt that was not tendered as part of the Refinancing  Plan.
  The  redemption  is expected to be funded with  borrowings  under the New Credit
  Facility. In connection with the redemption, Foamex L.P. is expected to incur an
  extraordinary  loss on the early  extinguishment  of debt of approximately  $2.6
  million in the fourth quarter of 1997.
  
         Early Extinguishment of Debt - Other
  
         In addition,  during 1997 Foamex L.P.  incurred  extraordinary  losses of
  approximately  $1.0  million   associated  with  the  early   extinguishment  of
  approximately  $11.8 million of long-term debt funded with  approximately  $12.1
  million  of the  remaining  net  proceeds  from the  sale of  Perfect  Fit.  The
  extraordinary  loss is  comprised  of  approximately  $0.4  million  of  premium
  payments  and  approximately  $0.6 million for the  write-off  of debt  issuance
  costs. The long-term debt was comprised of:
  
  *    $2.5 million of  aggregate  principal  amount of its 9 1/2% senior  secured
       notes due 2000.
  
  *    $5.5 million of aggregate  principal amount of its 11 1/4% senior notes due
       2002.
  
  *    Bank term loan borrowings of $3.8 million under its old credit facility.
  
         Interest Rate Swaps
  
         Foamex L.P. uses  derivative  financial  instruments  to manage  interest
  expense.  All  derivative  financial  instruments  are  classified  as "held for
  purposes  other  than  trading".  Foamex  L.P.  does  not  use  derivatives  for
  speculative purposes.
  
         Interest  rate swap  agreements  are used to manage  interest  expense by
  changing the  interest  rate  characteristics  of certain  debt  instruments  to
  approximate current market conditions.  The amended interest rate swap agreement
  matures  in June  2007  which  is  consistent  with  the  underlying  debt.  The
  differential  paid or received on interest rate swap agreements is recognized on
  an accrual basis as an adjustment to interest and debt issuance  expense.  Gains
  and  losses on  terminated  interest  rate swap  agreements  are  amortized  and
  reflected in interest and debt issuance  expense over the remaining  term of the
  underlying debt.
  
         In connection with the Refinancing  Plan, Foamex L.P.'s existing interest
  rate swap agreements with a notional amount of $300.0 million were considered to
  be effectively  terminated  since the underlying  debt was  extinguished.  These
  interest  rate swap  agreements  had an estimated  fair value  liability of $8.2
  million  at  the  date  of  the  Refinancing  Plan  which  is  included  in  the
  extraordinary  loss  on the  early  extinguishment  of  debt.  In lieu of a cash
  payment  for the  estimated  fair  value  of the  existing  interest  rate  swap
  agreements,  Foamex L.P. entered into an amendment of the existing interest rate
  swap  agreements  resulting in one interest rate swap  agreement with a notional
  amount of $150.0 million through June 2007.  Accordingly,  the $8.2 million fair
  value  liability has been recorded as a deferred  credit which will be amortized
  as a reduction in interest and debt issuance  expense on a  straight-line  basis
  over the life of the amended  interest  rate swap  agreement.  Under the amended
  interest rate swap agreement, Foamex L.P. is obligated to make fixed payments of
  5.75% per annum through December 1997 and variable  payments based on the higher
  of  LIBOR  at the  beginning  of the  period  or the end of the  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 amended  interest rate swap  agreement can be terminated by either
  party in 2002, and annually thereafter,  for a cash settlement based on the fair
  market
  
  
                                         12
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  
  5. LONG-TERM DEBT (continued)
  
  value of the amended  interest rate swap  agreement.  Interest and debt issuance
  expense  is  subject  to  fluctuations  in  LIBOR  during  the  term of the swap
  agreement except during 1997. Foamex L.P. is exposed to credit loss in the event
  of nonperformance by the swap partner;  however, the occurrence of this event is
  not  anticipated.  The effect of the interest rate swaps  described  above was a
  favorable  adjustment to interest and debt issuance  expense of $0.8 million and
  $1.1  million for the  thirteen  week  periods  ended June 29, 1997 and June 30,
  1996,  respectively,  and $1.7 million and $1.9 million for the twenty-six  week
  periods ended June 29, 1997 and June 30, 1996, respectively.
  
  6. ENVIRONMENTAL MATTERS
  
         As of June 29,  1997,  Foamex L.P.  has  accruals of  approximately  $4.2
  million for environmental matters. In addition, as of June 29, 1997, Foamex L.P.
  has net receivables of approximately  $1.0 million  relating to  indemnification
  for environmental liabilities, net of an allowance of approximately $1.0 million
  relating to potential  disagreements regarding the scope of the indemnification.
  Foamex L.P.  believes that  realization of the net  receivables  established for
  indemnification is probable.
  
         On May 5, 1997,  there was an accidental  chemical spill at one of Foamex
  L.P.'s  manufacturing  facilities that was contained on site.  Foamex L.P. is in
  the process of  disposing  of the  contaminated  soil which is estimated to cost
  approximately  $0.4 million.  The actual cost and the timetable for the clean-up
  of the site  cannot be  predicted  with any  degree of  certainty  at this time;
  therefore,  there can be no  assurance  that the  clean-up  of the site will not
  result in a more significant environmental liability in the future.
  
         Foamex L.P. has reported to  appropriate  state  authorities  that it has
  found soil and  groundwater  contamination  in excess of state standards at four
  additional  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 June 29, 1997,  Foamex L.P. has
  environmental accruals of approximately $3.0 million for the remaining potential
  remediation costs for these facilities based on engineering estimates.
  
         Federal  regulations  require that by 1998 all underground  storage tanks
  ("USTs") be removed or upgraded  in most  states to meet  applicable  standards.
  Foamex L.P. has six 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 approximately $0.3 million for the estimated removal and remediation, if
  any,  associated with the 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 permanent  in-place
  closure for certain USTs. However, there can be no assurance that such USTs will
  not result in significant environmental liability in the future.
  
         Foamex  L.P.  has been  designated  as a  Potentially  Responsible  Party
  ("PRP") by the United States  Environmental  Protection  Agency (the "EPA") with
  respect to thirteen sites,  with an estimated total liability to Foamex L.P. for
  the thirteen sites of less than approximately  $0.5 million.  Estimates of total
  cleanup 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.
  
                                         13
  
  <PAGE>
  
                            FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  
  6. ENVIRONMENTAL MATTERS (continued)
  
         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,  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.
  
  7. LITIGATION
  
         As of August 8, 1997, Foamex L.P. and Trace Holdings were two of multiple
  defendants in actions filed on behalf of approximately  5,000 persons in various
  United  States  federal and state  courts and one Canadian  provincial  court by
  recipients of breast implants,  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 and New Zealand.
  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.  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,  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 the capitalization
  of Foamex L.P. in October 1990.  Although  Trace Holdings has paid Foamex L.P.'s
  litigation expenses,  pursuant to such indemnification,  and management believes
  Trace Holdings will be in a position to continue to pay such expenses, there can
  be no  assurance  that Trace  Holdings  will be able to continue to provide such
  indemnification. Based on information available at this time with respect to the
  potential  liability,  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.
  
         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.
  
                                         14
  <PAGE>
  
                             FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                             BALANCE SHEETS (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                June 29,  December 29,
                                                                 1997         1996
  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.
  
                                         15
  <PAGE>
  
                             FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                         NOTES TO BALANCE SHEETS (unaudited)
  
  1. ORGANIZATION
  
         Foamex Capital Corporation  ("FCC"), a wholly-owned  subsidiary of Foamex
  L.P.,  was formed for the sole  purpose of  obtaining  financing  from  external
  sources.
  
  2. COMMITMENTS AND CONTINGENCIES
  
         FCC is a joint obligor 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 a
  private placement under Rule 144A of the Securities Act of 1933, as amended,  on
  June 12, 1997 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 redemption.
  The Senior Subordinated Notes are subordinated in right of payment to all senior
  indebtedness  and are pari  passu in right of  payment  to two  issues of senior
  subordinated   debentures  due  2004  and  the  subordinated  note.  The  Senior
  Subordinated  Notes  contain  certain  covenants  that will  limit,  among other
  things,  the  ability  of  Foamex  L.P.  (i)  to  pay  distributions  or  redeem
  partnership interests, (ii) to make certain restrictive payments or investments,
  (iii) to incur additional  indebtedness or issue Preferred  Equity Interest,  as
  defined,  (iv) to merge,  consolidate  or sell all or  substantially  all of its
  assets,  or (vi) to enter into certain  transactions  with affiliates or related
  persons. The Senior Subordinated Notes are guaranteed by General Felt and Foamex
  Fibers and all current and future domestic subsidiaries of Foamex L.P. and FCC.
  
         Foamex L.P. and FCC have filed a  registration  statement  relating to an
  exchange  offer  in  which  Foamex  L.P.  will  offer  to  exchange  the  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
  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 Senior  Subordinated  Notes held by affiliates
  of the  issuers  and for  certain  other  holders),  and are not  subject to any
  covenant  regarding  registration  under the Securities Act of 1933, as amended.
  The exchange  offer is expected to be  consummated  during the third  quarter of
  1997.
  
         9 1/2% Senior Secured Notes due 2000 ("Senior Secured Notes")
  
  The Senior  Secured  Notes were issued on June 3, 1993 and bear  interest at the
  rate of 9 1/2% per annum payable semiannually on each June 1 and December 1. The
  Senior  Secured  Notes  mature on June 1,  2000.  The Senior  Secured  Notes are
  collateralized  by a first-priority  lien on substantially  all of the assets of
  Foamex L.P. except for receivables,
  
                                         16
  <PAGE>
  
                             FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                         NOTES TO BALANCE SHEETS (unaudited)
  
  2. COMMITMENTS AND CONTINGENCIES (continued)
  
  real estate and fixtures. The Senior Secured Notes may be redeemed at the option
  of  Foamex  L.P.,  in whole or in part,  at any time on or after  June 1,  1998,
  initially at 101.583% of their  principal  amount,  plus accrued  interest,  and
  declining to 100.0% on or after June 1, 1999. The Senior Secured Notes have been
  guaranteed,  on a senior secured basis by General Felt and on a senior unsecured
  basis by Foamex  International.  During 1997 and 1996,  Foamex L.P.  repurchased
  $102.3 million and $9.9 million,  respectively,  aggregate  principal  amount of
  Senior Secured Notes.
  
         11 1/4% Senior Notes due 2002 ("Senior Notes")
  
         The Senior Notes bear  interest at the rate of 11 1/4% per annum  payable
  semiannually  on each April 1 and October 1. The Senior  Notes mature on October
  1, 2002. The Senior Notes may be redeemed at the option of Foamex L.P., in whole
  or in part,  at any time on or after  October 1, 1997,  initially at 104.219% of
  their principal  amount,  plus accrued  interest,  and declining to 100.0% on or
  after  October 1, 2000.  In October  1994,  Foamex L.P.  provided  certain  real
  property  as  collateral  for the Senior  Notes,  with a net book value of $37.8
  million at December 29, 1996. The Senior Notes have been guaranteed, on a senior
  basis, by General Felt.  During 1997 and 1996,  Foamex L.P.  repurchased  $135.6
  million and $8.6 million,  respectively,  aggregate  principal  amount of Senior
  Notes.  Foamex L.P.  intends to redeem all of the  outstanding  Senior  Notes on
  October 1, 1997.
  
         11 7/8% Senior Subordinated Debentures ("Subordinated Debentures")
  
         The  Subordinated  Debentures  bear  interest  at the rate of 11 7/8% per
  annum  payable  semiannually  on each April 1 and  October  1. The  Subordinated
  Debentures  mature on  October  1,  2004.  The  Subordinated  Debentures  may be
  redeemed at the option of Foamex  L.P.,  in whole or in part,  at any time on or
  after October 1, 1997,  initially at 105.938% of their  principal  amount,  plus
  accrued  interest,  and  declining  to 100.0% on or after  October 1, 2002.  The
  Subordinated  Debentures  are  subordinated  in right of  payment  to all senior
  indebtedness,  including  the Senior  Secured  Notes and the Senior  Notes.  The
  Subordinated Debentures have been guaranteed, on a senior subordinated basis, by
  General Felt and rank pari passu in right of payment to the Senior  Subordinated
  Notes.  During 1997 and 1996,  Foamex L.P.  repurchased  $104.9 million and $0.1
  million,  respectively,  aggregate principal amount of Subordinated  Debentures.
  Foamex L.P. intends to redeem all of the outstanding  Subordinated Debentures on
  October 1, 1997.
  
         11 7/8% Senior Subordinated Debentures, Series B ("Series B Debentures")
  
         The Series B Debentures  were issued July 30, 1993,  by Foamex L.P. in an
  exchange offer to holders of senior subordinated debentures issued in connection
  with the  acquisition of General Felt on March 23, 1993. The Series B Debentures
  have terms  substantially  similar to the Subordinated  Debentures,  except that
  holders of the Series B  Debentures  are  entitled to receive  proceeds  from an
  asset sale only if any  proceeds  remain after an offer to  repurchase  has been
  made to the holders of the Subordinated Debentures. The Series B Debentures have
  been  guaranteed on a senior  subordinated  basis by General Felt.  During 1997,
  Foamex L.P. repurchased $6.9 million of Series B Debentures. Foamex L.P. intends
  to redeem all of the outstanding Series B Debentures on October 1, 1997.
  
  
                                         17
  <PAGE>
  
  
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  
         Foamex L.P.  operates in the flexible  polyurethane  and advanced polymer
  foam products  industry,  together with its wholly-owned  subsidiaries,  General
  Felt Industries,  Inc.,  Foamex Fibers,  Inc.,  Foamex Canada Inc., Foamex Latin
  America,  Inc., and Foamex Asia, Inc. 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 pages 3 and 4 of Foamex L.P.'s 1996 Annual Report on Form 10-K.
  
         On  June  12,  1997,  Foamex  International   substantially  completed  a
  refinancing  plan (the  "Refinancing  Plan") which  included the  repurchase  of
  $342.3  million of aggregate  principal  amount of Foamex L.P.'s public debt and
  $116.7 million of aggregate  principal  amount of FJPS's senior secured discount
  debenture  due 2004 and the  payment of $5.2  million of Foamex  L.P.  term loan
  borrowings under its old credit facility.  Foamex L.P. incurred an extraordinary
  loss on the early extinguishment of debt associated with the Refinancing Plan of
  approximately  $44.5 million.  The Refinancing Plan was funded by $347.0 million
  of  borrowings  under a new $480.0  million  credit  facility  (the "New  Credit
  Facility")  and the net proceeds  from the issuance of $150.0  million of 9 7/8%
  senior  subordinated  notes due 2007.  See Note 5 to the condensed  consolidated
  financial  statements  for further  discussion.  As a result of the  Refinancing
  Plan,  Foamex L.P.'s total  long-term  debt  increased  $150.1 million to $546.3
  million.  Foamex  L.P.  expects  the  Refinancing  Plan to result  in  increased
  interest  expense of  approximately  $2.5  million in the second half of 1997 as
  compared to the first half of 1997, and annualized increased interest expense of
  approximately  $5.0  million,  as  compared to the debt  structure  prior to the
  Refinancing Plan,  assuming no material changes in interest rates. Foamex L.P.'s
  future  interest  expense  will vary  based on a variety of  factors,  including
  fluctuation in interest rates in general.  As a result of the Refinancing  Plan,
  variable  rate debt  comprises  a larger  percentage  of Foamex  L.P.'s  overall
  indebtedness than in the past, and as a result,  future fluctuations in interest
  rates will have a greater impact on Foamex L.P.'s  interest  expense than in the
  past.
  
         In  addition,  Foamex  International  intends to call for  redemption  on
  October 1, 1997 approximately  $26.0 million of the approximately  $30.0 million
  of Foamex  L.P.'s  outstanding  public debt that was not tendered as part of the
  Refinancing  Plan. The redemption is expected to be funded with borrowings under
  the New Credit  Facility.  In connection  with this  redemption,  Foamex L.P. is
  expected to incur an extraordinary  loss on the early  extinguishment of debt of
  approximately $2.6 million in the fourth quarter of 1997.
  
         During July 1997,  Foamex  International  announced the creation of a new
  senior management  operating  committee to simplify Foamex L.P.'s management and
  reporting  structure and to position  Foamex L.P. to achieve its strategic goals
  which include: (i) to focus on its core flexible polyurethane  operations in the
  automotive,   carpet  cushion,  technical,   cushioning  and  furniture  markets
  (furniture  sales were  previously  combined  with  cushioning  sales),  (ii) to
  maximize  revenue  growth  by  increasing  market  share  in  existing  markets,
  introducing  new and enhanced  foam  products  with higher  margins and pursuing
  international opportunities and (iii) to continue to lower its cost structure.
  
         The principle  suppliers to the foam industry announced raw material cost
  increases  effective  April 1997.  The impact of the raw material cost increases
  were not  significant  during the second quarter of 1997.  However,  Foamex L.P.
  estimates an unfavorable impact for the raw material cost increases, net of sale
  price  increases to customers of between $1.5 million to $3.0 million during the
  third quarter of 1997.  There can be no assurance  that chemical  suppliers will
  not increase raw material  costs in the future or that Foamex L.P.  will be able
  to  implement  selling  price  increases  to offset any such raw  material  cost
  increases.
  
         During  1996,  Foamex  L.P.  sold  Perfect Fit which  comprised  the home
  comfort products business segment of Foamex L.P.  Accordingly,  the accompanying
  condensed  consolidated  statements  of  operations  for the  thirteen
  
                                         18
  <PAGE>
  
  
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  week  and  twenty-six  week  periods  ended  June  30,  1996  and the  condensed
  consolidated  statement of cash flows for the twenty-six  week period ended June
  30, 1996 reflects the home comfort  products  business  segment as  discontinued
  operations.  See Note 2 to the condensed  consolidated  financial statements for
  further discussion.
  
         Operating  results  for 1997 are  expected  to be  influenced  by various
  internal and external factors.  These factors include,  among other things,  (i)
  continued implementation of the continuous improvement program to improve Foamex
  L.P.'s  profitability,  (ii) additional raw material cost increases,  if any, by
  Foamex L.P.'s chemical  suppliers,  (iii) Foamex L.P.'s success in passing on to
  its  customers  selling  price  increases  to  recover  such raw  material  cost
  increases and (iv) fluctuations in interest rates.
  
  13 Week Period Ended June 29, 1997 Compared to 13 Week Period Ended
  June 30, 1996
  
  Results of Operations
  
         Net sales for the second  quarter of 1997 were $239.9 million as compared
  to $240.4  million in the second  quarter of 1996, a decrease of $0.5 million or
  0.2%. Carpet cushion products net sales for the second quarter of 1997 decreased
  2.4% to $75.0 million from $76.8 million in the second quarter of 1996 primarily
  due to decreased net sales volume of certain carpet cushion  products  resulting
  from weak carpet sales and competitive pricing pressure resulting from an excess
  supply of trim foam, the primary component of rebond carpet cushion.  Cushioning
  products  net sales  for the  second  quarter  of 1997  increased  4.0% to $59.1
  million from $56.8  million in the second  quarter of 1996  primarily  due to an
  increase in net sales from both new and existing  customers  of bedding  related
  products.  Furniture  products net sales for the second quarter of 1997 of $26.9
  million were consistent as compared to net sales of $26.7 million for the second
  quarter of 1996.  Automotive  products net sales for the second  quarter of 1997
  decreased 6.4% to $59.3 million from $63.3 million in the second quarter of 1996
  primarily due to decreased net sales volume resulting from reduced production of
  car and light  trucks  builds  during the  second  quarter of 1997 and the labor
  strikes  affecting  North  American  automotive  production at both Chrysler and
  General  Motors plants.  Technical  products net sales for the second quarter of
  1997  increased  16.4% to $19.6 million from $16.9 million in the second quarter
  of 1996 primarily due to increased net sales volume.
  
         Gross  profit as a  percentage  of net sales  increased  to 18.7% for the
  second  quarter of 1997 from 15.9% in the second  quarter 1996  primarily due to
  improved material and production efficiencies and manufacturing cost containment
  which  includes (i)  favorable raw material  efficiencies  and (ii) an increased
  favorable  impact of the 1995  restructuring  and operational plan in the second
  quarter of 1997 as compared to the second quarter of 1996.
  
         Operating  income  increased to $29.1  million for the second  quarter of
  1997 from $24.6 million in the second  quarter of 1996 primarily due to improved
  gross profit margins as discussed  above,  offset by a $2.1 million  increase in
  selling, general and administrative expenses for the second quarter of 1997. The
  increase in selling,  general and  administrative  expenses is primarily  due to
  increases in employee  compensation  and  incentives,  research and  development
  costs,  and travel and  promotion  costs  associated  with the  launching of new
  products and international expansion.
  
         Income from  continuing  operations  increased  to $16.4  million for the
  second  quarter of 1997 as compared to $11.7  million for the second  quarter of
  1996.  The increase is primarily  due to the reasons  cited above,  offset by an
  increase in interest and debt issuance expense of $0.5 million.  The increase in
  interest  and debt  issuance  expense  is  primarily  due to a  decrease  in the
  favorable impact from the interest rate swap agreements in the second quarter of
  1997  as  compared  to the  second  quarter  of  1996.  Loss  from  discontinued
  operations in the second quarter of 1996 represents the loss on disposal and the
  operating  loss of Perfect  Fit which was sold  during  1996.  See Note 2 to the
  condensed consolidated financial statements for further discussion. The decrease
  in the  effective  income  tax rate for  continuing  operations  for the  second
  
                                         19
  <PAGE>
  
  
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  quarter of 1997 as compared to the second  quarter of 1996 is primarily due to a
  decrease in pre-tax  earnings and the related tax provision of a subsidiary that
  files federal income tax returns.
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $44.9  million  primarily  relates to premium  and  consent  fee  payments,  the
  write-off of debt  issuance  costs and other charges  associated  with the early
  extinguishment of approximately  $351.3 million of aggregate principal amount of
  debt in connection with the Refinancing  Plan and other debt  extinguishment  in
  the  second  quarter of 1997.  See Note 5 to  condensed  consolidated  financial
  statements for further discussion.
  
  26 Week Period Ended June 29, 1997 Compared to 26 Week Period Ended 
  June 30, 1996
  
  Results of Operations
  
         Net sales for 1997 were $469.0  million as compared to $459.6  million in
  1996, an increase of $9.4 million or 2.1%. Carpet cushion products net sales for
  1997  increased 1.8% to $142.9 million from $140.3 million in 1996 primarily due
  to increased net sales during the first quarter of 1997 which  resulted from the
  effect of  increased  selling  prices  that were  initiated  late in the  second
  quarter  of 1996 as  well as  increased  shipments  of  certain  carpet  cushion
  products  offset by increased  competitive  pricing  pressure  during the second
  quarter of 1997 as  compared  to 1996.  Cushioning  products  net sales for 1997
  increased 3.9% to $115.4 million from $111.1 million in 1996 primarily due to an
  increase in net sales from both new and existing  customers  of bedding  related
  products. Furniture products net sales for 1997 of $54.5 million were consistent
  as compared  to net sales of $54.9  million for 1996.  Automotive  products  net
  sales  for 1997 of  $119.0  million  were  consistent  with net  sales of $119.3
  million in 1996 primarily due to increased selling prices implemented during the
  first  quarter of 1996 offset by reduced net sales volume in 1997 as compared to
  1996 due to the decreased net sales volume resulting from reduced  production of
  car and light truck  builds and the labor  strikes at both  Chrysler and General
  Motors  plants.  Technical  products net sales for 1997  increased 9.2% to $37.1
  million from $34.0 million in 1996 primarily due to increased net sales volume.
  
         Gross  profit as a  percentage  of net sales  increased to 18.7% for 1997
  from  16.1% in 1996  primarily  due to  selling  price  increases  and  improved
  material and production  efficiencies and  manufacturing  cost containment which
  includes (i) the impact during 1997 of the selling  prices  initiated in 1996 to
  offset  previous  raw  material  cost  increases,  (ii)  favorable  raw material
  efficiencies and (iii) an increased  favorable impact of the 1995  restructuring
  and operational plan in 1997 as compared to 1996.
  
         Operating  income  increased to $56.2 million for 1997 from $47.1 million
  in 1996  primarily  due to improved  gross profit  margins as  discussed  above,
  offset  by a $4.2  million  increase  in  selling,  general  and  administrative
  expenses for the second  quarter of 1997.  The increase in selling,  general and
  administrative  expenses is primarily due to increases in employee  compensation
  and incentives,  research and development  costs, and travel and promotion costs
  associated with the launching of new products and international expansion.
  
         Income from continuing  operations increased to $32.6 million for 1997 as
  compared to $23.2 million in 1996.  The increase is primarily due to the reasons
  cited above. Loss from  discontinued  operations for 1996 represents the loss on
  disposal and the operating  loss of Perfect Fit which was sold during 1996.  See
  Note  2  to  the  condensed   consolidated   financial  statements  for  further
  discussion.  The  decrease  in the  effective  income  tax rate  for  continuing
  operations  for 1997 as  compared  to 1996 is  primarily  due to a  decrease  in
  pre-tax  earnings  and the  related tax  provision  of a  subsidiary  that files
  federal income tax returns.
  
                                         20
  <PAGE>
  
  
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $45.5 million relates to premium and consent fee payments, the write-off of debt
  issuance costs and other charges  associated  with the early  extinguishment  of
  approximately $359.3 million of aggregate principal amount of debt in connection
  with the Refinancing Plan and other debt extinguishment  during 1997. See Note 5
  to the condensed consolidated financial statements for further discussion.
  
  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.  Foamex L.P.  believes that
  cash flow from operating activities,  cash on hand and periodic borrowings under
  revolving  credit  agreements,  if  necessary,  will be  adequate  to  meet  its
  operating cash  requirements.  The ability to meet  operating cash  requirements
  could  be  impaired  if  Foamex  L.P.  were to fail to  comply  with  any of the
  covenants   contained  in  its  credit   agreements  or   indentures   and  such
  noncompliance  was not  cured  by  Foamex  L.P.  or  waived  by the  lenders  or
  bondholders.  Foamex L.P. was in compliance  with such  covenants as of June 29,
  1997 and expects to be in compliance  with such  covenants  for the  foreseeable
  future.
  
         Cash and cash  equivalents  decreased  $16.5 million  during 1997 to $4.5
  million at June 29, 1997 from $21.0  million at December 29, 1996  primarily due
  to $16.4  million of cash used for capital  expenditures,  $5.9  million of cash
  distributions and $2.2 million of net cash used for operating  activities offset
  by $8.1 million of cash provided from financing activities after considering the
  decrease in  restricted  cash and the purchase of the Discount  Debentures.  The
  $8.1 million of cash provided by financing activities consisted of proceeds from
  long-term debt,  revolving loan and short-term  borrowings of $502.8 million and
  the decrease of  restricted  cash of $12.1  million,  offset by the repayment of
  long-term debt of $363.4  million,  $105.8 million of cash used for the purchase
  of the  Discount  Debentures,  and cash  used for debt  issuance  costs of $14.7
  million and premium and consent fee payments  and other cash charges  associated
  with the Refinancing Plan and other debt  extinguishment of $22.9 million.  Cash
  flow from continuing  operating  activities  decreased $17.1 million to a use of
  $2.2 million of cash for 1997 as compared to cash  provided of $14.9 million for
  1996.  Cash flow from  continuing  operating  activities  decreased  for 1997 as
  compared to 1996 primarily due to the use of cash for operating assets offset by
  an increase of $9.4 million in income from continuing operations.
  
         Working  capital  increased  $12.7 million for 1997 to $149.8  million at
  June 29, 1997 from $137.1  million at December 29, 1996. The increase in working
  capital  is  primarily  due  to  improved   operating  results  from  continuing
  operations.  The net  operating  assets and  liabilities  (comprised of accounts
  receivable,  inventories and accounts payable) increased $18.9 million to $162.9
  million at June 29, 1997 from $144.0  million at December 29, 1996 primarily due
  to an increase in accounts receivable and inventories and a decrease in accounts
  payable.  The increase in accounts receivable is primarily due to an increase in
  net  sales  for  June  1997 as  compared  to  December  1996.  The  increase  in
  inventories  is due to increased  sales  during  1997.  The decrease in accounts
  payable is primarily due to the timing of payments.
  
         During 1997,  Foamex L.P.  spent  approximately  $16.4 million on capital
  expenditures and expects to maintain or reduce spending for capital expenditures
  for the  foreseeable  future since  significant  capital  projects (e.g. the new
  Mexico City facility) are expected to be completed during 1997.
  
                                         21
  
  <PAGE>
  
  
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
         As of June 29, 1997, there was approximately $49.0 million of outstanding
  revolving   credit   borrowings  under  the  New  Credit  Facility  with  unused
  availability of approximately $84.9 million. Borrowings by Foamex Canada Inc. as
  of June 29,  1997 were  approximately  $3.5  million  under a  revolving  credit
  agreement with unused availability of approximately $1.0 million.  Borrowings by
  Foamex Latin America,  Inc. as of June 29, 1997 were  approximately $0.5 million
  under a revolving  credit  agreement with unused  availability of  approximately
  $1.5 million.
  
         Interest Rate Swaps
  
         In connection with the Refinancing  Plan, Foamex L.P.'s existing interest
  rate swap agreements with a notional amount of $300.0 million were considered to
  be effectively  terminated  since the underlying  debt was  extinguished.  These
  interest  rate swap  agreements  had an estimated  fair value  liability of $8.2
  million  at  the  date  of  the  Refinancing  Plan  which  is  included  in  the
  extraordinary  loss  on the  early  extinguishment  of  debt.  In lieu of a cash
  payment  for the  estimated  fair  value  of the  existing  interest  rate  swap
  agreements,  Foamex L.P. entered into an amendment of the existing interest rate
  swap  agreements  resulting in one interest rate swap  agreement with a notional
  amount of $150.0 million through June 2007.  Accordingly,  the $8.2 million fair
  value  liability has been recorded as a deferred  credit which will be amortized
  as a reduction in interest and debt issuance  expense on a  straight-line  basis
  over the life of the amended  interest  rate swap  agreement.  Under the amended
  interest rate swap agreement, Foamex L.P. is obligated to make fixed payments of
  5.75% per annum through December 1997 and variable  payments based on the higher
  of  LIBOR  at the  beginning  of the  period  or the end of the  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 amended  interest rate swap  agreement can be terminated by either
  party in June 2002, and annually thereafter,  for a cash settlement based on the
  fair market value of the amended interest rate swap agreement. Interest and debt
  issuance expense is subject to fluctuations in LIBOR during the term of the swap
  agreement except during 1997. Foamex L.P. is exposed to credit loss in the event
  of nonperformance by the swap partner;  however, the occurrence of this event is
  not  anticipated.  The effect of the interest rate swaps  described  above was a
  favorable  adjustment to interest and debt issuance  expense of $0.8 million and
  $1.1  million for the  thirteen  week  periods  ended June 29, 1997 and June 30,
  1996,  respectively,  and $1.7 million and $1.9 million for the twenty-six  week
  periods ended June 29, 1997 and June 30, 1996, 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  have not had a material  adverse  effect on its
  operations,  financial position,  capital expenditures or competitive  position.
  The  amount  of  liabilities   recorded  by  Foamex  L.P.  in  connection   with
  environmental  matters as of June 29, 1997 was  approximately  $4.2 million.  In
  addition,  as of June 29, 1997, Foamex L.P. has net receivables of approximately
  $1.0  million  for  indemnification  of  environmental  liabilities  from former
  owners,  net of a $1.0 million  allowance  relating to  potential  disagreements
  regarding  the scope of the  indemnification.  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  condensed  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.
  
         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.
  
  
                                         22
  <PAGE>
  
  
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  Inflation and Other Matters
  
         There was no significant  impact on Foamex L.P.'s  operations as a result
  of inflation for 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. Effective in January 1997, Foamex L.P.'s operations in Mexico became
  subject to highly  inflationary  accounting  for financial  reporting  purposes.
  Translation adjustments resulting from fluctuations in the exchange rate between
  the Mexican Peso and the U.S. dollar are included in Foamex L.P.'s  consolidated
  statement of operations as compared to partners' equity (deficit). The affect of
  translations   adjustments   on  the  1997  results  of  operations   have  been
  insignificant.
  
         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.
  
  
  
  
                                         23
  <PAGE>
  
  
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
           Reference is made to the description of the legal proceedings contained
           in the Foamex L.P. Annual Report on Form 10-K for the fiscal year ended
           December 29, 1996 and in Foamex L.P.'s  Quarterly Report for the fiscal
           quarter ended March 30, 1997.
  
            The  information  from  Notes  6 and 7 of the  condensed  consolidated
            financial  statements of Foamex L.P. and  subsidiaries  as of June 29,
            1997 (unaudited) is incorporated herein by reference.
  
  Item 2.  Changes in Securities.
  
           As part of the Refinancing Plan,  Foamex L.P.  solicited the consent of
           holders of the 9 1/2%  senior  secured  notes due 2000,  11 1/4% senior
           notes due 2002,  11 7/8% senior  subordinated  debentures  due 2004, 11
           7/8% senior subordinated debentures due 2004, series B, and FJPS senior
           secured   discount   debentures   due  2004   ("Discount   Debentures")
           (collectively,  the  "Notes")  to certain  proposed  amendments  to the
           indentures  (collectively,  the  "Indentures")  governing each issue of
           Notes (the  "Proposed  Amendments").  The  Proposed  Amendments  became
           effective upon  consummation of the  Refinancing  Plan on June 12, 1997
           (except  in the  case  of the  Proposed  Amendments  for  the  Discount
           Debentures,   as  all  of  the  outstanding  Discount  Debentures  were
           purchased  on  such  date),  and  (i)  eliminated   substantially   all
           restrictive  covenants in the Indentures  with respect to each issue of
           Notes,  (ii) eliminated all events of default in the Indentures,  other
           than  nonpayment  of principal of,  interest on, or redemption  payment
           with respect to, the Notes and certain bankruptcy events, (iii) removed
           certain obligations in connection with the defeasance of the Notes, and
           (iv)  with  respect  to the 11 1/4%  senior  notes  due 2002 and 9 1/2%
           senior  secured  notes due 2000 provided for the granting of pari passu
           liens in the collateral for such Notes with payment priority  preserved
           for the holders of the Notes.
  
  Item 3.  Defaults Upon Senior Securities.
  
           None.
  
  Item 4.  Submission of Matters to a Vote of Security Holders.
  
           As part of the Refinancing Plan,  Foamex L.P.  solicited the consent of
           holders of Notes to the Proposed Amendments. See Part II, Item 2 above.
           The  vote  on  the  Proposed  Amendments  was  conducted  based  on the
           outstanding principal amount of the Notes and was as follows:
  <TABLE>
  <CAPTION>
  <S>                                                      <C>                     <C>             <C>
           Issue of Notes                                      For             Against          Abstain
  
           9 1/2% senior secured notes due 2000           $  99,770,000            $0              $0
  
           11 1/4% senior notes due 2002                   $130,085,000            $0              $0
  
           11 7/8% senior subordinated
              debentures due 2004                          $105,482,000            $0              $0
  
           11 7/8% senior subordinated
              discount debentures due 2004                $   6,955,000            $0              $0
  
           Discount Debentures                             $116,745,000            $0              $0
  </TABLE>
  
                                         24
  <PAGE>
  
  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. Inc. ("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.
  3.3(a)         -    Certificate of Incorporation of FMXI.
  3.4(a)         -    By-laws of FMXI.
  3.5(k)         -    Certificate of Incorporation  of Foamex Capital  Corporation
                      ("FCC").
  3.6(k)         -    By-laws of FCC.
  3.7(g)         -    Certificate  of  Incorporation  of General Felt  Industries,
                      Inc. ("General Felt").
  3.8(g)         -    By-laws of General Felt.
  3.9(p)         -    Certificate of Incorporation of Foamex Fibers, Inc. ("Foamex
                      Fibers")
  3.10(p)        -    By-laws of Foamex Fibers.
  4.1.1(d)       -    Indenture,  dated as of June 12, 1997,  by and among Foamex,
                      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(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(e)       -    Indenture,  dated as of June 3, 1993,  among Foamex and FCC,
                      as joint and several  obligors,  General Felt, as Guarantor,
                      and  Shawmut  Bank,  National  Association  ("Shawmut"),  as
                      trustee, relating to $160,000,000 principal amount of 9 1/2%
                      Senior Secured Notes due 2000,  including the form of Senior
                      Secured Note.
  4.2.2(a)       -    First Supplemental Indenture, dated as of November 18, 1993,
                      among  Foamex and FCC, as Issuers,  General Felt and Perfect
                      Fit  Industries,  Inc.  ("Perfect  Fit"),  as Guarantors and
                      Shawmut, as trustee, relating to the Senior Secured Notes.
  4.2.3(a)       -    Second  Supplemental  Indenture,  dated as of  December  14,
                      1993, among Foamex and FCC, as Issuers, Foamex L.P., General
                      Felt and Perfect Fit, as Guarantors and Shawmut, as trustee,
                      relating to the Senior Secured Notes.
  4.2.4(f)       -    Third Supplemental Indenture, dated as of August 1, 1996, by
                      and among Foamex L.P. and FCC, as Issuers,  Foamex L.P.,  as
                      parent guarantor,  General Felt, as guarantor,  Perfect Fit,
                      as withdrawing guarantor, and Fleet National Bank ("Fleet"),
                      as trustee relating to the Senior Secured Notes.
  4.2.5(c)       -    Fourth Supplemental Indenture,  dated as of May 28, 1997, by
                      and among Foamex and FCC, as Issuers, Foamex L.P., as Parent
                      Guarantor,   General  Felt,  as  Guarantor,  and  Fleet,  as
                      Trustee.
  4.2.6(e)       -    Company  Pledge  Agreement,  dated  as of June 3,  1993,  by
                      Foamex in favor of  Shawmut,  as trustee  for the holders of
                      the Senior Secured Notes.
  4.2.7(p)       -    Amendment No. 1 to Company  (Foamex L.P.) Pledge  Agreement,
                      dated June 12, 1997.
  4.2.8(e)       -    Company Pledge  Agreement,  dated as of June 3, 1993, by FCC
                      in favor of  Shawmut,  as  trustee  for the  holders  of the
                      Senior Secured Notes.
  
                                         25
  <PAGE>
  
  4.2.9(p)       -    Amendment  No. 1 to Company  (FCC) Pledge  Agreement,  dated
                      June 12, 1997.
  4.2.10(e)      -    Subsidiary  Pledge  Agreement,  dated as of June 3, 1993, by
                      General Felt in favor of Shawmut, as trustee for the holders
                      of the Senior Secured Notes.
  4.2.11(p)      -    Amendment  No.  1  to  Subsidiary   (General   Felt)  Pledge
                      Agreement, dated June 12, 1997.
  4.2.12(e)      -    Company  Security  Agreement,  dated as of June 3, 1993,  by
                      Foamex  and FCC in  favor of  Shawmut,  as  trustee  for the
                      holders of the Senior Secured Notes.
  4.2.13(p)      -    Amendment No. 1 to Company  Security  Agreement,  dated June
                      12, 1997 (Foamex and FCC).
  4.2.14(e)      -    Subsidiary Security Agreement,  dated as of June 3, 1993, by
                      General Felt in favor of Shawmut, as trustee for the holders
                      of the Senior Secured Notes.
  4.2.15(p)      -    Amendment No. 1 to Subsidiary Security Agreement, dated June
                      12, 1997 (General Felt).
  4.2.16(e)      -    Collateral Assignment of Patents and Trademarks, dated as of
                      June 3, 1993, by Foamex L.P. in favor of Shawmut, as trustee
                      for the holders of the Senior Secured Notes.
  4.2.17(p)      -    Amendment  No. 1 to  Collateral  Assignment  of Patents  and
                      Trademarks (Foamex), dated June 12, 1997.
  4.2.18(e)      -    Collateral Assignment of Patents and Trademarks, dated as of
                      June 3, 1993, by FCC in favor of Shawmut, as trustee for the
                      holders of the Senior Secured Notes.
  4.2.19(p)      -    Amendment  No. 1 to  Collateral  Assignment  of Patents  and
                      Trademarks (FCC), dated June 12, 1997.
  4.2.20(e)      -    Collateral Assignment of Patents and Trademarks, dated as of
                      June 3,  1993,  by  General  Felt in  favor of  Shawmut,  as
                      trustee for the holders of the Senior Secured Notes.
  4.2.21(p)      -    Amendment  No.1 to  Collateral  Assignment  of  Patents  and
                      Trademarks (General Felt), dated June 12, 1997.
  4.2.22(p)      -    Amended and Restated Receivables Security Agreement,  by and
                      among Fleet National  Bank,  Citicorp USA, Inc. and The Bank
                      of Nova Scotia, dated as of June 12, 1997.
  4.2.23(p)      -    Intercreditor  Agreement  by and among  Fleet, Citicorp USA,
                      Inc.,  and The  Bank of Nova  Scotia,  dated  as of June 12,
                      1997,
  4.3.1(g)       -    Indenture,  dated as of October 13, 1992, among Foamex, FCC,
                      and The Connecticut  National Bank, as trustee,  relating to
                      $150,000,000 principal amount of 113% Senior Notes due 2002,
                      including form of Senior Note.
  4.3.2(h)       -    First  Supplemental  Indenture,  dated as of March 23, 1993,
                      among Foamex and FCC, as joint and several obligors, General
                      Felt, as Guarantor, and Shawmut, as trustee, relating to the
                      Senior Notes.
  4.3.3(a)       -    Second  Supplemental  Indenture,  dated as of  November  18,
                      1993,  among  Foamex and FCC, as Issuers,  General  Felt and
                      Perfect  Fit,  as  Guarantors,   and  Shawmut,  as  trustee,
                      relating to the Senior Notes.
  4.3.4(a)       -    Third Supplemental Indenture, dated as of December 14, 1993,
                      among Foamex L.P. and FCC, as Issuers,  Foamex L.P., General
                      Felt  and  Perfect  Fit,  as  Guarantors,  and  Shawmut,  as
                      trustee, relating to the Senior Notes.
  4.3.5(i)       -    Fourth Supplemental Indenture, dated as of October 31, 1994,
                      among  Foamex  and FCC as  Issuers,  Foamex  L.P.  as Parent
                      Guarantor,  General Felt and Perfect Fit, as Guarantors  and
                      Shawmut, as Trustee, relating to the Senior Notes.
  4.3.6(j)       -    Fifth Supplemental Indenture, dated as of August 1, 1996, by
                      and among Foamex and FCC, as issuers,  Foamex L.P. as Parent
                      Guarantor,  General Felt, as Issuers, Foamex L.P., as Parent
                      Guarantor,  General  Felt,  as  guarantor,  Perfect  Fit, as
                      withdrawing guarantor, and Fleet, as trustee relating to the
                      Senior Notes.
  4.3.7(c)       -    Sixth Supplemental  Indenture,  dated as of May 28, 1997, by
                      and among Foamex and FCC, as Issuers, Foamex L.P., as Parent
                      Guarantor, GFI, as Guarantor, and Fleet, as Trustee.
  4.3.8(p)       -    Intercreditor  Agreement  by and among  Fleet, Citicorp USA,
                      Inc. and The Bank of Nova Scotia, dated as of June 12, 1997.
  
  
                                         26
  <PAGE>
  
  4.4.1(g)       -    Indenture,  dated as of October 13, 1992, among Foamex,  FCC
                      and Shawmut, as trustee,  relating to $126,000,000 principal
                      amount  of 11f%  Senior  Subordinated  Debentures  due 2004,
                      including form of Senior Subordinated Debenture.
  4.4.2(h)       -    First  Supplemental  Indenture,  dated as of March 23, 1993,
                      among  Foamex L.P.  and FCC, as joint and several  obligors,
                      General  Felt,  as  guarantor,   and  Shawmut,  as  trustee,
                      relating to the Senior Subordinated Debentures.
  4.4.3(a)       -    Second  Supplemental  Indenture,  dated as of  November  18,
                      1993,  among  Foamex and FCC, as Issuers,  General  Felt and
                      Perfect  Fit,  as  Guarantors,   and  Shawmut,  as  trustee,
                      relating to the Senior Subordinated Debentures.
  4.4.4(e)       -    Third Supplemental Indenture, dated as of December 14, 1993,
                      among Foamex L.P. and FCC, as Issuers,  Foamex L.P., General
                      Felt  and  Perfect  Fit,  as  Guarantors,  and  Shawmut,  as
                      trustee, relating to the Senior Subordinated Debentures.
  4.4.5(j)       -    Fourth Supplemental  Indenture,  dated as of August 1, 1996,
                      among  Foamex  L.P.  and FCC, as Issuers,  Foamex  L.P.,  as
                      Parent Guarantor,  General Felt, as Guarantor,  Perfect Fit,
                      as withdrawing guarantor, and Fleet, as trustee, relating to
                      the Senior Subordinated Debentures.
  4.4.6(c)       -    Fifth Supplemental  Indenture,  dated as of May 28, 1997, by
                      and among Foamex and FCC, as Issuers, Foamex L.P., as Parent
                      Guarantor,   General  Felt,  as  Guarantor,  and  Fleet,  as
                      Trustee.
  4.5(d)         -    Credit  Agreement,  dated as of June 12, 1997,  by and among
                      Foamex,  General Felt,  Trace Foam,  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.
  4.6(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.
  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.
  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").
  
                                         27
  <PAGE>
  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 L.P.
  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.
  10.8.1(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(k)(o)  -    General Felt Industries,  Inc.  Retirement Plan for Salaried
                      Employees, effective as of January 1, 1995.
  10.10.5(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.
  10.10.6(n)     -    Foamex/General Felt 401(k) Savings Plan dated July 1, 1995.
  10.10.7(a)     -    Foamex L.P.'s 1993 Stock Option Plan.
  10.10.8(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.
  10.11.2(q)     -    Employment  Agreement,  dated  as of July 26,  1995,  by and
                      between Foamex L.P. and Salvatore J. Bonanno.
  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
  27             -    Financial Data Schedule.
  ----------------------------
  
  (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.
  
                                         28
  <PAGE>
  
  (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.
  
           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 reporting an event that occurred on May 29, 1997.
  
                Form 8-K reporting an event that occurred on June 12, 1997.
  
  
                                         29
  
  <PAGE>
  
  
  
  
  
  31
  
  
  
                                     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:  August 13, 1997                       By:/s/ Kenneth R. Fuette
                                               Kenneth R. Fuette
                                               Chief Financial Officer
  
  
  
  
                                               FOAMEX CAPITAL CORPORATION
  
  
  
  Date:  August 13, 1997                       By:/s/ Kenneth R. Fuette
                                               Kenneth R. Fuette
                                               Chief Financial Officer
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 110892}]
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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 June 29, 1997
  
                      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 August 8, 1997 was 1,000.
  
                                    Page 1 of 30
                            Exhibit List on Page 25 of 30
  
                                         1
  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 and  Twenty-Six  Week Periods  Ended June 29, 1997
                 and June 30, 1996                                           3
  
              Condensed Consolidated  Balance Sheets as of June 29, 1997
                 and December 29, 1996                                       4
  
              Condensed   Consolidated   Statements   of  Cash  Flows  -
                 Twenty-Six  Week  Periods  Ended June 29, 1997 and June
                 30, 1996                                                    5
  
              Notes to Condensed Consolidated Financial Statements           6
  
              Foamex Capital Corporation
  
              Balance Sheets as of June 29, 1997 and  December  29, 1996    15
  
              Notes to Balance Sheets                                       16
  
            Item 2. Management's  Discussion and Analysis of Financial
                    Condition and Results of Operations                     18
  
  Part II.  Other Information                                               24
  
            Exhibit List                                                    25
  
            Signatures                                                      30
  
                                    2
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                            FOAMEX L.P. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  13 Week Periods Ended          26 Week Periods Ended
                                            June 29,       June 30,        June 29,       June 30,
                                              1997          1996             1997          1996
                                                                 (thousands)
  NET SALES                                 $239,887       $240,447       $469,007       $459,578
  
  COST OF GOODS SOLD                         195,107        202,280        381,430        385,380
                                           ---------      ---------      ---------      ---------
  
  GROSS PROFIT                                44,780         38,167         87,577         74,198
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                  15,646         13,526         31,331         27,127
                                           ---------      ---------      ---------      ---------
  
  INCOME FROM OPERATIONS                      29,134         24,641         56,246         47,071
  
  INTEREST AND DEBT ISSUANCE EXPENSE          10,805         10,311         21,509         20,724
  
  OTHER INCOME, NET                              472            337          1,122            537
                                           ---------      ---------      ---------      ---------
  
  INCOME FROM CONTINUING OPERATIONS
     BEFORE PROVISION FOR INCOME TAXES        18,801         14,667         35,859         26,884
  
  PROVISION FOR INCOME TAXES                   2,417          2,699          3,259          3,718
                                           ---------      ---------      ---------      ---------
  
  INCOME FROM CONTINUING OPERATIONS           16,384         11,968         32,600         23,166
  
  LOSS FROM DISCONTINUED OPERATIONS               --        (40,164)            --        (39,527)
  
  EXTRAORDINARY LOSS ON EARLY
     EXTINGUISHMENT OF DEBT                  (44,859)            --        (45,538)            --
                                           ---------      ---------      ---------      ---------
  
  NET INCOME (LOSS)                         $(28,475)      $(28,196)      $(12,938)      $(16,361)
                                           =========      =========      =========      =========
  The accompanying notes are an integral part of the condensed
                    consolidated financial statements.
  
                                    3
  FOAMEX L.P. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
  
                                                         June 29,    December 29,
  ASSETS                                                   1997         1996
  
  CURRENT ASSETS:                                              (thousands)
       Cash and cash equivalents                          $4,508        $20,968
       Accounts receivable, net                          136,211        125,847
       Inventories                                       106,723        102,610
       Other current assets                               45,483         39,495
                                                       ---------      ---------
          Total current assets                           292,925        288,920
  
  PROPERTY, PLANT AND EQUIPMENT, NET                     190,631        182,427
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                  82,732         83,991
  
  DEBT ISSUANCE COSTS, NET                                18,428         14,902
  
  OTHER ASSETS                                            15,978         15,917
                                                       ---------      ---------
  
  TOTAL ASSETS                                          $600,694       $586,157
                                                       =========      =========
  
  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
       Short-term borrowings                              $3,960         $3,692
       Current portion of long-term debt                   8,351         13,735
       Accounts payable                                   67,659         75,621
       Accounts payable to related parties                12,347          8,803
       Accrued interest                                    3,172          8,871
       Other accrued liabilities                          47,588         41,108
                                                       ---------      ---------
          Total current liabilities                      143,077        151,830
                                                       ---------      ---------
  
  LONG-TERM DEBT                                         537,951        392,617
                                                       ---------      ---------
  
  OTHER LIABILITIES                                       37,883         28,878
                                                       ---------      ---------
  
  COMMITMENTS AND CONTINGENCIES                               --             --
                                                       ---------      ---------
  
  PARTNERS' EQUITY (DEFICIT):
       Partners' capital accounts                       (107,774)        58,286
       Note receivable from partner                           --        (33,180)
       Other                                             (10,443)       (12,274)
                                                       ---------      ---------
          Total partners' equity (deficit)              (118,217)        12,832
                                                       ---------      ---------
  
  TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT)      $600,694       $586,157
                                                       =========      =========
  
            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)
  26 Week Periods Ended
                                                                          June 29,      June 30,
                                                                            1997          1996
  
  OPERATING ACTIVITIES:                                                         (thousands)
  Net income (loss)                                                   $(12,938)      $(16,361)
     Adjustments  to  reconcile  net  income  to net cash  provided
         by  operating activities:
         Depreciation and amortization                                     10,301         10,711
         Amortization of debt issuance costs and debt discount              1,370          1,433
         Extraordinary loss on extinguishment of debt                      45,538             --
         Loss from discontinued operations                                     --         39,527
         Other operating activities                                           798           (597)
         Changes in operating assets and liabilities                      (47,256)       (19,815)
                                                                        ---------      ---------
  
            Net cash provided by (used for) continuing operations          (2,187)        14,898
            Net cash used for discontinued operations                          --         (1,017)
                                                                        ---------      ---------
            Net cash provided by (used for) operating activities           (2,187)        13,881
                                                                        ---------      ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                                 (16,369)        (7,798)
     Purchase of FJPS senior secured discount debentures                 (105,829)            --
     Decrease in restricted cash                                           12,143             --
     Other investing activities                                                35          1,399
     Discontinued operations investing activities                              --           (900)
                                                                        ---------      ---------
  
            Net cash used for investing activities                       (110,020)        (7,299)
                                                                        ---------      ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from short-term borrowings                                  256          1,976
     Proceeds from revolving loans                                         49,000             --
     Proceeds from long-term debt                                         453,500             --
     Repayment of long-term debt                                         (363,392)        (4,272)
     Premiums and costs associated with debt extinguishment               (22,918)            --
     Debt issuance costs                                                  (14,746)            --
     Distributions to partners                                             (5,949)        (2,478)
     Other financing activities                                                (4)            (8)
                                                                        ---------      ---------
  
            Net cash provided by (used for) financing activities           95,747         (4,782)
                                                                        ---------      ---------
  
  NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                                 (16,460)         1,800
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                                20,968            638
                                                                        ---------      ---------
  
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                      $4,508         $2,438
                                                                        =========      =========
  The accompanying notes are an integral part of the condensed
                         consolidated financial statements.
  
                                         5
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  1. ORGANIZATION AND BASIS OF PRESENTATION
  
         Foamex  L.P.'s  condensed  consolidated  balance sheet as of December 29,
  1996 has been  condensed  from the audited  consolidated  balance  sheet at that
  date.  The  condensed  consolidated  balance  sheet as of June 29,  1997 and the
  condensed  consolidated  statements  of  operations  for the  thirteen  week and
  twenty-six  periods  ended  June 29,  1997 and June 30,  1996 and the  condensed
  consolidated statements of cash flows for the twenty-six week periods ended June
  29, 1997 and June 30, 1996 have been  prepared by Foamex L.P.  and  subsidiaries
  and have not been audited by Foamex L.P.'s  independent  accountants.  Also, the
  condensed  consolidated  statement  of  operations  for the  thirteen  week  and
  twenty-six  week  periods  ended June 30,  1996 and the  condensed  consolidated
  statement of cash flows for the twenty-six  week period ended June 30, 1996 have
  been restated for discontinued  operations (see Note 2 below). 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 June 12, 1997,  Foamex  International  Inc.  ("Foamex  International")
  substantially  completed  a  refinancing  plan  (the  "Refinancing  Plan")  that
  included the  refinancing  of certain  long-term  indebtedness  to reduce Foamex
  International's   interest  expense  and  improve  financing   flexibility.   In
  connection with the Refinancing Plan, Foamex L.P. purchased approximately $342.3
  million  of  aggregate  principal  amount of its public  debt and  approximately
  $116.7 million of aggregate  principal  amount of Foamex-JPS  Automotive  L.P.'s
  ("FJPS") senior secured discount debentures due 2004 (the "Discount Debentures")
  and repaid $5.2 million of term loan borrowings  under its old credit  facility.
  Foamex L.P. incurred an extraordinary  loss on the early  extinguishment of debt
  associated with the Refinancing Plan of approximately $44.5 million. (See Note 5
  below for further discussion.) The Refinancing Plan was funded by $347.0 million
  of  borrowings  under a new $480.0  million  credit  facility  (the "New  Credit
  Facility")  and the net proceeds  from the issuance of $150.0  million of 9 7/8%
  senior subordinated notes due 2007.
  
         In addition,  Foamex L.P.  intends to call for  redemption  on October 1,
  1997  approximately  $26.0  million of the  approximately  $30.0  million of its
  outstanding  public debt that was not tendered as part of the Refinancing  Plan.
  The  redemption  is  expected  to be funded  from the New  Credit  Facility.  In
  connection  with  this   redemption,   Foamex  L.P.  is  expected  to  incur  an
  extraordinary  loss on the early  extinguishment  of debt of approximately  $2.6
  million in the fourth quarter of 1997.
  
         Upon  consummation  of the  Refinancing  Plan on June 12, 1997,  FJPS was
  merged into  Foamex  International,  which thus became a 98% limited  partner of
  Foamex L.P. FMXI, Inc.  ("FMXI") is a 1% managing general partner of Foamex L.P.
  and Trace Foam Company, Inc. ("Trace Foam") is a 1% non-managing general partner
  of Foamex L.P. FMXI is a wholly-owned subsidiary of Foamex International.
  
         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 1996 consolidated  financial statements and notes thereto as set forth in
  Foamex L.P.'s Annual Report on Form 10-K for the fiscal year ended  December 29,
  1996.
  
  2. DISCONTINUED OPERATIONS
  
         During 1996, Foamex L.P. sold the outstanding common stock of Perfect Fit
  Industries,  Inc.  ("Perfect Fit"), a wholly-owned  subsidiary,  for an adjusted
  sale price of approximately  $44.2 million.  The sale included the net assets of
  Foamex L.P.'s home comfort products business segment.
  
                                         6
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  2. DISCONTINUED OPERATIONS (continued)
  
         Foamex  L.P.'s  condensed  consolidated  financial  statements  have been
  restated to reflect the  discontinuation  of the home comfort products  business
  segment.  A summary of the operating results for the discontinued  operations is
  as follows:
  13 Week Period Ended   26 Week Period Ended
                                                     June 30, 1996        June 30, 1996
                                                                (thousands)
  Net sales                                             $24,935            $50,097
  Gross profit                                            3,815              8,065
  Income (loss) from operations                            (101)             1,123
  Interest and debt issuance expense                      1,190              2,384
  Other expense                                             348                348
  Loss on disposal of discontinued operations           (39,297)           (39,297)
  Loss from discontinued operations
  before (benefit) from income taxes                    (40,936)           (40,906)
  Benefit for income taxes                                 (772)            (1,379)
  Loss from discontinued operations,
         net of income taxes                            (40,164)           (39,527)
  3. INVENTORIES
  
         The components of inventories consist of:
  
                                       June 29,        December 29,
                                         1997             1996
                                              (thousands)
  Raw materials and supplies           $59,070           $61,559
  Work-in-process                       17,305            13,453
  Finished goods                        30,348            27,598
                                      --------          --------
         Total                        $106,723          $102,610
                                      ========          ========
  
  4. RELATED PARTY TRANSACTIONS
  
         In  connection  with  the  Refinancing   Plan,   Foamex  L.P.   purchased
  approximately   $116.7  million  of  aggregate   principal  amount  of  Discount
  Debentures for  approximately  $105.8  million  including  transaction  costs of
  approximately $0.8 million.  Foamex L.P.  subsequently  distributed the Discount
  Debentures to FJPS and FMXI.
  
         On June 12, 1997,  Foamex L.P.  distributed  its $2.0  million  aggregate
  principal amount promissory note due from Foamex International to FJPS and FMXI.
  
         Also  on June  12,  1997,  Foamex  L.P.  distributed  its  $56.2  million
  aggregate  principal  amount note,  as amended,  due 2006 (the "FJPS Note") from
  FJPS with an  accreted  value as of June 12,  1997 of $35.6  million to FJPS and
  FMXI.  The  accretion  of the original  issue  discount of $2.4 million and $3.5
  million for the  twenty-six  week periods ended June 29, 1997 and June 30, 1996,
  respectively,  was reflected as a direct increase in the FJPS Note and partners'
  capital account, and thereby excluded from the condensed consolidated statements
  of operations.
  
                                         7
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  4. RELATED PARTY TRANSACTIONS (continued)
  
         In  connection  with  the  Refinancing  Plan,  Foamex  L.P.  made  a cash
  distribution of  approximately  $1.5 million to Trace Foam as a result of Foamex
  L.P.'s distribution to FJPS and FMXI of the Discount  Debentures,  the FJPS Note
  and the $2.0 million aggregate  principal amount promissory note due from Foamex
  International.
  
         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  $4.9 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).
  
         During June 1997,  Foamex L.P.  and Trace Foam amended  their  management
  services  agreement  to  increase  the  annual  fee from  $1.75  million to $3.0
  million, plus reimbursement of expenses incurred.
  
         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 June 29, 1997 and June 30, 1996,  Foamex L.P.
  purchased  approximately $35.3 million and $30.0 million,  respectively,  of raw
  materials under the Supply  Agreement.  During the twenty-six week periods ended
  June 29, 1997 and June 30,  1996,  Foamex  L.P.  purchased  approximately  $63.0
  million  and $54.1  million,  respectively,  of raw  materials  under the Supply
  Agreement.  As of June 29, 1997 and December 29, 1996,  Foamex L.P. had accounts
  payable to Foamex International of approximately $12.3 million and $8.8 million,
  respectively, associated with the Supply Agreement.
  
         Foamex  L.P.  chartered  an  aircraft  (which is owned by a  wholly-owned
  subsidiary of Foamex International)  through a third party and incurred costs of
  approximately  $0.2  million and $0.3 million  during the thirteen  week periods
  ended June 29, 1997 and June 30, 1996,  respectively,  and $0.6 million and $0.5
  million for the  twenty-six  week periods ended June 29, 1997 and June 30, 1996,
  respectively.
  
         On July 1, 1997,  Trace Holdings  issued to Foamex L.P. a promissory note
  for an aggregate  principal  amount of $5.0 million.  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.
  
                                         8
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT
  
  Long-term debt consists of:
  June 29,        December 29,
                                                                               1997              1996
                                                                                    (thousands)
  9 7/8% senior subordinated notes due 2007 (1)                              $150,000          $     --
  Foamex L.P. term loan facilities (7.95% interest rate
      at June 29, 1997) (2)                                                   298,000                --
  Foamex L.P. revolving loan (7.65% interest rate
      at June 29, 1997) (3)                                                    49,000                --
  9 1/2% senior secured notes due 2000 (4)                                      4,523           106,793
  11 1/4% senior notes due 2002 (4)                                             5,825           141,400
  11 7/8% senior subordinated debentures due 2004 (net of
      unamortized debt discount of $119 and $769) (4)                          20,224           125,056
  11 7/8% senior subordinated debentures due 2004, Series B (5)                    45             7,000
  Industrial revenue bonds (6)                                                  7,000             7,000
  Foamex L.P. term loan (8.54% interest rate as of
      December 29, 1996) (6)                                                       --            11,000
  Subordinated note (net of debt discount of $1,047 and $1,198) (6)             5,968             5,817
  Other                                                                         5,717             2,286
                                                                             --------          --------
                                                                              546,302           406,352
  
  Less current portion                                                          8,351            13,735
                                                                             --------          --------
  
  Long-term debt                                                             $537,951          $392,617
                                                                             ========          ========
  (1)  Debt of Foamex L.P. and Foamex Capital  Corporation  ("FCC")  (together the
       "Issuers")  and  guaranteed  by General  Felt  Industries,  Inc.  ("General
       Felt"),  Foamex Fibers,  Inc.  ("Foamex  Fibers") and all other current and
       future domestic subsidiaries of the Issuers.
  
  (2)  Debt of Foamex L.P. and  guaranteed by Foamex  International,  General Felt
       and Foamex Fibers.
  
  (3)  Debt of Foamex L.P. and General Felt and guaranteed by Foamex International
       and Foamex Fibers.
  
  (4)  Debt of the  Issuers and  guaranteed  by Foamex  International  and General
       Felt.
  
  (5)  Debt of the Issuers and guaranteed by General Felt.
  
  (6)  Debt of Foamex L.P.
  
         Term Loans and Revolving Loan
  
         On June 12, 1997, Foamex L.P. entered into the New Credit Facility with a
  group of banks that provides for term loans of up to $330.0 million which expire
  from June 2003 to June 2006 and up to $150.0  million under a revolving  line of
  credit which  expires in June 2003.  In connection  with the  Refinancing  Plan,
  Foamex L.P. entered into term loans of $298.0 million and borrowed $49.0 million
  under the revolving line of credit.
  
                                         9
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT (continued)
  
         The term  loans  are  comprised  of a (i) term A loan  ("Term  A")  which
  provides up to $120.0 million of borrowings of which Foamex L.P.  borrowed $88.0
  million in connection with the Refinancing  Plan, (ii) term B loan ("Term B") of
  $110.0 million and (iii) term C loan ("Term C") of $100.0 million. The remaining
  $32.0 million  available  under the Term A is restricted and can only be used by
  Foamex  L.P.  to retire its public  debt not  tendered  in  connection  with the
  Refinancing Plan with such unused availability terminating June 15, 1998.
  
         Borrowings   under  the  New  Credit  Facility  are   collateralized   by
  substantially  all of the assets of Foamex L.P.,  General Felt and Foamex Fibers
  on a pari passu basis with the 9 1/2% senior secured notes due 2000, the 11 1/4%
  senior  notes  due 2002 and the  industrial  revenue  bonds  (collectively,  the
  "Notes"); however, the rights of the holders of the applicable issue of Notes to
  receive  payment upon the  disposition of the collateral  securing such issue of
  Notes has been preserved.
  
         Pursuant  to the terms of the New Credit  Facility,  borrowed  funds will
  bear interest at a floating rate equal to an applicable margin, as defined, plus
  the higher of (i) the base rate of The Bank of Nova Scotia,  in effect from time
  to time,  or (ii) a rate that is equal to 0.5% per annum plus the federal  funds
  rate in effect  from time to time.  The  applicable  margin is  determined  by a
  calculation  of the total net debt to EBDAIT  ratio,  as defined,  and can range
  from no margin up to 1.125%  per  annum  for Term A and  revolving  loans,  from
  0.875%  per annum to 1.375%  per annum for Term B and from  1.125%  per annum to
  1.625%  per annum for Term C. At the  option of  Foamex  L.P.,  portions  of the
  outstanding loans under the New Credit Facility are convertible into LIBOR based
  loans which bear interest at a floating  rate equal to an applicable  margin for
  LIBOR  based  loans,  as  defined,  plus the  average  LIBOR,  as  defined.  The
  applicable  margin for LIBOR based loans is a rate that will generally equal the
  applicable margin (discussed above) plus 1.0% per annum.
  
         9 7/8% Senior Subordinated Notes due 2007 ("Senior Subordinated Notes")
  
         The 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
  June 12, 1997 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 redemption.
  The Senior Subordinated Notes are subordinated in right of payment to all senior
  indebtedness  and are pari  passu in right of  payment  to two  issues of senior
  subordinated   debentures  due  2004  and  the  subordinated  note.  The  Senior
  Subordinated  Notes  contain  certain  covenants  that will  limit,  among other
  things,  the  ability  of  Foamex  L.P.  (i)  to  pay  distributions  or  redeem
  partnership interests, (ii) to make certain restrictive payments or investments,
  (iii) to incur additional  indebtedness or issue Preferred  Equity Interest,  as
  defined,  (iv) to merge,  consolidate  or sell all or  substantially  all of its
  assets,  or (vi) to enter into certain  transactions  with affiliates or related
  persons. The Senior Subordinated Notes are guaranteed by General Felt and Foamex
  Fibers and all other current and future domestic subsidiaries of the Issuers.
  
                                         10
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT (continued)
  
         Foamex L.P. and FCC have filed a  registration  statement  relating to an
  exchange  offer in which  Foamex L.P.  and FCC will offer to exchange the 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
  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 Senior  Subordinated  Notes held by affiliates
  of the  Issuers  and for  certain  other  holders),  and are not  subject to any
  covenant  regarding  registration  under the Securities Act of 1933, as amended.
  The exchange  offer is expected to be  consummated  during the third  quarter of
  1997.
  
         Principal  payments on Foamex L.P.'s  long-term debt for the remainder of
  1997 and for the next five years are as  follows:  1997 - $4.2  million;  1998 -
  $11.9 million; 1999 - $20.9 million; 2000 - $31.3 million; 2001 - $31.3 million;
  2002 - $32.7 million; and thereafter - $415.2 million.
  
         Early Extinguishment of Debt - Refinancing Plan
  
         In  connection  with  the  Refinancing  Plan,  Foamex  L.P.  incurred  an
  extraordinary  loss on the early  extinguishment of debt of approximately  $44.5
  million.  The extraordinary loss is comprised of approximately $20.2 million for
  premium and consent fee payments,  approximately $12.6 million for the write-off
  of debt issuance  costs and debt  discount,  approximately  $8.2 million for the
  loss  associated  with the effective  termination  and amendment of the interest
  rate swap agreements and  approximately  $3.5 million of  professional  fees and
  other costs. In connection with the  Refinancing  Plan,  Foamex L.P. repaid $5.2
  million in term loan  borrowings  under its old credit  facility  and  purchased
  approximately  $459.0  million  of  aggregate  principal  amount of public  debt
  comprised of:
  
  *      $99.8 million of aggregate  principal amount of its 9 1/2% senior secured
         notes due 2000 for an  aggregate  consideration  of 104.193% of principal
         plus  accrued  interest,  comprised  of a tender  price of 102.193% and a
         consent fee of 2.0%;
  
  *      $130.1 million of aggregate  principal amount of its 11 1/4% senior notes
         due 2002 for an aggregate  consideration  of 105.709% of  principal  plus
         accrued  interest,  comprised of a tender price of 103.709% and a consent
         fee of 2.0%;
  
  *      $105.5  million  of  aggregate  principal  amount  of its 11 7/8%  senior
         subordinated  debentures  due  2004  for an  aggregate  consideration  of
         107.586% of principal plus accrued interest,  comprised of a tender price
         of 105.586% and a consent fee of 2.0%;
  
  *      $6.9  million  of  aggregate  principal  amount  of  its 11  7/8%  senior
         subordinated debentures, series B due 2004 for an aggregate consideration
         of 107.586% of  principal  plus accrued  interest,  comprised of a tender
         price of 105.586% and a consent fee of 2.0%; and
  
  *      $116.7 million of aggregate  principal amount of the Discount  Debentures
         for an  aggregate  consideration  of 90.0%  of  principal  amount,  which
         represents approximately 121.9% of the accreted book value as of June 12,
         1997,  comprised  of a tender  price of 88.0% of  principal  amount and a
         consent fee of 2.0%.
  
                                         11
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT (continued)
  
         In addition,  Foamex L.P.  intends to call for  redemption  on October 1,
  1997  approximately  $26.0  million of the  approximately  $30.0  million of its
  outstanding  public debt that was not tendered as part of the Refinancing  Plan.
  The  redemption  is expected to be funded with  borrowings  under the New Credit
  Facility. In connection with the redemption, Foamex L.P. is expected to incur an
  extraordinary  loss on the early  extinguishment  of debt of approximately  $2.6
  million in the fourth quarter of 1997.
  
         Early Extinguishment of Debt - Other
  
         In addition,  during 1997 Foamex L.P.  incurred  extraordinary  losses of
  approximately  $1.0  million   associated  with  the  early   extinguishment  of
  approximately  $11.8 million of long-term debt funded with  approximately  $12.1
  million  of the  remaining  net  proceeds  from the  sale of  Perfect  Fit.  The
  extraordinary  loss is  comprised  of  approximately  $0.4  million  of  premium
  payments  and  approximately  $0.6 million for the  write-off  of debt  issuance
  costs. The long-term debt was comprised of:
  
  *    $2.5 million of  aggregate  principal  amount of its 9 1/2% senior  secured
       notes due 2000.
  
  *    $5.5 million of aggregate  principal amount of its 11 1/4% senior notes due
       2002.
  
  *    Bank term loan borrowings of $3.8 million under its old credit facility.
  
         Interest Rate Swaps
  
         Foamex L.P. uses  derivative  financial  instruments  to manage  interest
  expense.  All  derivative  financial  instruments  are  classified  as "held for
  purposes  other  than  trading".  Foamex  L.P.  does  not  use  derivatives  for
  speculative purposes.
  
         Interest  rate swap  agreements  are used to manage  interest  expense by
  changing the  interest  rate  characteristics  of certain  debt  instruments  to
  approximate current market conditions.  The amended interest rate swap agreement
  matures  in June  2007  which  is  consistent  with  the  underlying  debt.  The
  differential  paid or received on interest rate swap agreements is recognized on
  an accrual basis as an adjustment to interest and debt issuance  expense.  Gains
  and  losses on  terminated  interest  rate swap  agreements  are  amortized  and
  reflected in interest and debt issuance  expense over the remaining  term of the
  underlying debt.
  
         In connection with the Refinancing  Plan, Foamex L.P.'s existing interest
  rate swap agreements with a notional amount of $300.0 million were considered to
  be effectively  terminated  since the underlying  debt was  extinguished.  These
  interest  rate swap  agreements  had an estimated  fair value  liability of $8.2
  million  at  the  date  of  the  Refinancing  Plan  which  is  included  in  the
  extraordinary  loss  on the  early  extinguishment  of  debt.  In lieu of a cash
  payment  for the  estimated  fair  value  of the  existing  interest  rate  swap
  agreements,  Foamex L.P. entered into an amendment of the existing interest rate
  swap  agreements  resulting in one interest rate swap  agreement with a notional
  amount of $150.0 million through June 2007.  Accordingly,  the $8.2 million fair
  value  liability has been recorded as a deferred  credit which will be amortized
  as a reduction in interest and debt issuance  expense on a  straight-line  basis
  over the life of the amended  interest  rate swap  agreement.  Under the amended
  interest rate swap agreement, Foamex L.P. is obligated to make fixed payments of
  5.75% per annum through December 1997 and variable  payments based on the higher
  of  LIBOR  at the  beginning  of the  period  or the end of the  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 amended  interest rate swap  agreement can be terminated by either
  party in 2002, and annually thereafter,  for a cash settlement based on the fair
  market
  
                                         12
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  5. LONG-TERM DEBT (continued)
  
  value of the amended  interest rate swap  agreement.  Interest and debt issuance
  expense  is  subject  to  fluctuations  in  LIBOR  during  the  term of the swap
  agreement except during 1997. Foamex L.P. is exposed to credit loss in the event
  of nonperformance by the swap partner;  however, the occurrence of this event is
  not  anticipated.  The effect of the interest rate swaps  described  above was a
  favorable  adjustment to interest and debt issuance  expense of $0.8 million and
  $1.1  million for the  thirteen  week  periods  ended June 29, 1997 and June 30,
  1996,  respectively,  and $1.7 million and $1.9 million for the twenty-six  week
  periods ended June 29, 1997 and June 30, 1996, respectively.
  
  6. ENVIRONMENTAL MATTERS
  
         As of June 29,  1997,  Foamex L.P.  has  accruals of  approximately  $4.2
  million for environmental matters. In addition, as of June 29, 1997, Foamex L.P.
  has net receivables of approximately  $1.0 million  relating to  indemnification
  for environmental liabilities, net of an allowance of approximately $1.0 million
  relating to potential  disagreements regarding the scope of the indemnification.
  Foamex L.P.  believes that  realization of the net  receivables  established for
  indemnification is probable.
  
         On May 5, 1997,  there was an accidental  chemical spill at one of Foamex
  L.P.'s  manufacturing  facilities that was contained on site.  Foamex L.P. is in
  the process of  disposing  of the  contaminated  soil which is estimated to cost
  approximately  $0.4 million.  The actual cost and the timetable for the clean-up
  of the site  cannot be  predicted  with any  degree of  certainty  at this time;
  therefore,  there can be no  assurance  that the  clean-up  of the site will not
  result in a more significant environmental liability in the future.
  
         Foamex L.P. has reported to  appropriate  state  authorities  that it has
  found soil and  groundwater  contamination  in excess of state standards at four
  additional  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 June 29, 1997,  Foamex L.P. has
  environmental accruals of approximately $3.0 million for the remaining potential
  remediation costs for these facilities based on engineering estimates.
  
         Federal  regulations  require that by 1998 all underground  storage tanks
  ("USTs") be removed or upgraded  in most  states to meet  applicable  standards.
  Foamex L.P. has six 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 approximately $0.3 million for the estimated removal and remediation, if
  any,  associated with the 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 permanent  in-place
  closure for certain USTs. However, there can be no assurance that such USTs will
  not result in significant environmental liability in the future.
  
         Foamex  L.P.  has been  designated  as a  Potentially  Responsible  Party
  ("PRP") by the United States  Environmental  Protection  Agency (the "EPA") with
  respect to thirteen sites,  with an estimated total liability to Foamex L.P. for
  the thirteen sites of less than approximately  $0.5 million.  Estimates of total
  cleanup 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.
  
                                         13
  FOAMEX L.P. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIATED FINANCIAL STATEMENTS (unaudited)
  
  6. ENVIRONMENTAL MATTERS (continued)
  
         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,  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.
  
  7. LITIGATION
  
         As of August 8, 1997, Foamex L.P. and Trace Holdings were two of multiple
  defendants in actions filed on behalf of approximately  5,000 persons in various
  United  States  federal and state  courts and one Canadian  provincial  court by
  recipients of breast implants,  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 and New Zealand.
  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.  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,  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 the capitalization
  of Foamex L.P. in October 1990.  Although  Trace Holdings has paid Foamex L.P.'s
  litigation expenses,  pursuant to such indemnification,  and management believes
  Trace Holdings will be in a position to continue to pay such expenses, there can
  be no  assurance  that Trace  Holdings  will be able to continue to provide such
  indemnification. Based on information available at this time with respect to the
  potential  liability,  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.
  
         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.
  
                                         14
  FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                             BALANCE SHEETS (unaudited)
  June 29,  December 29,
                                                                 1997         1996
  ASSETS                                                            (thousands)
  CASH                                                            $1            $1
                                                                  ==            ==
  
  LIABILITIES AND STOCKHOLDER'S EQUITY
  
  COMMITMENTS AND CONTINGENCIES                                  $--           $--
                                                                  --            --
  
  STOCKHOLDER'S EQUITY:
       Common stock, par value $.01 per share;
       1,000 shares authorized, issued and outstanding            --            --
       Additional paid-in capital                                  1             1
                                                                  --            --
  
          TOTAL STOCKHOLDER'S EQUITY                              $1            $1
                                                                  ==            ==
  The accompanying notes are an integral part of the balance sheets.
  
                                         15
  FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                         NOTES TO BALANCE SHEETS (unaudited)
  
  1. ORGANIZATION
  
         Foamex Capital Corporation  ("FCC"), a wholly-owned  subsidiary of Foamex
  L.P.,  was formed for the sole  purpose of  obtaining  financing  from  external
  sources.
  
  2. COMMITMENTS AND CONTINGENCIES
  
         FCC is a joint obligor 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 a
  private placement under Rule 144A of the Securities Act of 1933, as amended,  on
  June 12, 1997 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 redemption.
  The Senior Subordinated Notes are subordinated in right of payment to all senior
  indebtedness  and are pari  passu in right of  payment  to two  issues of senior
  subordinated   debentures  due  2004  and  the  subordinated  note.  The  Senior
  Subordinated  Notes  contain  certain  covenants  that will  limit,  among other
  things,  the  ability  of  Foamex  L.P.  (i)  to  pay  distributions  or  redeem
  partnership interests, (ii) to make certain restrictive payments or investments,
  (iii) to incur additional  indebtedness or issue Preferred  Equity Interest,  as
  defined,  (iv) to merge,  consolidate  or sell all or  substantially  all of its
  assets,  or (vi) to enter into certain  transactions  with affiliates or related
  persons. The Senior Subordinated Notes are guaranteed by General Felt and Foamex
  Fibers and all current and future domestic subsidiaries of Foamex L.P. and FCC.
  
         Foamex L.P. and FCC have filed a  registration  statement  relating to an
  exchange  offer  in  which  Foamex  L.P.  will  offer  to  exchange  the  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
  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 Senior  Subordinated  Notes held by affiliates
  of the  issuers  and for  certain  other  holders),  and are not  subject to any
  covenant  regarding  registration  under the Securities Act of 1933, as amended.
  The exchange  offer is expected to be  consummated  during the third  quarter of
  1997.
  
         9 1/2% Senior Secured Notes due 2000 ("Senior Secured Notes")
  
  The Senior  Secured  Notes were issued on June 3, 1993 and bear  interest at the
  rate of 9 1/2% per annum payable semiannually on each June 1 and December 1. The
  Senior  Secured  Notes  mature on June 1,  2000.  The Senior  Secured  Notes are
  collateralized  by a first-priority  lien on substantially  all of the assets of
  Foamex L.P. except for receivables,
  
                                         16
  FOAMEX CAPITAL CORPORATION
                     (A Wholly-Owned Subsidiary of Foamex L.P.)
                         NOTES TO BALANCE SHEETS (unaudited)
  
  2. COMMITMENTS AND CONTINGENCIES (continued)
  
  real estate and fixtures. The Senior Secured Notes may be redeemed at the option
  of  Foamex  L.P.,  in whole or in part,  at any time on or after  June 1,  1998,
  initially at 101.583% of their  principal  amount,  plus accrued  interest,  and
  declining to 100.0% on or after June 1, 1999. The Senior Secured Notes have been
  guaranteed,  on a senior secured basis by General Felt and on a senior unsecured
  basis by Foamex  International.  During 1997 and 1996,  Foamex L.P.  repurchased
  $102.3 million and $9.9 million,  respectively,  aggregate  principal  amount of
  Senior Secured Notes.
  
         11 1/4% Senior Notes due 2002 ("Senior Notes")
  
         The Senior Notes bear  interest at the rate of 11 1/4% per annum  payable
  semiannually  on each April 1 and October 1. The Senior  Notes mature on October
  1, 2002. The Senior Notes may be redeemed at the option of Foamex L.P., in whole
  or in part,  at any time on or after  October 1, 1997,  initially at 104.219% of
  their principal  amount,  plus accrued  interest,  and declining to 100.0% on or
  after  October 1, 2000.  In October  1994,  Foamex L.P.  provided  certain  real
  property  as  collateral  for the Senior  Notes,  with a net book value of $37.8
  million at December 29, 1996. The Senior Notes have been guaranteed, on a senior
  basis, by General Felt.  During 1997 and 1996,  Foamex L.P.  repurchased  $135.6
  million and $8.6 million,  respectively,  aggregate  principal  amount of Senior
  Notes.  Foamex L.P.  intends to redeem all of the  outstanding  Senior  Notes on
  October 1, 1997.
  
         11 7/8% Senior Subordinated Debentures ("Subordinated Debentures")
  
         The  Subordinated  Debentures  bear  interest  at the rate of 11 7/8% per
  annum  payable  semiannually  on each April 1 and  October  1. The  Subordinated
  Debentures  mature on  October  1,  2004.  The  Subordinated  Debentures  may be
  redeemed at the option of Foamex  L.P.,  in whole or in part,  at any time on or
  after October 1, 1997,  initially at 105.938% of their  principal  amount,  plus
  accrued  interest,  and  declining  to 100.0% on or after  October 1, 2002.  The
  Subordinated  Debentures  are  subordinated  in right of  payment  to all senior
  indebtedness,  including  the Senior  Secured  Notes and the Senior  Notes.  The
  Subordinated Debentures have been guaranteed, on a senior subordinated basis, by
  General Felt and rank pari passu in right of payment to the Senior  Subordinated
  Notes.  During 1997 and 1996,  Foamex L.P.  repurchased  $104.9 million and $0.1
  million,  respectively,  aggregate principal amount of Subordinated  Debentures.
  Foamex L.P. intends to redeem all of the outstanding  Subordinated Debentures on
  October 1, 1997.
  
         11 7/8% Senior Subordinated Debentures, Series B ("Series B Debentures")
  
         The Series B Debentures  were issued July 30, 1993,  by Foamex L.P. in an
  exchange offer to holders of senior subordinated debentures issued in connection
  with the  acquisition of General Felt on March 23, 1993. The Series B Debentures
  have terms  substantially  similar to the Subordinated  Debentures,  except that
  holders of the Series B  Debentures  are  entitled to receive  proceeds  from an
  asset sale only if any  proceeds  remain after an offer to  repurchase  has been
  made to the holders of the Subordinated Debentures. The Series B Debentures have
  been  guaranteed on a senior  subordinated  basis by General Felt.  During 1997,
  Foamex L.P. repurchased $6.9 million of Series B Debentures. Foamex L.P. intends
  to redeem all of the outstanding Series B Debentures on October 1, 1997.
  
                                         17
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
         Foamex L.P.  operates in the flexible  polyurethane  and advanced polymer
  foam products  industry,  together with its wholly-owned  subsidiaries,  General
  Felt Industries,  Inc.,  Foamex Fibers,  Inc.,  Foamex Canada Inc., Foamex Latin
  America,  Inc., and Foamex Asia, Inc. 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 pages 3 and 4 of Foamex L.P.'s 1996 Annual Report on Form 10-K.
  
         On  June  12,  1997,  Foamex  International   substantially  completed  a
  refinancing  plan (the  "Refinancing  Plan") which  included the  repurchase  of
  $342.3  million of aggregate  principal  amount of Foamex L.P.'s public debt and
  $116.7 million of aggregate  principal  amount of FJPS's senior secured discount
  debenture  due 2004 and the  payment of $5.2  million of Foamex  L.P.  term loan
  borrowings under its old credit facility.  Foamex L.P. incurred an extraordinary
  loss on the early extinguishment of debt associated with the Refinancing Plan of
  approximately  $44.5 million.  The Refinancing Plan was funded by $347.0 million
  of  borrowings  under a new $480.0  million  credit  facility  (the "New  Credit
  Facility")  and the net proceeds  from the issuance of $150.0  million of 9 7/8%
  senior  subordinated  notes due 2007.  See Note 5 to the condensed  consolidated
  financial  statements  for further  discussion.  As a result of the  Refinancing
  Plan,  Foamex L.P.'s total  long-term  debt  increased  $150.1 million to $546.3
  million.  Foamex  L.P.  expects  the  Refinancing  Plan to result  in  increased
  interest  expense of  approximately  $2.5  million in the second half of 1997 as
  compared to the first half of 1997, and annualized increased interest expense of
  approximately  $5.0  million,  as  compared to the debt  structure  prior to the
  Refinancing Plan,  assuming no material changes in interest rates. Foamex L.P.'s
  future  interest  expense  will vary  based on a variety of  factors,  including
  fluctuation in interest rates in general.  As a result of the Refinancing  Plan,
  variable  rate debt  comprises  a larger  percentage  of Foamex  L.P.'s  overall
  indebtedness than in the past, and as a result,  future fluctuations in interest
  rates will have a greater impact on Foamex L.P.'s  interest  expense than in the
  past.
  
         In  addition,  Foamex  International  intends to call for  redemption  on
  October 1, 1997 approximately  $26.0 million of the approximately  $30.0 million
  of Foamex  L.P.'s  outstanding  public debt that was not tendered as part of the
  Refinancing  Plan. The redemption is expected to be funded with borrowings under
  the New Credit  Facility.  In connection  with this  redemption,  Foamex L.P. is
  expected to incur an extraordinary  loss on the early  extinguishment of debt of
  approximately $2.6 million in the fourth quarter of 1997.
  
         During July 1997,  Foamex  International  announced the creation of a new
  senior management  operating  committee to simplify Foamex L.P.'s management and
  reporting  structure and to position  Foamex L.P. to achieve its strategic goals
  which include: (i) to focus on its core flexible polyurethane  operations in the
  automotive,   carpet  cushion,  technical,   cushioning  and  furniture  markets
  (furniture  sales were  previously  combined  with  cushioning  sales),  (ii) to
  maximize  revenue  growth  by  increasing  market  share  in  existing  markets,
  introducing  new and enhanced  foam  products  with higher  margins and pursuing
  international opportunities and (iii) to continue to lower its cost structure.
  
         The principle  suppliers to the foam industry announced raw material cost
  increases  effective  April 1997.  The impact of the raw material cost increases
  were not  significant  during the second quarter of 1997.  However,  Foamex L.P.
  estimates an unfavorable impact for the raw material cost increases, net of sale
  price  increases to customers of between $1.5 million to $3.0 million during the
  third quarter of 1997.  There can be no assurance  that chemical  suppliers will
  not increase raw material  costs in the future or that Foamex L.P.  will be able
  to  implement  selling  price  increases  to offset any such raw  material  cost
  increases.
  
         During  1996,  Foamex  L.P.  sold  Perfect Fit which  comprised  the home
  comfort products business segment of Foamex L.P.  Accordingly,  the accompanying
  condensed  consolidated  statements  of  operations  for the  thirteen
  
                                         18
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  week  and  twenty-six  week  periods  ended  June  30,  1996  and the  condensed
  consolidated  statement of cash flows for the twenty-six  week period ended June
  30, 1996 reflects the home comfort  products  business  segment as  discontinued
  operations.  See Note 2 to the condensed  consolidated  financial statements for
  further discussion.
  
         Operating  results  for 1997 are  expected  to be  influenced  by various
  internal and external factors.  These factors include,  among other things,  (i)
  continued implementation of the continuous improvement program to improve Foamex
  L.P.'s  profitability,  (ii) additional raw material cost increases,  if any, by
  Foamex L.P.'s chemical  suppliers,  (iii) Foamex L.P.'s success in passing on to
  its  customers  selling  price  increases  to  recover  such raw  material  cost
  increases and (iv) fluctuations in interest rates.
  
  13 Week Period Ended June 29, 1997 Compared to 13 Week Period Ended
  June 30, 1996
  
  Results of Operations
  
         Net sales for the second  quarter of 1997 were $239.9 million as compared
  to $240.4  million in the second  quarter of 1996, a decrease of $0.5 million or
  0.2%. Carpet cushion products net sales for the second quarter of 1997 decreased
  2.4% to $75.0 million from $76.8 million in the second quarter of 1996 primarily
  due to decreased net sales volume of certain carpet cushion  products  resulting
  from weak carpet sales and competitive pricing pressure resulting from an excess
  supply of trim foam, the primary component of rebond carpet cushion.  Cushioning
  products  net sales  for the  second  quarter  of 1997  increased  4.0% to $59.1
  million from $56.8  million in the second  quarter of 1996  primarily  due to an
  increase in net sales from both new and existing  customers  of bedding  related
  products.  Furniture  products net sales for the second quarter of 1997 of $26.9
  million were consistent as compared to net sales of $26.7 million for the second
  quarter of 1996.  Automotive  products net sales for the second  quarter of 1997
  decreased 6.4% to $59.3 million from $63.3 million in the second quarter of 1996
  primarily due to decreased net sales volume resulting from reduced production of
  car and light  trucks  builds  during the  second  quarter of 1997 and the labor
  strikes  affecting  North  American  automotive  production at both Chrysler and
  General  Motors plants.  Technical  products net sales for the second quarter of
  1997  increased  16.4% to $19.6 million from $16.9 million in the second quarter
  of 1996 primarily due to increased net sales volume.
  
         Gross  profit as a  percentage  of net sales  increased  to 18.7% for the
  second  quarter of 1997 from 15.9% in the second  quarter 1996  primarily due to
  improved material and production efficiencies and manufacturing cost containment
  which  includes (i)  favorable raw material  efficiencies  and (ii) an increased
  favorable  impact of the 1995  restructuring  and operational plan in the second
  quarter of 1997 as compared to the second quarter of 1996.
  
         Operating  income  increased to $29.1  million for the second  quarter of
  1997 from $24.6 million in the second  quarter of 1996 primarily due to improved
  gross profit margins as discussed  above,  offset by a $2.1 million  increase in
  selling, general and administrative expenses for the second quarter of 1997. The
  increase in selling,  general and  administrative  expenses is primarily  due to
  increases in employee  compensation  and  incentives,  research and  development
  costs,  and travel and  promotion  costs  associated  with the  launching of new
  products and international expansion.
  
         Income from  continuing  operations  increased  to $16.4  million for the
  second  quarter of 1997 as compared to $11.7  million for the second  quarter of
  1996.  The increase is primarily  due to the reasons  cited above,  offset by an
  increase in interest and debt issuance expense of $0.5 million.  The increase in
  interest  and debt  issuance  expense  is  primarily  due to a  decrease  in the
  favorable impact from the interest rate swap agreements in the second quarter of
  1997  as  compared  to the  second  quarter  of  1996.  Loss  from  discontinued
  operations in the second quarter of 1996 represents the loss on disposal and the
  operating  loss of Perfect  Fit which was sold  during  1996.  See Note 2 to the
  condensed consolidated financial statements for further discussion. The decrease
  in the  effective  income  tax rate for  continuing  operations  for the  second
  
                                         19
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  quarter of 1997 as compared to the second  quarter of 1996 is primarily due to a
  decrease in pre-tax  earnings and the related tax provision of a subsidiary that
  files federal income tax returns.
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $44.9  million  primarily  relates to premium  and  consent  fee  payments,  the
  write-off of debt  issuance  costs and other charges  associated  with the early
  extinguishment of approximately  $351.3 million of aggregate principal amount of
  debt in connection with the Refinancing  Plan and other debt  extinguishment  in
  the  second  quarter of 1997.  See Note 5 to  condensed  consolidated  financial
  statements for further discussion.
  
  26 Week Period Ended June 29, 1997 Compared to 26 Week Period Ended 
  June 30, 1996
  
  Results of Operations
  
         Net sales for 1997 were $469.0  million as compared to $459.6  million in
  1996, an increase of $9.4 million or 2.1%. Carpet cushion products net sales for
  1997  increased 1.8% to $142.9 million from $140.3 million in 1996 primarily due
  to increased net sales during the first quarter of 1997 which  resulted from the
  effect of  increased  selling  prices  that were  initiated  late in the  second
  quarter  of 1996 as  well as  increased  shipments  of  certain  carpet  cushion
  products  offset by increased  competitive  pricing  pressure  during the second
  quarter of 1997 as  compared  to 1996.  Cushioning  products  net sales for 1997
  increased 3.9% to $115.4 million from $111.1 million in 1996 primarily due to an
  increase in net sales from both new and existing  customers  of bedding  related
  products. Furniture products net sales for 1997 of $54.5 million were consistent
  as compared  to net sales of $54.9  million for 1996.  Automotive  products  net
  sales  for 1997 of  $119.0  million  were  consistent  with net  sales of $119.3
  million in 1996 primarily due to increased selling prices implemented during the
  first  quarter of 1996 offset by reduced net sales volume in 1997 as compared to
  1996 due to the decreased net sales volume resulting from reduced  production of
  car and light truck  builds and the labor  strikes at both  Chrysler and General
  Motors  plants.  Technical  products net sales for 1997  increased 9.2% to $37.1
  million from $34.0 million in 1996 primarily due to increased net sales volume.
  
         Gross  profit as a  percentage  of net sales  increased to 18.7% for 1997
  from  16.1% in 1996  primarily  due to  selling  price  increases  and  improved
  material and production  efficiencies and  manufacturing  cost containment which
  includes (i) the impact during 1997 of the selling  prices  initiated in 1996 to
  offset  previous  raw  material  cost  increases,  (ii)  favorable  raw material
  efficiencies and (iii) an increased  favorable impact of the 1995  restructuring
  and operational plan in 1997 as compared to 1996.
  
         Operating  income  increased to $56.2 million for 1997 from $47.1 million
  in 1996  primarily  due to improved  gross profit  margins as  discussed  above,
  offset  by a $4.2  million  increase  in  selling,  general  and  administrative
  expenses for the second  quarter of 1997.  The increase in selling,  general and
  administrative  expenses is primarily due to increases in employee  compensation
  and incentives,  research and development  costs, and travel and promotion costs
  associated with the launching of new products and international expansion.
  
         Income from continuing  operations increased to $32.6 million for 1997 as
  compared to $23.2 million in 1996.  The increase is primarily due to the reasons
  cited above. Loss from  discontinued  operations for 1996 represents the loss on
  disposal and the operating  loss of Perfect Fit which was sold during 1996.  See
  Note  2  to  the  condensed   consolidated   financial  statements  for  further
  discussion.  The  decrease  in the  effective  income  tax rate  for  continuing
  operations  for 1997 as  compared  to 1996 is  primarily  due to a  decrease  in
  pre-tax  earnings  and the  related tax  provision  of a  subsidiary  that files
  federal income tax returns.
  
                                         20
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
         The extraordinary  loss on early  extinguishment of debt of approximately
  $45.5 million relates to premium and consent fee payments, the write-off of debt
  issuance costs and other charges  associated  with the early  extinguishment  of
  approximately $359.3 million of aggregate principal amount of debt in connection
  with the Refinancing Plan and other debt extinguishment  during 1997. See Note 5
  to the condensed consolidated financial statements for further discussion.
  
  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.  Foamex L.P.  believes that
  cash flow from operating activities,  cash on hand and periodic borrowings under
  revolving  credit  agreements,  if  necessary,  will be  adequate  to  meet  its
  operating cash  requirements.  The ability to meet  operating cash  requirements
  could  be  impaired  if  Foamex  L.P.  were to fail to  comply  with  any of the
  covenants   contained  in  its  credit   agreements  or   indentures   and  such
  noncompliance  was not  cured  by  Foamex  L.P.  or  waived  by the  lenders  or
  bondholders.  Foamex L.P. was in compliance  with such  covenants as of June 29,
  1997 and expects to be in compliance  with such  covenants  for the  foreseeable
  future.
  
         Cash and cash  equivalents  decreased  $16.5 million  during 1997 to $4.5
  million at June 29, 1997 from $21.0  million at December 29, 1996  primarily due
  to $16.4  million of cash used for capital  expenditures,  $5.9  million of cash
  distributions and $2.2 million of net cash used for operating  activities offset
  by $8.1 million of cash provided from financing activities after considering the
  decrease in  restricted  cash and the purchase of the Discount  Debentures.  The
  $8.1 million of cash provided by financing activities consisted of proceeds from
  long-term debt,  revolving loan and short-term  borrowings of $502.8 million and
  the decrease of  restricted  cash of $12.1  million,  offset by the repayment of
  long-term debt of $363.4  million,  $105.8 million of cash used for the purchase
  of the  Discount  Debentures,  and cash  used for debt  issuance  costs of $14.7
  million and premium and consent fee payments  and other cash charges  associated
  with the Refinancing Plan and other debt  extinguishment of $22.9 million.  Cash
  flow from continuing  operating  activities  decreased $17.1 million to a use of
  $2.2 million of cash for 1997 as compared to cash  provided of $14.9 million for
  1996.  Cash flow from  continuing  operating  activities  decreased  for 1997 as
  compared to 1996 primarily due to the use of cash for operating assets offset by
  an increase of $9.4 million in income from continuing operations.
  
         Working  capital  increased  $12.7 million for 1997 to $149.8  million at
  June 29, 1997 from $137.1  million at December 29, 1996. The increase in working
  capital  is  primarily  due  to  improved   operating  results  from  continuing
  operations.  The net  operating  assets and  liabilities  (comprised of accounts
  receivable,  inventories and accounts payable) increased $18.9 million to $162.9
  million at June 29, 1997 from $144.0  million at December 29, 1996 primarily due
  to an increase in accounts receivable and inventories and a decrease in accounts
  payable.  The increase in accounts receivable is primarily due to an increase in
  net  sales  for  June  1997 as  compared  to  December  1996.  The  increase  in
  inventories  is due to increased  sales  during  1997.  The decrease in accounts
  payable is primarily due to the timing of payments.
  
         During 1997,  Foamex L.P.  spent  approximately  $16.4 million on capital
  expenditures and expects to maintain or reduce spending for capital expenditures
  for the  foreseeable  future since  significant  capital  projects (e.g. the new
  Mexico City facility) are expected to be completed during 1997.
  
                                         21
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
         As of June 29, 1997, there was approximately $49.0 million of outstanding
  revolving   credit   borrowings  under  the  New  Credit  Facility  with  unused
  availability of approximately $84.9 million. Borrowings by Foamex Canada Inc. as
  of June 29,  1997 were  approximately  $3.5  million  under a  revolving  credit
  agreement with unused availability of approximately $1.0 million.  Borrowings by
  Foamex Latin America,  Inc. as of June 29, 1997 were  approximately $0.5 million
  under a revolving  credit  agreement with unused  availability of  approximately
  $1.5 million.
  
         Interest Rate Swaps
  
         In connection with the Refinancing  Plan, Foamex L.P.'s existing interest
  rate swap agreements with a notional amount of $300.0 million were considered to
  be effectively  terminated  since the underlying  debt was  extinguished.  These
  interest  rate swap  agreements  had an estimated  fair value  liability of $8.2
  million  at  the  date  of  the  Refinancing  Plan  which  is  included  in  the
  extraordinary  loss  on the  early  extinguishment  of  debt.  In lieu of a cash
  payment  for the  estimated  fair  value  of the  existing  interest  rate  swap
  agreements,  Foamex L.P. entered into an amendment of the existing interest rate
  swap  agreements  resulting in one interest rate swap  agreement with a notional
  amount of $150.0 million through June 2007.  Accordingly,  the $8.2 million fair
  value  liability has been recorded as a deferred  credit which will be amortized
  as a reduction in interest and debt issuance  expense on a  straight-line  basis
  over the life of the amended  interest  rate swap  agreement.  Under the amended
  interest rate swap agreement, Foamex L.P. is obligated to make fixed payments of
  5.75% per annum through December 1997 and variable  payments based on the higher
  of  LIBOR  at the  beginning  of the  period  or the end of the  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 amended  interest rate swap  agreement can be terminated by either
  party in June 2002, and annually thereafter,  for a cash settlement based on the
  fair market value of the amended interest rate swap agreement. Interest and debt
  issuance expense is subject to fluctuations in LIBOR during the term of the swap
  agreement except during 1997. Foamex L.P. is exposed to credit loss in the event
  of nonperformance by the swap partner;  however, the occurrence of this event is
  not  anticipated.  The effect of the interest rate swaps  described  above was a
  favorable  adjustment to interest and debt issuance  expense of $0.8 million and
  $1.1  million for the  thirteen  week  periods  ended June 29, 1997 and June 30,
  1996,  respectively,  and $1.7 million and $1.9 million for the twenty-six  week
  periods ended June 29, 1997 and June 30, 1996, 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  have not had a material  adverse  effect on its
  operations,  financial position,  capital expenditures or competitive  position.
  The  amount  of  liabilities   recorded  by  Foamex  L.P.  in  connection   with
  environmental  matters as of June 29, 1997 was  approximately  $4.2 million.  In
  addition,  as of June 29, 1997, Foamex L.P. has net receivables of approximately
  $1.0  million  for  indemnification  of  environmental  liabilities  from former
  owners,  net of a $1.0 million  allowance  relating to  potential  disagreements
  regarding  the scope of the  indemnification.  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  condensed  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.
  
         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.
  
                                         22
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALAYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS
  
  Inflation and Other Matters
  
         There was no significant  impact on Foamex L.P.'s  operations as a result
  of inflation for 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. Effective in January 1997, Foamex L.P.'s operations in Mexico became
  subject to highly  inflationary  accounting  for financial  reporting  purposes.
  Translation adjustments resulting from fluctuations in the exchange rate between
  the Mexican Peso and the U.S. dollar are included in Foamex L.P.'s  consolidated
  statement of operations as compared to partners' equity (deficit). The affect of
  translations   adjustments   on  the  1997  results  of  operations   have  been
  insignificant.
  
         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.
  
                                         23
  PART II - OTHER INFORMATION
  
  Item 1.  Legal Proceedings.
  
           Reference is made to the description of the legal proceedings contained
           in the Foamex L.P. Annual Report on Form 10-K for the fiscal year ended
           December 29, 1996 and in Foamex L.P.'s  Quarterly Report for the fiscal
           quarter ended March 30, 1997.
  
            The  information  from  Notes  6 and 7 of the  condensed  consolidated
            financial  statements of Foamex L.P. and  subsidiaries  as of June 29,
            1997 (unaudited) is incorporated herein by reference.
  
  Item 2.  Changes in Securities.
  
           As part of the Refinancing Plan,  Foamex L.P.  solicited the consent of
           holders of the 9 1/2%  senior  secured  notes due 2000,  11 1/4% senior
           notes due 2002,  11 7/8% senior  subordinated  debentures  due 2004, 11
           7/8% senior subordinated debentures due 2004, series B, and FJPS senior
           secured   discount   debentures   due  2004   ("Discount   Debentures")
           (collectively,  the  "Notes")  to certain  proposed  amendments  to the
           indentures  (collectively,  the  "Indentures")  governing each issue of
           Notes (the  "Proposed  Amendments").  The  Proposed  Amendments  became
           effective upon  consummation of the  Refinancing  Plan on June 12, 1997
           (except  in the  case  of the  Proposed  Amendments  for  the  Discount
           Debentures,   as  all  of  the  outstanding  Discount  Debentures  were
           purchased  on  such  date),  and  (i)  eliminated   substantially   all
           restrictive  covenants in the Indentures  with respect to each issue of
           Notes,  (ii) eliminated all events of default in the Indentures,  other
           than  nonpayment  of principal of,  interest on, or redemption  payment
           with respect to, the Notes and certain bankruptcy events, (iii) removed
           certain obligations in connection with the defeasance of the Notes, and
           (iv)  with  respect  to the 11 1/4%  senior  notes  due 2002 and 9 1/2%
           senior  secured  notes due 2000 provided for the granting of pari passu
           liens in the collateral for such Notes with payment priority  preserved
           for the holders of the Notes.
  
  Item 3.  Defaults Upon Senior Securities.
  
           None.
  
  Item 4.  Submission of Matters to a Vote of Security Holders.
  
           As part of the Refinancing Plan,  Foamex L.P.  solicited the consent of
           holders of Notes to the Proposed Amendments. See Part II, Item 2 above.
           The  vote  on  the  Proposed  Amendments  was  conducted  based  on the
           outstanding principal amount of the Notes and was as follows:
  Issue of Notes                                      For             Against          Abstain
  
           9 1/2% senior secured notes due 2000           $  99,770,000            $0              $0
  
           11 1/4% senior notes due 2002                   $130,085,000            $0              $0
  
           11 7/8% senior subordinated
              debentures due 2004                          $105,482,000            $0              $0
  
           11 7/8% senior subordinated
              discount debentures due 2004                $   6,955,000            $0              $0
  
           Discount Debentures                             $116,745,000            $0              $0
  24
  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. Inc. ("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.
  3.3(a)         -    Certificate of Incorporation of FMXI.
  3.4(a)         -    By-laws of FMXI.
  3.5(k)         -    Certificate of Incorporation  of Foamex Capital  Corporation
                      ("FCC").
  3.6(k)         -    By-laws of FCC.
  3.7(g)         -    Certificate  of  Incorporation  of General Felt  Industries,
                      Inc. ("General Felt").
  3.8(g)         -    By-laws of General Felt.
  3.9(p)         -    Certificate of Incorporation of Foamex Fibers, Inc. ("Foamex
                      Fibers")
  3.10(p)        -    By-laws of Foamex Fibers.
  4.1.1(d)       -    Indenture,  dated as of June 12, 1997,  by and among Foamex,
                      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(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(e)       -    Indenture,  dated as of June 3, 1993,  among Foamex and FCC,
                      as joint and several  obligors,  General Felt, as Guarantor,
                      and  Shawmut  Bank,  National  Association  ("Shawmut"),  as
                      trustee, relating to $160,000,000 principal amount of 9 1/2%
                      Senior Secured Notes due 2000,  including the form of Senior
                      Secured Note.
  4.2.2(a)       -    First Supplemental Indenture, dated as of November 18, 1993,
                      among  Foamex and FCC, as Issuers,  General Felt and Perfect
                      Fit  Industries,  Inc.  ("Perfect  Fit"),  as Guarantors and
                      Shawmut, as trustee, relating to the Senior Secured Notes.
  4.2.3(a)       -    Second  Supplemental  Indenture,  dated as of  December  14,
                      1993, among Foamex and FCC, as Issuers, Foamex L.P., General
                      Felt and Perfect Fit, as Guarantors and Shawmut, as trustee,
                      relating to the Senior Secured Notes.
  4.2.4(f)       -    Third Supplemental Indenture, dated as of August 1, 1996, by
                      and among Foamex L.P. and FCC, as Issuers,  Foamex L.P.,  as
                      parent guarantor,  General Felt, as guarantor,  Perfect Fit,
                      as withdrawing guarantor, and Fleet National Bank ("Fleet"),
                      as trustee relating to the Senior Secured Notes.
  4.2.5(c)       -    Fourth Supplemental Indenture,  dated as of May 28, 1997, by
                      and among Foamex and FCC, as Issuers, Foamex L.P., as Parent
                      Guarantor,   General  Felt,  as  Guarantor,  and  Fleet,  as
                      Trustee.
  4.2.6(e)       -    Company  Pledge  Agreement,  dated  as of June 3,  1993,  by
                      Foamex in favor of  Shawmut,  as trustee  for the holders of
                      the Senior Secured Notes.
  4.2.7(p)       -    Amendment No. 1 to Company  (Foamex L.P.) Pledge  Agreement,
                      dated June 12, 1997.
  4.2.8(e)       -    Company Pledge  Agreement,  dated as of June 3, 1993, by FCC
                      in favor of  Shawmut,  as  trustee  for the  holders  of the
                      Senior Secured Notes.
  
                                         25
  4.2.9(p)       -    Amendment  No. 1 to Company  (FCC) Pledge  Agreement,  dated
                      June 12, 1997.
  4.2.10(e)      -    Subsidiary  Pledge  Agreement,  dated as of June 3, 1993, by
                      General Felt in favor of Shawmut, as trustee for the holders
                      of the Senior Secured Notes.
  4.2.11(p)      -    Amendment  No.  1  to  Subsidiary   (General   Felt)  Pledge
                      Agreement, dated June 12, 1997.
  4.2.12(e)      -    Company  Security  Agreement,  dated as of June 3, 1993,  by
                      Foamex  and FCC in  favor of  Shawmut,  as  trustee  for the
                      holders of the Senior Secured Notes.
  4.2.13(p)      -    Amendment No. 1 to Company  Security  Agreement,  dated June
                      12, 1997 (Foamex and FCC).
  4.2.14(e)      -    Subsidiary Security Agreement,  dated as of June 3, 1993, by
                      General Felt in favor of Shawmut, as trustee for the holders
                      of the Senior Secured Notes.
  4.2.15(p)      -    Amendment No. 1 to Subsidiary Security Agreement, dated June
                      12, 1997 (General Felt).
  4.2.16(e)      -    Collateral Assignment of Patents and Trademarks, dated as of
                      June 3, 1993, by Foamex L.P. in favor of Shawmut, as trustee
                      for the holders of the Senior Secured Notes.
  4.2.17(p)      -    Amendment  No. 1 to  Collateral  Assignment  of Patents  and
                      Trademarks (Foamex), dated June 12, 1997.
  4.2.18(e)      -    Collateral Assignment of Patents and Trademarks, dated as of
                      June 3, 1993, by FCC in favor of Shawmut, as trustee for the
                      holders of the Senior Secured Notes.
  4.2.19(p)      -    Amendment  No. 1 to  Collateral  Assignment  of Patents  and
                      Trademarks (FCC), dated June 12, 1997.
  4.2.20(e)      -    Collateral Assignment of Patents and Trademarks, dated as of
                      June 3,  1993,  by  General  Felt in  favor of  Shawmut,  as
                      trustee for the holders of the Senior Secured Notes.
  4.2.21(p)      -    Amendment  No.1 to  Collateral  Assignment  of  Patents  and
                      Trademarks (General Felt), dated June 12, 1997.
  4.2.22(p)      -    Amended and Restated Receivables Security Agreement,  by and
                      among Fleet National  Bank,  Citicorp USA, Inc. and The Bank
                      of Nova Scotia, dated as of June 12, 1997.
  4.2.23(p)      -    Intercreditor  Agreement  by and among  Fleet, Citicorp USA,
                      Inc.,  and The  Bank of Nova  Scotia,  dated  as of June 12,
                      1997,
  4.3.1(g)       -    Indenture,  dated as of October 13, 1992, among Foamex, FCC,
                      and The Connecticut  National Bank, as trustee,  relating to
                      $150,000,000 principal amount of 113% Senior Notes due 2002,
                      including form of Senior Note.
  4.3.2(h)       -    First  Supplemental  Indenture,  dated as of March 23, 1993,
                      among Foamex and FCC, as joint and several obligors, General
                      Felt, as Guarantor, and Shawmut, as trustee, relating to the
                      Senior Notes.
  4.3.3(a)       -    Second  Supplemental  Indenture,  dated as of  November  18,
                      1993,  among  Foamex and FCC, as Issuers,  General  Felt and
                      Perfect  Fit,  as  Guarantors,   and  Shawmut,  as  trustee,
                      relating to the Senior Notes.
  4.3.4(a)       -    Third Supplemental Indenture, dated as of December 14, 1993,
                      among Foamex L.P. and FCC, as Issuers,  Foamex L.P., General
                      Felt  and  Perfect  Fit,  as  Guarantors,  and  Shawmut,  as
                      trustee, relating to the Senior Notes.
  4.3.5(i)       -    Fourth Supplemental Indenture, dated as of October 31, 1994,
                      among  Foamex  and FCC as  Issuers,  Foamex  L.P.  as Parent
                      Guarantor,  General Felt and Perfect Fit, as Guarantors  and
                      Shawmut, as Trustee, relating to the Senior Notes.
  4.3.6(j)       -    Fifth Supplemental Indenture, dated as of August 1, 1996, by
                      and among Foamex and FCC, as issuers,  Foamex L.P. as Parent
                      Guarantor,  General Felt, as Issuers, Foamex L.P., as Parent
                      Guarantor,  General  Felt,  as  guarantor,  Perfect  Fit, as
                      withdrawing guarantor, and Fleet, as trustee relating to the
                      Senior Notes.
  4.3.7(c)       -    Sixth Supplemental  Indenture,  dated as of May 28, 1997, by
                      and among Foamex and FCC, as Issuers, Foamex L.P., as Parent
                      Guarantor, GFI, as Guarantor, and Fleet, as Trustee.
  4.3.8(p)       -    Intercreditor  Agreement  by and among  Fleet, Citicorp USA,
                      Inc. and The Bank of Nova Scotia, dated as of June 12, 1997.
  
                                         26
  4.4.1(g)       -    Indenture,  dated as of October 13, 1992, among Foamex,  FCC
                      and Shawmut, as trustee,  relating to $126,000,000 principal
                      amount  of 11f%  Senior  Subordinated  Debentures  due 2004,
                      including form of Senior Subordinated Debenture.
  4.4.2(h)       -    First  Supplemental  Indenture,  dated as of March 23, 1993,
                      among  Foamex L.P.  and FCC, as joint and several  obligors,
                      General  Felt,  as  guarantor,   and  Shawmut,  as  trustee,
                      relating to the Senior Subordinated Debentures.
  4.4.3(a)       -    Second  Supplemental  Indenture,  dated as of  November  18,
                      1993,  among  Foamex and FCC, as Issuers,  General  Felt and
                      Perfect  Fit,  as  Guarantors,   and  Shawmut,  as  trustee,
                      relating to the Senior Subordinated Debentures.
  4.4.4(e)       -    Third Supplemental Indenture, dated as of December 14, 1993,
                      among Foamex L.P. and FCC, as Issuers,  Foamex L.P., General
                      Felt  and  Perfect  Fit,  as  Guarantors,  and  Shawmut,  as
                      trustee, relating to the Senior Subordinated Debentures.
  4.4.5(j)       -    Fourth Supplemental  Indenture,  dated as of August 1, 1996,
                      among  Foamex  L.P.  and FCC, as Issuers,  Foamex  L.P.,  as
                      Parent Guarantor,  General Felt, as Guarantor,  Perfect Fit,
                      as withdrawing guarantor, and Fleet, as trustee, relating to
                      the Senior Subordinated Debentures.
  4.4.6(c)       -    Fifth Supplemental  Indenture,  dated as of May 28, 1997, by
                      and among Foamex and FCC, as Issuers, Foamex L.P., as Parent
                      Guarantor,   General  Felt,  as  Guarantor,  and  Fleet,  as
                      Trustee.
  4.5(d)         -    Credit  Agreement,  dated as of June 12, 1997,  by and among
                      Foamex,  General Felt,  Trace Foam,  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.
  4.6(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.
  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.
  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").
  
                                         27
  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 L.P.
  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.
  10.8.1(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(k)(o)  -    General Felt Industries,  Inc.  Retirement Plan for Salaried
                      Employees, effective as of January 1, 1995.
  10.10.5(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.
  10.10.6(n)     -    Foamex/General Felt 401(k) Savings Plan dated July 1, 1995.
  10.10.7(a)     -    Foamex L.P.'s 1993 Stock Option Plan.
  10.10.8(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.
  10.11.2(q)     -    Employment  Agreement,  dated  as of July 26,  1995,  by and
                      between Foamex L.P. and Salvatore J. Bonanno.
  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
  27             -    Financial Data Schedule.
  ----------------------------
  
  (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.
  
                                         28
  (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.
  
           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 reporting an event that occurred on May 29, 1997.
  
                Form 8-K reporting an event that occurred on June 12, 1997.
  
                                         29
  31
  
                                     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:  August 13, 1997                       By:/s/ Kenneth R. Fuette
                                               Kenneth R. Fuette
                                               Chief Financial Officer
  
                                               FOAMEX CAPITAL CORPORATION
  
  Date:  August 13, 1997                       By:/s/ Kenneth R. Fuette
                                               Kenneth R. Fuette
                                               Chief Financial Officer