content: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
  
  
                                      FORM 10-Q
  
  
                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 29, 1998
  
                           Commission file number 0-22624
  
  
  
                             FOAMEX INTERNATIONAL INC.
               (Exact name of registrant as specified in its charter)
  
  
  
  
               Delaware                                  05-0473908
  (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 registrant (1) has 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)  has  been  subject  to such  filing
  requirements for the past 90 days. YES X NO
  
  The number of shares of the registrant's  common stock outstanding as of May 11,
  1998 was 25,003,475.
  
  
                                    Page 1 of 23
                            Exhibit List on Page 17 of 23
  
  
  <PAGE>
                              FOAMEX INTERNATIONAL INC.
  
                                        INDEX
                                                                              Page
  
  Part I.   Financial Information:
  
            Item 1.  Financial Statements
  
                Condensed Consolidated Statements of Operations -
                  Thirteen Week Periods Ended March 29, 1998 and March
                  30, 1997                                                       3
  
                Condensed Consolidated Balance Sheets as of March 29,
                  1998 and December 28, 1997                                     4
  
                Condensed Consolidated Statements of Cash Flows -
                  Thirteen Week Periods Ended March 29, 1998 and March
                  30, 1997                                                       5
  
                Notes to Condensed Consolidated Financial Statements             6
  
            Item 2. Management's Discussion and Analysis of
                    Financial Condition and Results of Operations               12
  
  Part II.  Other Information                                                   17
  
            Exhibit List                                                        17
  
            Signatures                                                          23
  
                                    2
  <PAGE>
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  <TABLE>
  <CAPTION>
                                                          13 Week Periods Ended
                                                      March 29,            March 30,
                                                        1998                 1997
                                                               (thousands)
  <S>                                                 <C>                 <C>      
  NET SALES                                           $ 313,790           $ 229,120
  
  COST OF GOODS SOLD                                    262,594             186,323
                                                      ---------           ---------
  
  GROSS PROFIT                                           51,196              42,797
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                             22,377              15,987
                                                      ---------           ---------
  
  INCOME FROM OPERATIONS                                 28,819              26,810
  
  INTEREST AND DEBT ISSUANCE EXPENSE                     17,777              13,968
  
  OTHER INCOME (EXPENSE), NET                              (699)                638
                                                      ---------           ---------
  
  INCOME BEFORE PROVISION FOR INCOME TAXES               10,343              13,480
  
  PROVISION FOR INCOME TAXES                              4,135               5,344
                                                      ---------           ---------
  
  INCOME BEFORE EXTRAORDINARY LOSS                        6,208               8,136
  
  EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
     OF DEBT, NET OF INCOME TAXES                        (1,874)               (410)
                                                      ---------           ---------
  
  NET INCOME                                          $   4,334           $   7,726
                                                      =========           =========
  
  BASIC EARNINGS (LOSS) PER SHARE:
     INCOME BEFORE EXTRAORDINARY LOSS                 $    0.25           $    0.32
     EXTRAORDINARY LOSS                                   (0.08)              (0.02)
                                                      ---------           ---------
     EARNINGS PER SHARE                               $    0.17           $    0.30
                                                      =========           =========
  
     WEIGHTED AVERAGE NUMBER OF SHARES                   24,942              25,311
                                                      =========           =========
  
  DILUTED EARNINGS (LOSS) PER SHARE:
     INCOME BEFORE EXTRAORDINARY LOSS                 $    0.24           $    0.31
     EXTRAORDINARY LOSS                                   (0.07)              (0.02)
                                                      ---------           ---------
     EARNINGS PER SHARE                               $    0.17           $    0.29
                                                      =========           =========
  
     WEIGHTED AVERAGE NUMBER OF SHARES                   25,603              26,368
                                                      =========           =========
  </TABLE>
  
  
       The accompanying notes are an integral part of the condensed
                    consolidated financial statements.
  
                                    3
  <PAGE>
                FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
  <TABLE>
  <CAPTION>
                                                                           March 29,            December 28,
                                                                            1998                    1997
  ASSETS                                                                          (thousands)
  CURRENT ASSETS:
  <S>                                                                    <C>                   <C>        
     Cash and cash equivalents                                           $    16,919           $    12,044
     Accounts receivable, net                                                186,850               175,684
     Inventories                                                             122,035               120,299
     Other current assets                                                     75,586                62,901
                                                                         -----------           -----------
         Total current assets                                                401,390               370,928
  
  PROPERTY, PLANT AND EQUIPMENT, NET                                         230,161               233,435
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                                     217,383               218,219
  
  DEBT ISSUANCE COSTS, NET                                                    16,456                18,889
  
  DEFERRED INCOME TAXES                                                       35,641                26,960
  
  OTHER ASSETS                                                                28,734                25,192
                                                                         -----------           -----------
  
  TOTAL ASSETS                                                           $   929,765           $   893,623
                                                                         ===========           ===========
  
  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
     Short-term borrowings                                               $     5,882           $     6,598
     Current portion of long-term debt                                         4,779                12,931
     Current portion of debt - related party                                   7,020                    --
     Accounts payable                                                        120,429               131,689
     Accrued interest                                                          8,954                10,716
     Other accrued liabilities                                                70,580                70,513
                                                                         -----------           -----------
         Total current liabilities                                           217,644               232,447
  
  LONG-TERM DEBT                                                             686,401               735,724
  
  LONG-TERM DEBT - RELATED PARTY                                              97,180                    --
  
  OTHER LIABILITIES                                                           38,533                38,871
                                                                         -----------           -----------
  
         Total liabilities                                                 1,039,758             1,007,042
                                                                         -----------           -----------
  
  COMMITMENTS AND CONTINGENCIES                                                   --                    --
                                                                         -----------           -----------
  
  STOCKHOLDERS' EQUITY (DEFICIT):
     Preferred Stock, par value $1.00 per share:
       Authorized 5,000,000 shares - none issued                                  --                    --
     Common Stock, par value $.01 per share:
       Authorized 50,000,000 shares
       Issued 26,992,475 and 26,908,680 shares, respectively;
       Outstanding 25,003,475 and 24,919,680 shares, respectively                270                   269
     Additional paid-in capital                                               86,662                86,025
     Retained earnings (accumulated deficit)                                (161,557)             (164,118)
     Other                                                                   (16,166)              (16,393)
                                                                         -----------           -----------
                                                                             (90,791)              (94,217)
     Common Stock held in treasury, at cost:
       1,989,000 shares at March 29, 1998 and December 28, 1997              (19,202)              (19,202)
                                                                         -----------           -----------
  
         Total stockholders' equity (deficit)                               (109,993)             (113,419)
                                                                         -----------           -----------
  
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                   $   929,765           $   893,623
                                                                         ===========           ===========
  </TABLE>
  
      The accompanying notes are an integral part of the consolidated
                          financial statements.
  
                                    4
  <PAGE>
                FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
  <TABLE>
  <CAPTION>
                                                                              13 Week Periods Ended
                                                                           March 29,           March 30,
                                                                             1998                1997
                                                                                   (thousands)
  OPERATING ACTIVITIES:
  <S>                                                                     <C>                 <C>      
     Net income                                                           $   4,334           $   7,726
     Adjustments to reconcile net income to net cash provided
         by operating activities:
         Depreciation and amortization                                        8,567               5,361
         Amortization of debt issuance costs and debt discount                  261               3,766
         Extraordinary loss on early extinguishment of debt                   1,608                 410
         Other operating activities                                           5,114                (153)
         Changes in operating assets and liabilities, net                   (39,191)              1,790
                                                                          ---------           ---------
  
            Net cash provided by (used for) operating activities            (19,307)             18,900
                                                                          ---------           ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                                    (7,201)             (7,426)
     Acquisitions, net of cash acquired                                      (3,321)                 --
     Decrease in restricted cash                                                 --               8,356
     Deposit for defeasence of indebtedness                                  (4,809)                 --
     Other investing activities                                              (1,001)                 --
                                                                          ---------           ---------
  
            Net cash provided by (used for) investing activities            (16,332)                930
                                                                          ---------           ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from short-term borrowings                                   (716)                293
     Net proceeds from revolving loans                                       69,973                  --
     Proceeds from long-term debt                                           129,000                 500
     Repayment of long-term debt                                           (127,083)             (9,230)
     Repayment of long-term debt - related party                            (24,800)                 --
     Dividend paid                                                           (1,246)                 --
     Transfer of General Felt                                                (3,898)                 --
     Debt issuance cost                                                      (1,149)                 --
     Other financing activities                                                 433                 405
                                                                          ---------           ---------
  
            Net cash used for financing activities                           40,514              (8,032)
                                                                          ---------           ---------
  
  NET INCREASE IN CASH AND CASH EQUIVALENTS                                   4,875              11,798
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                                  12,044              22,203
                                                                          ---------           ---------
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                     $  16,919           $  34,001
                                                                          =========           =========
  </TABLE>
  
  
       The accompanying notes are an integral part of the condensed
                    consolidated financial statements.
  
                                    5
  <PAGE>
  1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  
       Foamex International Inc.'s (the "Company") condensed  consolidated balance
  sheet as of December 28, 1997 has been condensed  from the audited  consolidated
  balance sheet at that date. The condensed consolidated balance sheet as of March
  29, 1998, the condensed  consolidated  statements of operations for the thirteen
  week  periods  ended  March  29,  1998 and  March  30,  1997  and the  condensed
  consolidated  statements of cash flows for the thirteen week periods ended March
  29, 1998 and March 30, 1997 have been  prepared by the Company and have not been
  audited by the Company's independent accountants.  In the opinion of management,
  all  adjustments,  consisting only of normal recurring  adjustments,  considered
  necessary  for a  fair  presentation  of  the  financial  position,  results  of
  operations and cash flows have been included.
  
       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 the Company's 1997  consolidated
  financial  statements  and notes  thereto as set forth in the  Company's  Annual
  Report on Form 10-K/A for the fiscal year ended December 28, 1997.
  
  2.   ACQUISITION
  
       On December 23, 1997, the Company acquired Crain Industries, Inc. ("Crain")
  pursuant to a merger agreement with Crain Holdings Corp. for a purchase price of
  approximately $213.7 million, including the assumption of debt with a face value
  of  approximately  $98.6 million (with an estimated fair value of  approximately
  $112.3 million ("Crain Acquisition").  In addition, fees and expenses associated
  with  the  Crain  Acquisition  are  approximately   $13.2  million.   The  Crain
  Acquisition provided a fully integrated manufacturer, fabricator and distributor
  of a broad range of flexible  polyurethane foam and foam products which are sold
  to a diverse  customer base,  principally  in the furniture,  bedding and carpet
  cushion markets. The acquisition was funded by $118.0 million in bank borrowings
  by Foamex L.P.  under a credit  facility.  The excess of the purchase price over
  the estimated  fair value of the net assets  acquired was  approximately  $152.5
  million.  In connection with the Crain Acquisition,  the Company approved a plan
  to close certain facilities. As of the acquisition date, the Company established
  accruals of  approximately  $1.5 million of severance and related costs and $8.5
  million for costs  associated  with the shut down and  consolidation  of certain
  acquired facilities in connection with purchase price accounting.
  
       The Crain  Acquisitions  was accounted for as a purchase and the operations
  of the Crain are included in the consolidated  statements of operations and cash
  flows from its respective date of acquisition. The cost of the Crain Acquisition
  has been allocated on the basis of the fair value of the assets acquired and the
  liabilities  assumed.  The excess of the purchase  price over the estimated fair
  value of the net assets  acquired  is being  amortized  using the  straight-line
  method over forty years.  The  allocation  of the  purchase  price for the Crain
  Acquisition is based upon  preliminary  estimates and assumptions and is subject
  to revision once  appraisals,  valuations and other studies of the fair value of
  the acquired assets and liabilities  have been completed.  The pro forma results
  listed below are unaudited and assume that the Crain Acquisition occurred at the
  beginning of fiscal year 1997.
  
                                                                      1997
                                                                (thousands, except
                                                                 per share data)
         Net sales                                                  $306,768
         Income before extraordinary loss                              5,828
         Pro forma basic earnings (loss) per share                      0.23
         Pro forma diluted earnings (loss) per share                    0.22
  
       The pro forma  results are not  necessarily  indicative  of what would have
  occurred  if the Crain  Acquisition  had been in effect for the  entire  periods
  presented nor are they necessarily indicative of future consolidated results.
  
                                         6
  
  <PAGE>
  
  3.   INVENTORIES
  
         Inventories consist of:
  
                                           March 29,        December 28,
                                             1998              1997
                                                  (thousands)
       Raw materials and supplies          $ 76,772          $ 73,487
       Work-in-process                       16,736            15,620
       Finished goods                        28,527            31,192
                                           --------          --------
  
       Total                               $122,035          $120,299
                                           ========          ========
  
  4.   LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  
       Long-term debt consists of:
  <TABLE>
  <CAPTION>
  
                                                                           March 29,       December 28,
                                                                             1998              1997
       Credit Facility:                                                           (thousands)
  <S>                                                                     <C>               <C>     
                Term Loan A                                               $     --          $ 76,700
                Term Loan B                                                 83,553           109,725
                Term Loan C                                                 75,958            99,750
                Term Loan D                                                110,000           110,000
                Revolving credit facility                                  124,901            54,928
              9.875% Senior subordinated notes due 2007                    150,000           150,000
              13.5% Senior subordinated notes due 2005 (includes
                $13,272 and $13,720 of unamortized debt premium)           111,272           111,720
              9 1/2% Senior secured notes due 2000                           4,523             4,523
              Subordinated note payable (net of unamortized
                debt discount of $804 and $1,198                             6,211             6,129
              Other                                                         24,762            18,180
                                                                          --------          --------
                                                                           691,180           748,655
  
              Less current portion                                           4,779            12,931
                                                                          --------          --------
  
              Long-term debt-unrelated parties                            $686,401          $735,724
                                                                          ========          ========
  
              Foamex/GFI Note                                             $ 34,000          $     --
  
              Note payable to Trace Foam LLC                                70,200                --
  
              Less current portion                                           7,020                --
                                                                          --------          --------
  
              Long-term debt - related party                              $ 97,180          $     --
                                                                          ========          ========
  </TABLE>
  
       Refinancing Associated with Transfer of General Felt Common Stock
  
       In connection  with the transfer of General Felt common stock (see Note 2),
  Foamex L.P. amended its agreements with lenders under the Credit Facility, which
  included additional  borrowings of $129.0 million under new term loan agreements
  that were assumed by Trace Foam LLC (as  discussed in Note 2) and  borrowings of
  $32.0 million under the existing  revolving  credit  facility.  These funds were
  used to (i) repay  approximately  $125.1  million  of  existing  term  loans and
  accrued  interest  thereon of  approximately  $0.9  million,  (ii)  deposit $4.8
  million into an escrow  account in order to redeem the Senior  Secured  Notes in
  June 1998, (iii) repay $24.8 million on the note payable to Trace Foam LLC
  
                                         7
  <PAGE>
  4.   LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY (continued)
  
  and (iv) pay fees  and  expenses  of  approximately  $5.4  million.  Also,  this
  amendment  increased the  availability  under the revolving credit facility from
  $150.0  million to $200.0  million;  however,  $34.5 million of this increase is
  used for a letter of credit to support the Foamex/GFI Note.
  
       Foamex/GFI Note
  
       In connection with the transfer of General Felt's common stock, Foamex L.P.
  entered  into  the  $34.0  million   Foamex/GFI   Note  to  settle  an  existing
  intercompany  note payable to General Felt. The Foamex/GFI Note matures in March
  2000 with  interest  payable at LIBOR plus an applicable  margin.  The principal
  amount is due upon maturity in March 2000.
  
       Note Payable to Trace Foam LLC
  
       In  connection  with the Asset  Purchase  Agreement  for the  General  Felt
  transaction  (see Note 8), the Company  entered into a $70.2 million  promissory
  note with Trace Foam LLC. The note bears interest at a base rate plus 2.0% or at
  LIBOR plus 3.0%. The note matures February 2004.
  
       Principal Payments
  
       Principal  payments on Foamex  L.P.'s  long-term  debt for the remainder of
  1998 and for the next five years are as  follows:  1998 - $9.8  million;  1999 -
  $17.7 million; 2000 - $56.8 million; 2001 - $17.3 million; 2002 - $17.7 million;
  and thereafter - $663.6 million.
  
  5.      EARLY EXTINGUISHMENT OF DEBT
  
         In connection with the GFI Transaction (see Note 8), the Company incurred
  an extraordinary loss on the early  extinguishment of debt of approximately $1.9
  million (net of income tax benefits of $1.2 million).  The extraordinary loss is
  comprised of approximately $2.9 million for the write-off of debt issuance costs
  and approximately $0.2 million of professional fees and other costs.
  
  6.   ENVIRONMENTAL MATTERS
  
       The Company is subject to extensive and changing federal,  state, local and
  foreign environmental laws and regulations, including those relating to the use,
  handling,  storage,  discharge  and  disposal of  hazardous  substances  and the
  remediation of  environmental  contamination,  and as a result,  is from time to
  time involved in administrative and judicial  proceedings and inquiries relating
  to  environmental  matters.  During the  thirteen  weeks ended  March 29,  1998,
  expenditures  in connection with the Company's  compliance with federal,  state,
  local and foreign  environmental  laws and  regulations  did not have a material
  adverse  effect  on  the  Company's  operations,   financial  position,  capital
  expenditures  or  competitive  position.  As of March 29, 1998,  the Company has
  environmental  accruals of approximately $4.9 million for environmental matters.
  In  addition,  as of  March  29,  1998,  the  Company  has  net  receivables  of
  approximately  $1.1  million  relating  to  indemnification   for  environmental
  liabilities.  The  Company  believes  that  realization  of the net  receivables
  established for indemnification is probable.
  
       The Clean Air Act  Amendments of 1990 (the "1990 CAA  Amendments")  provide
  for the establishment of federal emission standards for hazardous air pollutants
  including  methylene  chloride,  propylene oxide and TDI,  materials used in the
  manufacturing  of foam. On December 27, 1996,  the United  States  Environmental
  Protection Agency (the "EPA") proposed regulations under the 1990 CAA Amendments
  that  will  require  manufacturers  of slab  stock  polyurethane  foam  and foam
  fabrication  plants to reduce  emissions of methylene  chloride.  Because  these
  regulations  are subject to change  prior to  finalization,  the Company  cannot
  accurately predict the actual cost of their implementation. The Company does not
  believe  implementation  of the  regulations  will  require it to make  material
  expenditures  at  facilities  owned  prior  to  December  23,  1997,  due to the
  Company's  use  of  alternative  technologies  which  do not  utilize  methylene
  chloride and its ability to shift current production to the facilities which use
  these alternative  technologies;  however, material expenditures may be required
  at the facilities  formerly  operated by Crain. The 1990 CAA Amendments also may
  result in the imposition of additional  standards  regulating air emissions from
  polyurethane foam manufacturers,  but these standards have not yet been proposed
  or promulgated. 
  
                                         8
  
  <PAGE>
  
  6.   ENVIRONMENTAL MATTERS (continued)
  
       The Company has reported to appropriate state authorities that it has found
  soil  and  groundwater  contamination  in  excess  of  state  standards  at four
  facilities and soil  contamination  in excess of state  standards at three other
  facilities.  The  Company  has  begun  remediation  and  is  conducting  further
  investigations  into the extent of the  contamination  at these  facilities and,
  accordingly,  the extent of the remediation that may ultimately be required. The
  actual cost and the timetable of any such  remediation  cannot be predicted with
  any degree of  certainty  at this time.  As of March 29,  1998,  the Company has
  environmental accruals of approximately $4.3 million for the remaining potential
  remediation costs for these facilities based on engineering estimates.
  
       Federal regulations require that by the end of 1998 all underground storage
  tanks  ("USTs")  be  removed  or  upgraded  in all  states  to  meet  applicable
  standards.  The  Company  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.  The
  Company has accrued $0.1 million for the estimated  removal and remediation,  if
  any, associated with these USTs. However,  the full extent of contamination and,
  accordingly,  the actual cost of such  remediation  cannot be predicted with any
  degree of certainty at this time. The Company believes that its USTs do not pose
  a  significant  risk  of  environmental   liability  because  of  the  Company's
  monitoring  practices  for  USTs  and  conditional  approval  for the  permanent
  in-place closure for certain USTs. However,  there can be no assurance that such
  USTs will not result in significant environmental liability in the future.
  
       The Company has been designated as a Potentially  Responsible Party ("PRP")
  by the EPA with respect to thirteen sites with an estimated  total  liability to
  the Company for the  thirteen  sites of less than  approximately  $0.5  million.
  Estimates of total clean-up  costs and  fractional  allocations of liability are
  generally  provided  by the EPA or the  committee  of PRP's with  respect to the
  specified site. In each case, the  participation of the Company is considered to
  be immaterial.
  
       Although it is possible that new information or future  developments  could
  require the Company to reassess its potential  exposure  relating to all pending
  environmental  matters,  including those described herein,  management  believes
  that,  based upon all currently  available  information,  the resolution of such
  environmental  matters will not have a material  adverse effect on the Company'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 May 15,  1998,  the Company and Trace  Holdings  were two of multiple
  defendants  in actions  filed on behalf of  approximately  5,000  recipients  of
  breast  implants  in various  United  States  federal  and state  courts and one
  Canadian provincial court, some of which allege substantial damages, but most of
  which allege  unspecified  damages for personal injuries of various types. Three
  of these cases seek to allege claims on behalf of all breast implant  recipients
  or other allegedly affected parties, but no class has been approved or certified
  by the court. In addition, three cases have been filed alleging claims on behalf
  of approximately 700 residents of Australia, New Zealand,  England, and Ireland.
  During 1995, the Company and Trace Holdings were granted  summary  judgments and
  dismissed  as  defendants  from all cases in the  federal  courts of the  United
  States and the state  courts of  California.  Appeals for these  decisions  were
  withdrawn and the decisions  are final.  In addition,  two of the cases filed on
  behalf of 903 foreign  plaintiffs  were  dismissed on the grounds that the cases
  could not be brought in the United  States  courts.  This decision is subject to
  appeal.  The  Company  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 the
  Company or Trace Holdings.  Neither the Company nor Trace Holdings  recommended,
  authorized or approved the use of its foam for these  purposes.  While it is not
  feasible  to  predict  or  determine  the  outcome  of these  actions,  based on
  management's   present  assessment  of  the  merits  of  pending  claims,  after
  consultation with the general counsel of Trace Holdings, and without taking into
  account potential indemnity from 
  
                                         9
  
  <PAGE>
  
  7.   LITIGATION (continued)
  
  the manufacturers of polyurethane  covered breast implants,  management believes
  that the  disposition  of matters  that are  pending or that may  reasonably  be
  anticipated to be asserted  should not have a material  adverse effect on either
  the Company's or Trace Holdings'  consolidated  financial position or results of
  operations.  In addition,  the Company is also indemnified by Trace Holdings for
  any such  liabilities  relating  to foam  manufactured  prior to  October  1990.
  Although  Trace  Holdings  has paid the  Company's  litigation  expenses to date
  pursuant to such  indemnification  and management believes Trace Holdings likely
  will be in a position to continue to pay such expenses, there can be no absolute
  assurance  that Trace  Holdings  will be able to provide  such  indemnification.
  Based on  information  available  at this time  with  respect  to the  potential
  liability, and without taking into account the indemnification provided by Trace
  Holdings  and the  coverage  provided  by  Trace  Holdings'  and  the  Company's
  liability  insurance,  the  Company  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 the Company.  If management's
  assessment  of  the  Company's  liability  with  respect  to  these  actions  is
  incorrect, such actions could have a material adverse effect on the Company.
  
       In November 1997, a complaint was filed in the United States District Court
  for the Southern District of Texas alleging that various  defendants,  including
  Crain  through the use of the  CARDIO(R)  process  licensed  from a third party,
  infringed on a patent held by  plaintiff.  The Company is  negotiating  with the
  licensor of the process for the  assumption  of the defense of the action by the
  licensor;  however, the action is in the preliminary stages, and there can be no
  assurance as to the ultimate outcome of the action.
  
       On or about March 17, 1998, five purported class action lawsuits were filed
  in the  Delaware  Chancery  Court,  New  Castle  County,  against  the  Company,
  directors of the Company,  Trace Holdings, and individual officers and directors
  of Trace Holdings:
  
         Brickell Partners v. Marshall S. Cogan, et al.,  No. 16260NC;
         Mimona Capital v. Salvatore J. Bonanno, et al.,  No. 16259NC;
         Daniel Cohen v. Foamex International Inc.,  No. 16263;
         Eileen Karisinki v. Foamex International Inc., et al.,  No. 16261NC and
         John E. Funky Trust v. Salvatore J. Bonanno, et al., No. 16267.
  
       A  sixth  purported   class  action  lawsuit,   Barnett  Stepak  v.  Foamex
  International  Inc.,  et al.,  No.  16277,  was filed on or about March 23, 1998
  against the same  defendants.  The complaints in the six actions  allege,  among
  other things,  that the defendants have violated  fiduciary and other common law
  duties  purportedly owed to the Company's  stockholders in connection with Trace
  Holdings  proposal to acquire all of the shares of the  Company's  common stock.
  The complaints seek, among other things, class certification, a declaration that
  the defendants  have breached their fiduciary  duties to the class,  preliminary
  and permanent  injunctions  baring  implementation of the proposed  transaction,
  rescission of the transaction if consummated,  unspecified compensatory damages,
  and costs and attorneys' fees.
  
       The  Company 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  the  Company.  If  management's  assessment  of the
  Company's  liability  with respect to these actions is  incorrect,  such actions
  could have a material  adverse  effect on the Company's  consolidated  financial
  position.
  
                                         10
  <PAGE>
  
  8.   GFI TRANSACTION
  
       On February 27, 1998, the Company and certain of its affiliates completed a
  series of  transactions  designed to simplify  the  Company's  structure  and to
  provide  future  operational  flexibility.  Prior to the  consummation  of these
  transactions, the Company defeased the $4.5 million outstanding principal amount
  of  its  9  1/2%  Senior  Secured  Notes  due  2000.  Foamex  L.P.  settled  its
  intercompany  payables  to  General  Felt with $4.8  million in cash and a $34.0
  million  principal amount promissory note supported by a $34.5 million letter of
  credit  under  the  Credit  Facility  (the  "Foamex/GFI   Note").   The  initial
  transaction  resulted in the transfer  from Foamex L.P. to Trace Foam LLC of all
  of the  outstanding  common  stock of  General  Felt,  in  exchange  for (i) the
  assumption by Trace Foam LLC of $129.0 million of Foamex L.P.'s indebtedness and
  (ii) the transfer by Trace Foam LLC to Foamex L.P. of a 1% non-managing  general
  partnership  interest in Foamex L.P. As a result,  General  Felt ceased  being a
  subsidiary  of Foamex L.P. and was relieved  from all  obligations  under Foamex
  L.P.'s 9 7/8% Senior Subordinated Notes due 2007 and 13 1/2% Senior Subordinated
  Notes due 2005. Upon consummation of the initial  transaction,  Foamex Carpet, a
  newly formed  wholly-owned  subsidiary of the Company,  the Company,  Trace Foam
  LLC, and General Felt entered into an Asset  Purchase  Agreement  dated February
  27, 1998, in which General Felt sold substantially all of its assets (other than
  the Foamex/GFI  Note and its operating  facility in Pico Rivera,  California) to
  Foamex  Carpet in exchange  for (i) $20.0  million in cash and (ii) a promissory
  note issued by Foamex  Carpet to Trace Foam LLC in the amount of $70.2  million.
  The $20.0  million  cash payment was funded with a  distribution  by Foamex L.P.
  Upon  consummation  of these  transactions  contemplated  by the Asset  Purchase
  Agreement,  Foamex Carpet entered into a Credit  Agreement with the institutions
  from time to time party thereto,  as issuing  banks,  and Citicorp USA, Inc. and
  The Bank of Nova Scotia,  as  administrative  agents,  which  provides for up to
  $20.0 million in revolving credit borrowings.  These transactions were accounted
  for in a manner similar to a pooling of interests  since the entities were under
  common  control.   Foamex  Carpet  will  conduct  the  carpet  cushion  business
  previously  conducted  by  General  Felt.  Also,  Trace  Foam  LLC has  retained
  ownership of one of General Felt's operating facilities which is being leased to
  Foamex Carpet and the $34.0 million Foamex/GFI Note.
  
                                         11
  <PAGE>
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
       The Company  operates  primarily in the flexible  polyurethane and advanced
  polymer foam  products  industry.  The  following  discussion  should be read in
  conjunction  with the condensed  consolidated  financial  statements and related
  notes thereto of the Company  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 4 and 5 of the Company's 1997 Annual Report on Form 10-K/A.
  
       During  1997,  the  Company's  products  were  utilized  primarily  in five
  end-markets;  (i) carpet  cushion and other  carpet  products,  (ii)  cushioning
  foams,  including  bedding  products,  (iii)  furniture  products for  furniture
  manufacturers and distributors, (iv) automotive applications, including trim and
  accessories,  and (v) specialty and technical applications,  including those for
  filtration,  gasketing and sealing.  As a result of the Crain  Acquisition,  the
  Company has added a sixth end market: consumer products.
  
       On March 16,  1998,  the  Company  announced  that its  Board of  Directors
  received an  unsolicited  buyout  proposal  from Trace  Holdings,  the Company's
  principal stockholder. Trace Holdings proposed to acquire all of the outstanding
  common  stock of the  Company  not  currently  owned by Trace  Holdings  and its
  subsidiaries for a cash price of $17.00 per share. Also, Trace Holdings informed
  the Board of  Directors  that  financing  for the  buyout  transaction  would be
  arranged through  Donaldson,  Lufkin & Jenrette  Securities  Corporation and The
  Bank of Nova Scotia/Scotia Capital Markets. As of March 16, 1998, Trace Holdings
  and its  subsidiaries  beneficially  owned  approximately  11,475,000  shares or
  approximately 46% of the outstanding common stock of the Company. In response to
  Trace Holding's  offer, the Company's Board of Directors has appointed a special
  committee to determine the  advisability  and fairness of the proposed buyout to
  the Company's stockholders other than Trace Holdings and its subsidiaries. Trace
  Holding's  proposed  buyout is subject to a number of conditions,  including the
  negotiations of definitive  documents  (which are expected to contain  customary
  closing  conditions);  the filing of a disclosure  statement and other documents
  with the Securities and Exchange Commission; regulatory filings; and approval of
  the transaction by a majority of the Company's stockholders.
  
       On February 27, 1998, the Company and certain of its affiliates completed a
  series of  transactions  designed to simplify  the  Company's  structure  and to
  provide  future  operational  flexibility.  Prior to the  consummation  of these
  transactions, the Company defeased the $4.5 million outstanding principal amount
  of  its  9  1/2%  senior  secured  notes  due  2000.  Foamex  L.P.  settled  its
  intercompany  payables  to  General  Felt with $4.8  million in cash and a $34.0
  million  principal amount promissory note supported by a $34.5 million letter of
  credit  under the Foamex L.P.  credit  facility  (the  "Foamex/GFI  Note").  The
  initial transaction  resulted in the transfer from Foamex L.P. to Trace Foam LLC
  of all of the outstanding  common stock of General Felt, in exchange for (i) the
  assumption by Trace Foam LLC of $129.0 million of Foamex L.P.'s indebtedness and
  (ii) the transfer by Trace Foam LLC to Foamex L.P. of a 1% non-managing  general
  partnership  interest in Foamex L.P. As a result,  General  Felt ceased  being a
  subsidiary  of Foamex L.P. and was relieved  from all  obligations  under Foamex
  L.P.'s 9 7/8% senior subordinated notes due 2007 and 13 1/2% senior subordinated
  notes due 2005. Upon consummation of the initial  transaction,  Foamex Carpet, a
  newly formed  wholly-owned  subsidiary of the Company,  the Company,  Trace Foam
  LLC, and General Felt entered into an Asset  Purchase  Agreement  dated February
  27, 1998, in which General Felt sold substantially all of its assets (other than
  the Foamex/GFI  Note and its operating  facility in Pico Rivera,  California) to
  Foamex  Carpet in exchange  for (i) $20.0  million in cash and (ii) a promissory
  note issued by Foamex  Carpet to Trace Foam LLC in the amount of $70.2  million.
  The $20.0 million cash payment was funded by a distribution  by Foamex L.P. Upon
  consummation of these transactions contemplated by the Asset Purchase Agreement,
  Foamex Carpet entered into a credit agreement with the institutions from time to
  time party  thereto,  as issuing  banks,  and Citicorp USA, Inc. and The Bank of
  Nova Scotia, as administrative agents, which provides for up to $20.0 million in
  revolving credit  borrowings.  These transactions were accounted for in a manner
  similar to a pooling of interests  since the entities were under common control.
  Foamex Carpet will conduct the carpet cushion business  previously  conducted by
  General  Felt.  Also,  Trace Foam LLC has  retained  ownership of one of General
  Felt's operating facilities which is being leased to Foamex Carpet and the $34.0
  million Foamex/GFI Note.
  
       On December  23,  1997,  the Company  acquired  Crain  pursuant to a merger
  agreement with Crain Holdings Corp. for a purchase price of approximately $213.7
  million,  including the  assumption  of debt with a face value of  approximately
  $98.6 million (and an estimated fair value of approximately $112.3 million) (the
  "Crain 
  
                                         12
  
  <PAGE>
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
  Acquisition").  In  addition,  fees  and  expenses  associated  with  the  Crain
  Acquisition  are  approximately  $13.2  million.  In  connection  with the Crain
  Acquisition, the Company approved a restructuring/consolidation plan for the two
  entities.  The Company recorded  restructuring charges of $21.1 million relating
  to the  restructuring  of the Company's  operations in connection with the Crain
  Acquisition  and  related  transactions.   In  addition,  the  Company  recorded
  approximately  $1.5 million of severance  and related costs and $8.5 million for
  costs  associated  with the shut  down and  consolidation  of  certain  acquired
  facilities.
  
       On October 6, 1997, the Company sold substantially all of the net assets of
  its  needlepunch  carpeting,  tufted  carpeting and  artificial  grass  products
  business  located at its  facilities  in Dalton,  Georgia  ("Dalton").  Dalton's
  revenues were $10.7 million for the thirteen week period ended March 30, 1997.
  
       Operating  results  for 1998  are  expected  to be  influenced  by  various
  internal and external factors.  These factors include,  among other things,  (i)
  consolidation of the Crain  Acquisition,  (ii) continued  implementation  of the
  continuous  improvement  program to improve the Company's  profitability,  (iii)
  additional  raw  material  cost  increases,  if any, by the  Company's  chemical
  suppliers,  (iv) the Company's  success in passing on to its  customers  selling
  price increases to recover such raw material cost increases and (v) fluctuations
  in interest rates.
  
  13 Week Period  Ended March 29, 1998  Compared to 13 Week Period Ended March 30,
  1997
  
  Results of Operations
  
       Net sales for the first quarter of 1998 were $313.8  million as compared to
  $229.1  million in the first  quarter of 1997,  an increase of $84.7  million or
  37.0%. Carpet cushion products net sales for the first quarter of 1998 increased
  3.8% to $70.5 million from $67.9 million in the first quarter of 1997  primarily
  due to net  sales  from the  Crain  operations  offset  by the sale of Dalton in
  October  which  contributed  net sales of $10.7 million in 1997 and reduction of
  rebond selling prices as compared to 1997 and product mix. Rebond selling prices
  were  approximately  12.0%  lower in the  first  quarter  of 1998  versus  1997.
  Cushioning  products net sales for the first quarter of 1998 increased  86.3% to
  $97.8 million from $52.5  million in the first quarter of 1997  primarily due to
  net sales from the Crain operations and increased volume to our national bedding
  customers and fabricators. Furniture products net sales for the first quarter of
  1998 increased  36.8% to $43.1 million as compared to net sales of $31.5 million
  for the  first  quarter  of 1997  primarily  due to net  sales  from  the  Crain
  operations.  Automotive  products  net  sales  for  the  first  quarter  of 1998
  increased 10.0% to $65.7 million from $59.7 million in the first quarter of 1997
  primarily due to increased  volume.  Technical  products net sales for the first
  quarter of 1998 increased 20.6% to $21.1 million from $17.5 million in the first
  quarter  of 1997  primarily  due to  increased  net  sales  volume  for  felted,
  gasketing,  and  sealing  products.  Consumer  products  net sales for the first
  quarter of 1998 was $156.9 million.  The consumer products category was acquired
  in the December 1997 Crain Acquisition.
  
       Gross profit as a percentage of net sales  decreased to 16.3% for the first
  quarter of 1998 from 18.7% in the first  quarter  of 1997  primarily  due to the
  shift in  product  mix for 1998 as a result  of the Crain  Acquisition.  Crain's
  principal product lines, bedding,  furniture and carpet cushion, have inherently
  lower gross profit margins versus the Company's historical gross profit margins.
  Also,  the gross profit was lower in the first quarter of 1998 since the Company
  carried the full start-up costs related to both organizations.
  
       Income from operations  increased to $28.1 million for the first quarter of
  1998 from $26.8  million in the first  quarter of 1997  primarily  due the Crain
  Acquisition.  The increase in selling,  general and  administrative  expenses is
  primarily due the Crain Acquisition.
  
       Income before  extraordinary  loss  decreased to $6.2 million for the first
  quarter of 1998 as compared to $8.1 million for the first  quarter of 1997.  The
  decrease is primarily due to an increase in interest and debt issuance  expense.
  The increase in interest and debt issuance  expense is primarily due to the debt
  incurred  in  connection  with the Crain  Acquisition  offset  by the  favorable
  effects of the June 1997 refinancing plan.
  
                                         13
  <PAGE>
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
       The  extraordinary  loss on early  extinguishment  of debt of approximately
  $1.9 million during the first quarter of 1998 primarily relates to the write-off
  of debt issuance costs associated with the GFI Transaction.
  
  Liquidity and Capital Resources
  
       Liquidity and Capital Resources
  
       The  Company  is a holding  company  whose  operations,  as a result of the
  February  27,  1998   transactions,   are  conducted   through  two  wholly-owed
  subsidiaries,  Foamex L.P. and Foamex Carpet. The liquidity  requirements of the
  Company  consist  primarily  of the  operating  cash  requirements  of  its  two
  principal  subsidiaries.  Prior to February 27, 1998,  substantially  all of the
  Company's operations were conducted through Foamex L.P., which at the time was a
  99% owned subsidiary, hence the discussion of historical trends of liquidity and
  capital resources related primarily to Foamex L.P.
  
       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.  The Company believes that
  cash flow from Foamex  L.P.'s  operating  activities,  cash on hand and periodic
  borrowings  under the Credit  Facility,  if necessary,  will be adequate to meet
  Foamex  L.P.'s  liquidity  requirements.  The  ability  to meet  such  liquidity
  requirements  could be impaired  if Foamex L.P.  were to fail to comply with any
  covenants  contained in the Credit Facility and such noncompliance was not cured
  by Foamex L.P. or waived by the lenders.  Foamex L.P. was in compliance with the
  covenants in the Credit Facility as of December 28, 1997 and the Company expects
  Foamex L.P. to be in compliance with such covenants for the foreseeable  future.
  The ability of Foamex L.P. to make distributions to the Company is restricted by
  the terms of its financing agreements; therefore, neither the Company nor Foamex
  Carpet is expected to have access to the cash flow  generated by Foamex L.P. for
  the foreseeable future.
  
       Foamex Carpet's operating cash requirements  consist principally of working
  capital requirements, schedule payments of principal and interest on outstanding
  indebtedness and capital expenditures.  The Company believes that cash flow from
  Foamex Carpet's operating activities, cash on hand and periodic borrowings under
  Foamex  Carpet's  credit  facility  (the "Foamex  Carpet Credit  Facility"),  if
  necessary, will be adequate to meet Foamex Carpet's liquidity requirements.  The
  ability to meet such liquidity  requirements  could be impaired if Foamex Carpet
  were to fail to comply with any covenants  contained in the Foamex Carpet Credit
  Facility and such  noncompliance was not cured by Foamex Carpet or waived by the
  lenders.  The  Company  expects  Foamex  Carpet  to be in  compliance  with such
  covenants  for the  foreseeable  future.  The  ability of Foamex  Carpet to make
  distributions  to the  Company  is  restricted  by the  terms  of its  financing
  agreements;  therefore,  neither the Company nor Foamex L.P. is expected to have
  access to the cash flow generated by Foamex Carpet for the foreseeable future.
  
       Cash and cash  equivalents  increased  $49.0  million  during 1998 to $16.9
  million at March 29, 1998 from $12.0 million at December 28, 1997  primarily due
  to increased borrowings offset by cash used by operating assets and liabilities.
  Working  capital  increased $61.0 million during 1998 to $199.5 million at March
  29, 1998 from $138.5 million at December 28, 19978 primarily due to the increase
  in operating net assets.  Net  operating  assets and  liabilities  (comprised of
  accounts  receivable,  inventories and accounts payable) increased $28.2 million
  during 1998 to $192.5  million at March 29, 1998 from $164.3 million at December
  28, 1997 primarily due to increases in accounts receivable and inventories and a
  decrease in accounts  payable.  The Company's  restructuring/consolidation  plan
  includes accruals of approximately  $26.9 million of cash charges of which $15.6
  million is expected to be paid during 1998.
  
       As of March 29,  1998,  there  were  $124.9  million  of  revolving  credit
  borrowings  under the Credit Facility with unused  availability of approximately
  $25.6 million which includes approximately $49.5 million associated with letters
  of credit  outstanding  which are supported by the Credit Facility.  As of March
  29, 1998,  Foamex Carpet credit facility had used  availability of approximately
  $19.0 million.  Borrowings by Foamex Canada, Inc. as of March 29, 1998 were $5.1
  million  under Foamex  Canada  Inc.'s  revolving  credit  agreement  with unused
  availability of approximately $0.9 million.
  
                                         14
  
  <PAGE>
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
       Interest Rate Swaps
  
       The Company  enters into  interest rate swaps to lower funding costs and/or
  to manage interest costs and exposure to changing  interest  rates.  The Company
  does not hold or issue financial instruments for trading purposes.
  
       On January 8, 1998, the Company entered into an amended  interest rate swap
  agreement  which  provides for an interest rate swap  agreement  with a notional
  amount of $150.0 million through June 2002. Under this agreement, the Company is
  obligated to make fixed  payments of 5.78% per annum  through  December 1998 and
  variable  payments  based on LIBOR at the beginning of each six month period for
  the  remainder  of the  agreement,  in exchange  for fixed  payments by the swap
  partner at 6.44% per annum for the life of the agreement,  payable  semiannually
  in arrears.  The newly amended interest rate swap agreement can be terminated by
  the swap partner at the end of each six month period commencing December 1999.
  
       The Company is exposed to credit loss in the event of a  nonperformance  by
  the swap partner; however, the occurrence of this event is not anticipated.  The
  effect of interest  rate swaps was a favorable  adjustment  to interest and debt
  issuance  expense of $0.3 million and $0.9 million for the thirteen week periods
  ended March 29, 1998 and March 30, 1997, respectively.
  
  Environmental Matters
  
       The Company is subject to  extensive  and changing  environmental  laws and
  regulations.  Expenditures to date in connection  with the Company's  compliance
  with  such  laws and  regulations  did not have a  material  adverse  effect  on
  operations,  financial position,  capital expenditures or competitive  position.
  The  amount  of  liabilities   recorded  by  the  Company  in  connection   with
  environmental  matters as of March 29, 1998 was $4.9 million. In addition, as of
  December 28, 1997, the Company has net receivables of approximately $1.1 million
  for  indemnification  of environmental  liabilities  from former owners,  net of
  approximately  $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 the Company to reassess its
  potential  exposure  to  all  pending  environmental  matters,  including  those
  described in the footnotes to the Company's  consolidated  financial statements,
  management  believes that, based upon all currently available  information,  the
  resolution  of all such pending  environmental  matters will not have a material
  adverse  effect  on  the  Company's  operations,   financial  position,  capital
  expenditures or competitive position.
  
  Inflation and Other Matters
  
       There was no significant impact on the Company's  operations as a result of
  inflation  during the  periods  presented.  See  "Results of  Operations"  for a
  discussion of the impact of raw material price increases. In some circumstances,
  market  conditions  or  customer  expectations  may  prevent  the  Company  from
  increasing the price of its products to offset the  inflationary  pressures that
  may increase its costs in the future.
  
       The  Company  has and will  continue  to make  certain  investments  in its
  software  systems and applications to ensure the Company is Year 2000 compliant.
  The Company plans to continue to make  modifications to the identified  software
  during  1998 and test the  changes  during  1998.  The  financial  impact to the
  Company has not been and is not  anticipated  to be  material  to its  financial
  position or results of operation in any given year.
  
       The Company'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.
  
                                         15
  <PAGE>
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
  New Accounting Standards
  
       Statement  of  Financial  Accounting  Standards  No. 130 ("SFAS No.  130"),
  "Reporting  Comprehensive  Income,"  was  issued  by  the  Financial  Accounting
  Standards  Board in June 1997.  This  statement  requires all items that must be
  recognized under accounting  standards as components of comprehensive  income to
  be reported in a financial  statement that is displayed with the same prominence
  as other financial statements. The Company will adopt SFAS No. 130 for 1998.
  
       Statement  of  Financial  Accounting  Standards  No. 131 ("SFAS No.  131"),
  "Disclosures  about  Segments of an Enterprise  and Restated  Information,"  was
  issued by the Financial  Accounting Standards Board in June 1997. This statement
  establishes  standards for reporting  information  about  operating  segments in
  annual  financial  statements  and  requires  reporting  of  selected  financial
  information  about  operating  segments in interim  financial  reports issued to
  stockholders.  It also  establishes  standards  for  related  disclosures  about
  products and services,  geographic areas, and major customers.  The Company will
  adopt SFAS No. 131 for year ended 1998  reporting.  Management is evaluating the
  impact,  if any,  the  standard  will  have  on the  Company's  present  segment
  reporting.
  
                                         16
  <PAGE>
  Part II - Other Information
  
  Item 1.    Legal Proceedings
  
             Reference  is  made  to  the  description  of the  legal  proceedings
             contained  in the  Company's  Annual  Report on Form  10-K/A  for the
             fiscal year ended December 28, 1997.
  
             The  information  from  Notes 6 and 7 of the  condensed  consolidated
             financial  statements of the Company as of March 29, 1998 (unaudited)
             is incorporated herein by reference.
  
  Item 2.    Changes in Securities
  
             None.
  
  Item 3.    Defaults Upon Senior Securities
  
             None.
  
  Item 4.    Submission of Matters to a Vote of Security Holders.
  
             None.
  
  Item 5.    Other Information
  
             None.
  
  Item 6.    Exhibits and Reports on Form 8-K
  
            (a)  Exhibits
  
  2.1(x)         - Transfer  Agreement,  dated as of  February  27,  1998,  by and
                 between Trace Foam LLC and Foamex L.P.
  2.2(x)         - Asset Purchase Agreement, dated as of February 27, 1998, by and
                 among Foamex  Carpet  Cushion,  Inc.  ("Foamex  Carpet"),  Foamex
                 International,  Trace Foam LLC and General Felt Industries,  Inc.
                 ("General Felt").
  3.1(a)         - Certificate of Limited Partnership of Foamex L.P.
  3.2.1(a)       - Fourth Amended and Restated Agreement of Limited Partnership of
                 Foamex L.P.,  dated as of December  14, 1993,  by and among FMXI,
                 Inc.  ("FMXI") and Trace Foam Company,  Inc.  ("Trace Foam"),  as
                 general  partners,   and  Foamex   International   Inc.  ("Foamex
                 International"),   as  a  limited   partner   (the   "Partnership
                 Agreement").
  3.2.2(b)       - First  Amendment to the Partnership  Agreement,  dated June 28,
                 1994.
  3.2.3(c)       - Second Amendment to the Partnership  Agreement,  dated June 12,
                 1997.
  3.2.4(v)       - Third  Amendment to the Partnership  Agreement,  dated December
                 23, 1997.
  3.2.5(x)       - Fourth Amendment to the Partnership  Agreement,  dated February
                 27, 1998.
  3.3            - Certificate of Incorporation of FMXI.
  3.4            - By-laws of FMXI.
  3.5(k)         - Certificate  of  Incorporation  of Foamex  Capital  Corporation
                 ("FCC").
  3.6(k)         - By-laws of FCC.
  3.7(a)         - Certificate of Incorporation of Foamex International.
  3.8(a)         - By-laws of Foamex International.
  4.1.1(d)       - Indenture, dated as of June 12, 1997, by and among Foamex L.P.,
                 FCC,  the  Subsidiary  Guarantors  and The Bank of New  York,  as
                 trustee,  relating  to  $150,000,000  principal  amount of 9 7/8%
                 Senior   Subordinated  Notes  due  2007  (the  "9  7/8%  Notes"),
                 including  the form of Senior  Subordinated  Note and  Subsidiary
                 Guarantee.
  
                                         17
  <PAGE>
  4.1.2(v)       - First  Supplemental  Indenture,  dated as of December 23, 1997,
                 between Foamex LLC ("FLLC") and The Bank of New York, as trustee,
                 relating to the 9 7/8% Notes.
  4.1.3(x)       - Second Supplemental  Indenture,  dated as of February 27, 1998,
                 among Foamex L.P. and FCC, as joint and several obligors, General
                 Felt, Foamex Fibers, and FLLC, as withdrawing guarantors, and The
                 Bank of New York, as trustee, relating to the 9 7/8% Notes.
  4.1.4(d)       - Registration  Rights  Agreement,  dated as of June 12, 1997, by
                 and among Foamex L.P., FCC, General Felt, Foamex Fibers,  and all
                 future direct or indirect domestic subsidiaries of Foamex L.P. or
                 FCC, and  Donaldson,  Lufkin & Jenrette  Securities  Corporation,
                 Salomon  Brothers  Inc. and Scotia  Capital  Markets,  as Initial
                 Purchasers.
  4.2.1(v)       - Indenture,  dated as of December 23, 1997,  by and among Foamex
                 L.P.,  FCC, the Subsidiary  Guarantors,  Crain Holdings Corp., as
                 Intermediate  obligator,  and The Bank of New York,  as  trustee,
                 relating  to  $98,000,000  principal  amount  of 13  1/2%  Senior
                 Subordinated Notes due 2005 (the "13 1/2% Notes"),  including the
                 form of Senior Subordinated Note and Subsidiary Guarantee.
  4.2.2(x)       - First  Supplemental  Indenture,  dated as of February 27, 1998,
                 among Foamex L.P. and FCC, as joint and several obligors, General
                 Felt,  Foamex Fibers and FLLC, as withdrawing  guarantors,  Crain
                 Industries,  Inc., as withdrawing  intermediate  obligor, and The
                 Bank of New York, as trustee, relating to the 13 1/2% Notes.
  4.3(x)         - Discharge of  Indenture,  dated as of February 27, 1998, by and
                 among Foamex L.P.,  General Felt, Foamex  International and State
                 Street Bank and Trust Company, as trustee, relating to the 9 1/2%
                 Senior Secured Notes due 2000.
  4.4.1(x)       - Credit  Agreement,  dated as of June 12,  1997,  as amended and
                 restated as of February 27, 1998,  by and among Foamex L.P.,  and
                 FMXI,  the  institutions  from  time to  time  party  thereto  as
                 lenders,  the  institutions  from time to time  party  thereto as
                 issuing  banks,  and  Citicorp  USA,  Inc.  and The  Bank of Nova
                 Scotia, as Administrative Agents.
  4.4.2(x)       - Second  Amended and  Restated  Foamex  International  Guaranty,
                 dated as of February 27, 1998,  made by Foamex  International  in
                 favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.3(x)       - Amended and Restated Partnership Guaranty, dated as of February
                 27,  1998,  made by FMXI in  favor  of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.4(p)       - Foamex Guaranty, dated as of June 12, 1997, made by Foamex L.P.
                 in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.5(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Latin America, Inc. in favor of Citicorp USA, Inc., as Collateral
                 Agent.
  4.4.6(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.7(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by FCC in
                 favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.8(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Mexico II, Inc. in favor of Citicorp  USA,  Inc.,  as  Collateral
                 Agent.
  4.4.9(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Asia, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.10(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.11(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex Latin  America,  Inc. in favor of Citicorp  USA,  Inc., as
                 Collateral Agent.
  4.4.12(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex Asia,  Inc. in favor of Citicorp USA,  Inc., as Collateral
                 Agent.
  4.4.13(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral
                 Agent.
  4.4.14(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex  Mexico  II,  Inc.  in favor of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  
                                         18
  
  <PAGE>
  
  4.4.15(p)      - Foamex Security  Agreement,  dated as of June 12, 1997, made by
                 Foamex L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.16(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by Foamex Latin America,  Inc. in favor of Citicorp USA, Inc., as
                 Collateral Agent.
  4.4.17(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by  Foamex  Mexico,  Inc.  in favor of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.18(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by Foamex  Mexico II,  Inc. in favor of Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.19(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by  Foamex  Asia,  Inc.  in  favor  of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.20(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.21         - Intentionally omitted.
  4.4.22(w)      -  First  Amendment  to  Foamex  Pledge  Agreement,  dated  as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.23(w)      - First  Amendment  to  Foamex  Security  Agreement,  dated as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.24(w)      -  First  Amendment  to  Foamex  Patent  Agreement,  dated  as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.25(w)      - First Amendment to Trademark  Security  Agreement,  dated as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.26(w)      -  Acknowledgment  of  Guaranty  by each of the  guarantors  to a
                 Guaranty dated June 12, 1997 in favor of Citicorp USA, Inc.
  4.4.27(w)      - First Amendment to Pledge  Agreement,  dated as of December 23,
                 1997, by pledgors in favor of Citicorp USA, Inc.
  4.4.28(w)      - Crain Industries Guaranty,  dated as of December 23, 1997, made
                 by Crain in favor of Citicorp USA, Inc.
  4.4.29(x)      - Partnership  Pledge  Agreement,  dated as of February 27, 1998,
                 made by Foamex  International  and FMXI in favor of Citicorp USA,
                 Inc., as Collateral Agent.
  4.5(u)         - Commitment  letter,  dated July 17, 1997, from The Bank of Nova
                 Scotia to Foamex Canada Inc.
  4.6(a)         n 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").
  4.7(a)         - Marely Loan  Commitment  Agreement,  dated as of  December  14,
                 1993, by and between Foamex L.P. and Marely s.a. ("Marely").
  4.8(a)         - DLJ Loan Commitment  Agreement,  dated as of December 14, 1993,
                 by and between Foamex L.P. and DLJ Funding, Inc. ("DLJ Funding").
  4.9.1(p)       -  Promissory  Note,  dated  June  12,  1997,  in  the  aggregate
                 principal  amount of  $5,000,000,  executed by Trace  Holdings to
                 Foamex L.P.
  4.9.2(p)       -  Promissory  Note,  dated  June  12,  1997,  in  the  aggregate
                 principal  amount of  $4,794,828,  executed by Trace  Holdings to
                 Foamex L.P.
  4.10.1(x)      - Credit  Agreement,  dated as of February 27, 1998, by and among
                 Foamex Carpet,  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.
  4.10.2(x)      - Foamex International  Guaranty,  dated as of February 27, 1998,
                 made by Foamex  International  in favor of Citicorp USA, Inc., as
                 Collateral Agent.
  4.10.3(x)      - Foamex International Pledge Agreement, dated as of February 27,
                 1998,  made by Foamex  International  in favor of  Citicorp  USA,
                 Inc., as Collateral Agent.
  4.10.4(x)      - New GFI Security Agreement, dated as of February 27, 1998, made
                 by Foamex  Carpet in favor of Citicorp  USA,  Inc., as Collateral
                 Agent.
  4.10.5(x)      - New GFI Intercreditor Agreement, dated as of February 27, 1998,
                 by  and  among  Foamex  Carpet,  The  Bank  of  Nova  Scotia,  as
                 Administrative  Agent, and Citicorp USA, Inc., as  Administrative
                 Agent and Collateral Agent.
  4.10.6(x)      - FII Intercreditor Agreement,  dated as of February 27, 1998, by
                 and between  Foamex  International  and Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  
                                         19
  
  <PAGE>
  
  4.11.1(x)      -  Promissory  Note of Foamex  L.P. in favor of Trace Foam LLC in
                 the principal amount of $34 million, dated February 27, 1998.
  4.12.1(x)      - Promissory  Note of Foamex Carpet in favor of Trace Foam LLC in
                 the principal amount of $70.2 million, dated February 27, 1998.
  10.1.1(p)      -  Amendment  to  Master  Agreement,  dated  as of June 5,  1997,
                 between Citibank, N.A. and Foamex L.P.
  10.1.2(p)      -  Amended  Confirmation,  dated  as of June  13,  1997,  between
                 Citibank, N.A. and Foamex L.P.
  10.2(h)        - Reimbursement  Agreement,  dated as of March 23, 1993,  between
                 Trace Holdings and General Felt.
  10.3(h)        - Shareholder Agreement, dated December 31, 1992, among Recticel,
                 s.a.  ("Recticel"),  Recticel  Holding  Noord B.V.,  Foamex L.P.,
                 Beamech Group Limited, LME-Beamech,  Inc., James Brian Blackwell,
                 and Prefoam AG relating to foam technology sharing arrangement.
  10.4.1(k)      - Asset Transfer Agreement,  dated as of October 2, 1990, between
                 Trace  Holdings  and  Foamex  L.P.  (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
                 Recticel Foam Corporation ("RFC") and Foamex L.P. (the "RFC Asset
                 Transfer Agreement").
  10.5.2(k)      - First  Amendment,  dated as of December  19,  1991,  to the RFC
                 Asset Transfer Agreement.
  10.5.3(k)      - Schedule 5.03 to the RFC Asset  Transfer  Agreement  (the "5.03
                 Protocol").
  10.5.4(h)      - The 5.03 Protocol Assumption Agreement, dated as of October 13,
                 1992,  between RFC and Foamex L.P.  10.5.5(h) n Letter  Agreement
                 between  Trace  Holdings  and  Recticel  regarding  the  Recticel
                 Guaranty, dated as of July 22, 1992.
  10.6(l)        - Supply Agreement,  dated June 28, 1994, between Foamex L.P. and
                 Foamex International.
  10.7.1(l)      - First Amended and Restated Tax Sharing  Agreement,  dated as of
                 December 14, 1993, among Foamex L.P., Trace Foam, FMXI and Foamex
                 International.
  10.7.2(d)      - First  Amendment to Amended and Restated Tax Sharing  Agreement
                 of Foamex L.P.,  dated as of June 12,  1997,  by and among Foamex
                 L.P., Foamex International, FMXI and Trace Foam.
  10.7.3(w)      - Second Amendment to Amended and Restated Tax Sharing  Agreement
                 of Foamex  L.P.,  dated as of  December  23,  1997,  by and among
                 Foamex L.P., Foamex International, FMXI, and Trace Foam.
  10.7.4         - Third  Amendment to Amended and Restated Tax Sharing  Agreement
                 of Foamex L.P.,  dated as of February  27,  1998,  by and between
                 Foamex L.P., Foamex International and FMXI.
  10.8.1(m)      - Tax Distribution  Advance  Agreement,  dated as of December 11,
                 1996, by and between Foamex L.P. 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
                 International.
  10.9.1(h)      - Trace Foam Management  Agreement  between Foamex L.P. 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 L.P. and Trace Foam.
  10.9.3(d)      - First Amendment to Management  Agreement,  dated as of June 12,
                 1997, by and between Foamex L.P. and Trace Foam.
  10.10.1(k)     - Salaried Incentive Plan of Foamex L.P. and Subsidiaries.
  10.10.2(k)     - Trace Holdings 1987 Nonqualified Stock Option Plan.
  10.10.3(k)     - Equity Growth Participation Program.
  10.10.4(o)     - The Foamex L.P.  Salaried  Pension Plan  (formerly  the General
                 Felt Industries,  Inc.  Retirement Plan for Salaried  Employees),
                 effective as of January 1, 1995.
  
                                         20
  
  <PAGE>
  
  10.10.5(u)     - The Foamex  L.P.  Hourly  Pension  Plan  (formerly  "The Foamex
                 Products  Inc.  Hourly  Employee  Retirement  Plan),  as  amended
                 December 31, 1995.
  10.10.6(u)     - Foamex L.P. 401(k) Savings Plan effective October 1, 1997.
  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.
  10.12.1(a)     - Warrant Exchange  Agreement,  dated as of December 14, 1993, by
                 and between Foamex L.P. and Marely.
  10.12.2(a)     - Warrant Exchange  Agreement,  dated as of December 14, 1993, by
                 and between Foamex L.P. and DLJ Funding.
  10.13(t)       - Warrant  Agreement,  dated as of June 28, 1994,  by and between
                 Foamex International and Shawmut Bank.
  10.14(o)       - Stock Purchase Agreement, dated as of December 23, 1993, by and
                 between   Transformacion   de  Espumas  u  Fieltros,   S.A.,  the
                 stockholders which are parties thereto, and Foamex L.P.
  10.15.1(r)     - Asset Purchase  Agreement,  dated as of August 29, 1997, by and
                 among  General  Felt,  Foamex L.P.,  Bretlin,  Inc. and The Dixie
                 Group.
  10.15.2(s)     - Addendum to Asset  Purchase  Agreement,  dated as of October 1,
                 1997, by and among General Felt, Foamex L.P.,  Bretlin,  Inc. and
                 The Dixie Group.
  10.16.1(x)     - Supply Agreement, dated as of February 27, 1998, by and between
                 Foamex L.P. and General Felt (as assigned to Foamex Carpet).
  10.16.2(x)     -  Administrative  Services  Agreement,  dated as of February 27,
                 1998, by and between Foamex L.P. and General Felt (as assigned to
                 Foamex Carpet).
  10.17          - Tax Sharing  Agreement,  dated as of February 27, 1998, between
                 Foamex International and Foamex Carpet.
  23.1           - Consent of Independent Accountants, Coopers & Lybrand L.L.P.
  27             - Financial  Data Schedule for the year ended  December 28, 1997.
  ----------------------------
  
  (a)  Incorporated   herein  by  reference  to  the  Exhibit  to  Foamex   L.P.'s
       Registration Statement on Form S-1, Registration No. 33-69606.
  
  (b)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       for the fiscal year ended January 1, 1995.
  
  (c)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred May 28, 1997.
  
  (d)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred June 12, 1997.
  
  (e)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex and FCC on Form S-4, Registration No. 33-65158.
  
  (f)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended June 30, 1996.
  
  (g)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex,  FCC and General Felt on Form S-1,  Registration  Nos.
       33-60888, 33-60888-01, and 33-60888-02.
  
  (h)  Incorporated  herein by reference to the Exhibit to the Form 10-K Statement
       of Foamex and FCC for fiscal 1992.
  
                                         21
  
  <PAGE>
  
  (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.
  
  (r)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on August 29, 1997.
  
  (s)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on October 6, 1997.
  
  (t)  Incorporated  by  reference  to the  Exhibit  to the  Form  10-Q of  Foamex
       International for the quarterly period ended July 3, 1994.
  
  (u)  Incorporated  by  reference  to the Exhibit to the Form 10-Q of Foamex L.P.
       for the quarterly period ended September 28, 1997.
  
  (v)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form  8-K  of  Foamex  L.P.,   Foamex   Capital   Corporation   and  Foamex
       International reporting an event that occurred December 23, 1997.
  
  (w)  Incorporated  herein  by  reference  to the  Exhibit  in  the  Registration
       Statement of Foamex on Form S-4, Registration No. 333-45733.
  
  (x)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex International reporting an event that occurred on February 27, 1998.
  
       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.
  
                                         22
  
  
  <PAGE>
  
                                     SIGNATURES
  
  
       Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
                                          FOAMEX INTERNATIONAL INC.
  
  
  Date:   May 18, 1998                    By:/s/ Kenneth R. Fuette
                                             -------------------------
                                             Kenneth R. Fuette
                                             Chief Financial Officer
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 87499}]
metadata_filer: {"company-data": {"conformed-name": "FOAMEX INTERNATIONAL INC", "cik": "0000912908", "assigned-sic": "3086", "irs-number": "050473908", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-22624", "film-number": "98627433"}, "business-address": {"street1": "1000 COLUMBIA AVENUE", "city": "LINWOOD", "state": "PA", "zip": "19061", "phone": "6108593000"}, "mail-address": {"street1": "1000 COLUMBIA AVE", "city": "LINWOOD", "state": "PA", "zip": "19061"}}
text: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
                                      FORM 10-Q
  
                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF 1934
  
                    For the quarterly period ended March 29, 1998
  
                           Commission file number 0-22624
  
                             FOAMEX INTERNATIONAL INC.
               (Exact name of registrant as specified in its charter)
  
               Delaware                                  05-0473908
  (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 registrant (1) has 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)  has  been  subject  to such  filing
  requirements for the past 90 days. YES X NO
  
  The number of shares of the registrant's  common stock outstanding as of May 11,
  1998 was 25,003,475.
  
                                    Page 1 of 23
                            Exhibit List on Page 17 of 23
  FOAMEX INTERNATIONAL INC.
  
                                        INDEX
                                                                              Page
  
  Part I.   Financial Information:
  
            Item 1.  Financial Statements
  
                Condensed Consolidated Statements of Operations -
                  Thirteen Week Periods Ended March 29, 1998 and March
                  30, 1997                                                       3
  
                Condensed Consolidated Balance Sheets as of March 29,
                  1998 and December 28, 1997                                     4
  
                Condensed Consolidated Statements of Cash Flows -
                  Thirteen Week Periods Ended March 29, 1998 and March
                  30, 1997                                                       5
  
                Notes to Condensed Consolidated Financial Statements             6
  
            Item 2. Management's Discussion and Analysis of
                    Financial Condition and Results of Operations               12
  
  Part II.  Other Information                                                   17
  
            Exhibit List                                                        17
  
            Signatures                                                          23
  
                                    2
  PART I.  FINANCIAL INFORMATION
  ITEM 1.  FINANCIAL STATEMENTS
  
                FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
  13 Week Periods Ended
                                                      March 29,            March 30,
                                                        1998                 1997
                                                               (thousands)
  NET SALES                                           $ 313,790           $ 229,120
  
  COST OF GOODS SOLD                                    262,594             186,323
                                                      ---------           ---------
  
  GROSS PROFIT                                           51,196              42,797
  
  SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                             22,377              15,987
                                                      ---------           ---------
  
  INCOME FROM OPERATIONS                                 28,819              26,810
  
  INTEREST AND DEBT ISSUANCE EXPENSE                     17,777              13,968
  
  OTHER INCOME (EXPENSE), NET                              (699)                638
                                                      ---------           ---------
  
  INCOME BEFORE PROVISION FOR INCOME TAXES               10,343              13,480
  
  PROVISION FOR INCOME TAXES                              4,135               5,344
                                                      ---------           ---------
  
  INCOME BEFORE EXTRAORDINARY LOSS                        6,208               8,136
  
  EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
     OF DEBT, NET OF INCOME TAXES                        (1,874)               (410)
                                                      ---------           ---------
  
  NET INCOME                                          $   4,334           $   7,726
                                                      =========           =========
  
  BASIC EARNINGS (LOSS) PER SHARE:
     INCOME BEFORE EXTRAORDINARY LOSS                 $    0.25           $    0.32
     EXTRAORDINARY LOSS                                   (0.08)              (0.02)
                                                      ---------           ---------
     EARNINGS PER SHARE                               $    0.17           $    0.30
                                                      =========           =========
  
     WEIGHTED AVERAGE NUMBER OF SHARES                   24,942              25,311
                                                      =========           =========
  
  DILUTED EARNINGS (LOSS) PER SHARE:
     INCOME BEFORE EXTRAORDINARY LOSS                 $    0.24           $    0.31
     EXTRAORDINARY LOSS                                   (0.07)              (0.02)
                                                      ---------           ---------
     EARNINGS PER SHARE                               $    0.17           $    0.29
                                                      =========           =========
  
     WEIGHTED AVERAGE NUMBER OF SHARES                   25,603              26,368
                                                      =========           =========
  The accompanying notes are an integral part of the condensed
                    consolidated financial statements.
  
                                    3
  FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
  March 29,            December 28,
                                                                            1998                    1997
  ASSETS                                                                          (thousands)
  CURRENT ASSETS:
  Cash and cash equivalents                                           $    16,919           $    12,044
     Accounts receivable, net                                                186,850               175,684
     Inventories                                                             122,035               120,299
     Other current assets                                                     75,586                62,901
                                                                         -----------           -----------
         Total current assets                                                401,390               370,928
  
  PROPERTY, PLANT AND EQUIPMENT, NET                                         230,161               233,435
  
  COST IN EXCESS OF ASSETS ACQUIRED, NET                                     217,383               218,219
  
  DEBT ISSUANCE COSTS, NET                                                    16,456                18,889
  
  DEFERRED INCOME TAXES                                                       35,641                26,960
  
  OTHER ASSETS                                                                28,734                25,192
                                                                         -----------           -----------
  
  TOTAL ASSETS                                                           $   929,765           $   893,623
                                                                         ===========           ===========
  
  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  CURRENT LIABILITIES:
     Short-term borrowings                                               $     5,882           $     6,598
     Current portion of long-term debt                                         4,779                12,931
     Current portion of debt - related party                                   7,020                    --
     Accounts payable                                                        120,429               131,689
     Accrued interest                                                          8,954                10,716
     Other accrued liabilities                                                70,580                70,513
                                                                         -----------           -----------
         Total current liabilities                                           217,644               232,447
  
  LONG-TERM DEBT                                                             686,401               735,724
  
  LONG-TERM DEBT - RELATED PARTY                                              97,180                    --
  
  OTHER LIABILITIES                                                           38,533                38,871
                                                                         -----------           -----------
  
         Total liabilities                                                 1,039,758             1,007,042
                                                                         -----------           -----------
  
  COMMITMENTS AND CONTINGENCIES                                                   --                    --
                                                                         -----------           -----------
  
  STOCKHOLDERS' EQUITY (DEFICIT):
     Preferred Stock, par value $1.00 per share:
       Authorized 5,000,000 shares - none issued                                  --                    --
     Common Stock, par value $.01 per share:
       Authorized 50,000,000 shares
       Issued 26,992,475 and 26,908,680 shares, respectively;
       Outstanding 25,003,475 and 24,919,680 shares, respectively                270                   269
     Additional paid-in capital                                               86,662                86,025
     Retained earnings (accumulated deficit)                                (161,557)             (164,118)
     Other                                                                   (16,166)              (16,393)
                                                                         -----------           -----------
                                                                             (90,791)              (94,217)
     Common Stock held in treasury, at cost:
       1,989,000 shares at March 29, 1998 and December 28, 1997              (19,202)              (19,202)
                                                                         -----------           -----------
  
         Total stockholders' equity (deficit)                               (109,993)             (113,419)
                                                                         -----------           -----------
  
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                   $   929,765           $   893,623
                                                                         ===========           ===========
  The accompanying notes are an integral part of the consolidated
                          financial statements.
  
                                    4
  FOAMEX INTERNATIONAL INC. AND SUBSIDIARIES
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
  13 Week Periods Ended
                                                                           March 29,           March 30,
                                                                             1998                1997
                                                                                   (thousands)
  OPERATING ACTIVITIES:
  Net income                                                           $   4,334           $   7,726
     Adjustments to reconcile net income to net cash provided
         by operating activities:
         Depreciation and amortization                                        8,567               5,361
         Amortization of debt issuance costs and debt discount                  261               3,766
         Extraordinary loss on early extinguishment of debt                   1,608                 410
         Other operating activities                                           5,114                (153)
         Changes in operating assets and liabilities, net                   (39,191)              1,790
                                                                          ---------           ---------
  
            Net cash provided by (used for) operating activities            (19,307)             18,900
                                                                          ---------           ---------
  
  INVESTING ACTIVITIES:
     Capital expenditures                                                    (7,201)             (7,426)
     Acquisitions, net of cash acquired                                      (3,321)                 --
     Decrease in restricted cash                                                 --               8,356
     Deposit for defeasence of indebtedness                                  (4,809)                 --
     Other investing activities                                              (1,001)                 --
                                                                          ---------           ---------
  
            Net cash provided by (used for) investing activities            (16,332)                930
                                                                          ---------           ---------
  
  FINANCING ACTIVITIES:
     Net proceeds from short-term borrowings                                   (716)                293
     Net proceeds from revolving loans                                       69,973                  --
     Proceeds from long-term debt                                           129,000                 500
     Repayment of long-term debt                                           (127,083)             (9,230)
     Repayment of long-term debt - related party                            (24,800)                 --
     Dividend paid                                                           (1,246)                 --
     Transfer of General Felt                                                (3,898)                 --
     Debt issuance cost                                                      (1,149)                 --
     Other financing activities                                                 433                 405
                                                                          ---------           ---------
  
            Net cash used for financing activities                           40,514              (8,032)
                                                                          ---------           ---------
  
  NET INCREASE IN CASH AND CASH EQUIVALENTS                                   4,875              11,798
  
  CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                                  12,044              22,203
                                                                          ---------           ---------
  CASH AND CASH EQUIVALENTS
     AT END OF PERIOD                                                     $  16,919           $  34,001
                                                                          =========           =========
  The accompanying notes are an integral part of the condensed
                    consolidated financial statements.
  
                                    5
  1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  
       Foamex International Inc.'s (the "Company") condensed  consolidated balance
  sheet as of December 28, 1997 has been condensed  from the audited  consolidated
  balance sheet at that date. The condensed consolidated balance sheet as of March
  29, 1998, the condensed  consolidated  statements of operations for the thirteen
  week  periods  ended  March  29,  1998 and  March  30,  1997  and the  condensed
  consolidated  statements of cash flows for the thirteen week periods ended March
  29, 1998 and March 30, 1997 have been  prepared by the Company and have not been
  audited by the Company's independent accountants.  In the opinion of management,
  all  adjustments,  consisting only of normal recurring  adjustments,  considered
  necessary  for a  fair  presentation  of  the  financial  position,  results  of
  operations and cash flows have been included.
  
       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 the Company's 1997  consolidated
  financial  statements  and notes  thereto as set forth in the  Company's  Annual
  Report on Form 10-K/A for the fiscal year ended December 28, 1997.
  
  2.   ACQUISITION
  
       On December 23, 1997, the Company acquired Crain Industries, Inc. ("Crain")
  pursuant to a merger agreement with Crain Holdings Corp. for a purchase price of
  approximately $213.7 million, including the assumption of debt with a face value
  of  approximately  $98.6 million (with an estimated fair value of  approximately
  $112.3 million ("Crain Acquisition").  In addition, fees and expenses associated
  with  the  Crain  Acquisition  are  approximately   $13.2  million.   The  Crain
  Acquisition provided a fully integrated manufacturer, fabricator and distributor
  of a broad range of flexible  polyurethane foam and foam products which are sold
  to a diverse  customer base,  principally  in the furniture,  bedding and carpet
  cushion markets. The acquisition was funded by $118.0 million in bank borrowings
  by Foamex L.P.  under a credit  facility.  The excess of the purchase price over
  the estimated  fair value of the net assets  acquired was  approximately  $152.5
  million.  In connection with the Crain Acquisition,  the Company approved a plan
  to close certain facilities. As of the acquisition date, the Company established
  accruals of  approximately  $1.5 million of severance and related costs and $8.5
  million for costs  associated  with the shut down and  consolidation  of certain
  acquired facilities in connection with purchase price accounting.
  
       The Crain  Acquisitions  was accounted for as a purchase and the operations
  of the Crain are included in the consolidated  statements of operations and cash
  flows from its respective date of acquisition. The cost of the Crain Acquisition
  has been allocated on the basis of the fair value of the assets acquired and the
  liabilities  assumed.  The excess of the purchase  price over the estimated fair
  value of the net assets  acquired  is being  amortized  using the  straight-line
  method over forty years.  The  allocation  of the  purchase  price for the Crain
  Acquisition is based upon  preliminary  estimates and assumptions and is subject
  to revision once  appraisals,  valuations and other studies of the fair value of
  the acquired assets and liabilities  have been completed.  The pro forma results
  listed below are unaudited and assume that the Crain Acquisition occurred at the
  beginning of fiscal year 1997.
  
                                                                      1997
                                                                (thousands, except
                                                                 per share data)
         Net sales                                                  $306,768
         Income before extraordinary loss                              5,828
         Pro forma basic earnings (loss) per share                      0.23
         Pro forma diluted earnings (loss) per share                    0.22
  
       The pro forma  results are not  necessarily  indicative  of what would have
  occurred  if the Crain  Acquisition  had been in effect for the  entire  periods
  presented nor are they necessarily indicative of future consolidated results.
  
                                         6
  3.   INVENTORIES
  
         Inventories consist of:
  
                                           March 29,        December 28,
                                             1998              1997
                                                  (thousands)
       Raw materials and supplies          $ 76,772          $ 73,487
       Work-in-process                       16,736            15,620
       Finished goods                        28,527            31,192
                                           --------          --------
  
       Total                               $122,035          $120,299
                                           ========          ========
  
  4.   LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY
  
       Long-term debt consists of:
  March 29,       December 28,
                                                                             1998              1997
       Credit Facility:                                                           (thousands)
  Term Loan A                                               $     --          $ 76,700
                Term Loan B                                                 83,553           109,725
                Term Loan C                                                 75,958            99,750
                Term Loan D                                                110,000           110,000
                Revolving credit facility                                  124,901            54,928
              9.875% Senior subordinated notes due 2007                    150,000           150,000
              13.5% Senior subordinated notes due 2005 (includes
                $13,272 and $13,720 of unamortized debt premium)           111,272           111,720
              9 1/2% Senior secured notes due 2000                           4,523             4,523
              Subordinated note payable (net of unamortized
                debt discount of $804 and $1,198                             6,211             6,129
              Other                                                         24,762            18,180
                                                                          --------          --------
                                                                           691,180           748,655
  
              Less current portion                                           4,779            12,931
                                                                          --------          --------
  
              Long-term debt-unrelated parties                            $686,401          $735,724
                                                                          ========          ========
  
              Foamex/GFI Note                                             $ 34,000          $     --
  
              Note payable to Trace Foam LLC                                70,200                --
  
              Less current portion                                           7,020                --
                                                                          --------          --------
  
              Long-term debt - related party                              $ 97,180          $     --
                                                                          ========          ========
  Refinancing Associated with Transfer of General Felt Common Stock
  
       In connection  with the transfer of General Felt common stock (see Note 2),
  Foamex L.P. amended its agreements with lenders under the Credit Facility, which
  included additional  borrowings of $129.0 million under new term loan agreements
  that were assumed by Trace Foam LLC (as  discussed in Note 2) and  borrowings of
  $32.0 million under the existing  revolving  credit  facility.  These funds were
  used to (i) repay  approximately  $125.1  million  of  existing  term  loans and
  accrued  interest  thereon of  approximately  $0.9  million,  (ii)  deposit $4.8
  million into an escrow  account in order to redeem the Senior  Secured  Notes in
  June 1998, (iii) repay $24.8 million on the note payable to Trace Foam LLC
  
                                         7
  4.   LONG-TERM DEBT AND LONG-TERM DEBT - RELATED PARTY (continued)
  
  and (iv) pay fees  and  expenses  of  approximately  $5.4  million.  Also,  this
  amendment  increased the  availability  under the revolving credit facility from
  $150.0  million to $200.0  million;  however,  $34.5 million of this increase is
  used for a letter of credit to support the Foamex/GFI Note.
  
       Foamex/GFI Note
  
       In connection with the transfer of General Felt's common stock, Foamex L.P.
  entered  into  the  $34.0  million   Foamex/GFI   Note  to  settle  an  existing
  intercompany  note payable to General Felt. The Foamex/GFI Note matures in March
  2000 with  interest  payable at LIBOR plus an applicable  margin.  The principal
  amount is due upon maturity in March 2000.
  
       Note Payable to Trace Foam LLC
  
       In  connection  with the Asset  Purchase  Agreement  for the  General  Felt
  transaction  (see Note 8), the Company  entered into a $70.2 million  promissory
  note with Trace Foam LLC. The note bears interest at a base rate plus 2.0% or at
  LIBOR plus 3.0%. The note matures February 2004.
  
       Principal Payments
  
       Principal  payments on Foamex  L.P.'s  long-term  debt for the remainder of
  1998 and for the next five years are as  follows:  1998 - $9.8  million;  1999 -
  $17.7 million; 2000 - $56.8 million; 2001 - $17.3 million; 2002 - $17.7 million;
  and thereafter - $663.6 million.
  
  5.      EARLY EXTINGUISHMENT OF DEBT
  
         In connection with the GFI Transaction (see Note 8), the Company incurred
  an extraordinary loss on the early  extinguishment of debt of approximately $1.9
  million (net of income tax benefits of $1.2 million).  The extraordinary loss is
  comprised of approximately $2.9 million for the write-off of debt issuance costs
  and approximately $0.2 million of professional fees and other costs.
  
  6.   ENVIRONMENTAL MATTERS
  
       The Company is subject to extensive and changing federal,  state, local and
  foreign environmental laws and regulations, including those relating to the use,
  handling,  storage,  discharge  and  disposal of  hazardous  substances  and the
  remediation of  environmental  contamination,  and as a result,  is from time to
  time involved in administrative and judicial  proceedings and inquiries relating
  to  environmental  matters.  During the  thirteen  weeks ended  March 29,  1998,
  expenditures  in connection with the Company's  compliance with federal,  state,
  local and foreign  environmental  laws and  regulations  did not have a material
  adverse  effect  on  the  Company's  operations,   financial  position,  capital
  expenditures  or  competitive  position.  As of March 29, 1998,  the Company has
  environmental  accruals of approximately $4.9 million for environmental matters.
  In  addition,  as of  March  29,  1998,  the  Company  has  net  receivables  of
  approximately  $1.1  million  relating  to  indemnification   for  environmental
  liabilities.  The  Company  believes  that  realization  of the net  receivables
  established for indemnification is probable.
  
       The Clean Air Act  Amendments of 1990 (the "1990 CAA  Amendments")  provide
  for the establishment of federal emission standards for hazardous air pollutants
  including  methylene  chloride,  propylene oxide and TDI,  materials used in the
  manufacturing  of foam. On December 27, 1996,  the United  States  Environmental
  Protection Agency (the "EPA") proposed regulations under the 1990 CAA Amendments
  that  will  require  manufacturers  of slab  stock  polyurethane  foam  and foam
  fabrication  plants to reduce  emissions of methylene  chloride.  Because  these
  regulations  are subject to change  prior to  finalization,  the Company  cannot
  accurately predict the actual cost of their implementation. The Company does not
  believe  implementation  of the  regulations  will  require it to make  material
  expenditures  at  facilities  owned  prior  to  December  23,  1997,  due to the
  Company's  use  of  alternative  technologies  which  do not  utilize  methylene
  chloride and its ability to shift current production to the facilities which use
  these alternative  technologies;  however, material expenditures may be required
  at the facilities  formerly  operated by Crain. The 1990 CAA Amendments also may
  result in the imposition of additional  standards  regulating air emissions from
  polyurethane foam manufacturers,  but these standards have not yet been proposed
  or promulgated. 
  
                                         8
  6.   ENVIRONMENTAL MATTERS (continued)
  
       The Company has reported to appropriate state authorities that it has found
  soil  and  groundwater  contamination  in  excess  of  state  standards  at four
  facilities and soil  contamination  in excess of state  standards at three other
  facilities.  The  Company  has  begun  remediation  and  is  conducting  further
  investigations  into the extent of the  contamination  at these  facilities and,
  accordingly,  the extent of the remediation that may ultimately be required. The
  actual cost and the timetable of any such  remediation  cannot be predicted with
  any degree of  certainty  at this time.  As of March 29,  1998,  the Company has
  environmental accruals of approximately $4.3 million for the remaining potential
  remediation costs for these facilities based on engineering estimates.
  
       Federal regulations require that by the end of 1998 all underground storage
  tanks  ("USTs")  be  removed  or  upgraded  in all  states  to  meet  applicable
  standards.  The  Company  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.  The
  Company has accrued $0.1 million for the estimated  removal and remediation,  if
  any, associated with these USTs. However,  the full extent of contamination and,
  accordingly,  the actual cost of such  remediation  cannot be predicted with any
  degree of certainty at this time. The Company believes that its USTs do not pose
  a  significant  risk  of  environmental   liability  because  of  the  Company's
  monitoring  practices  for  USTs  and  conditional  approval  for the  permanent
  in-place closure for certain USTs. However,  there can be no assurance that such
  USTs will not result in significant environmental liability in the future.
  
       The Company has been designated as a Potentially  Responsible Party ("PRP")
  by the EPA with respect to thirteen sites with an estimated  total  liability to
  the Company for the  thirteen  sites of less than  approximately  $0.5  million.
  Estimates of total clean-up  costs and  fractional  allocations of liability are
  generally  provided  by the EPA or the  committee  of PRP's with  respect to the
  specified site. In each case, the  participation of the Company is considered to
  be immaterial.
  
       Although it is possible that new information or future  developments  could
  require the Company to reassess its potential  exposure  relating to all pending
  environmental  matters,  including those described herein,  management  believes
  that,  based upon all currently  available  information,  the resolution of such
  environmental  matters will not have a material  adverse effect on the Company'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 May 15,  1998,  the Company and Trace  Holdings  were two of multiple
  defendants  in actions  filed on behalf of  approximately  5,000  recipients  of
  breast  implants  in various  United  States  federal  and state  courts and one
  Canadian provincial court, some of which allege substantial damages, but most of
  which allege  unspecified  damages for personal injuries of various types. Three
  of these cases seek to allege claims on behalf of all breast implant  recipients
  or other allegedly affected parties, but no class has been approved or certified
  by the court. In addition, three cases have been filed alleging claims on behalf
  of approximately 700 residents of Australia, New Zealand,  England, and Ireland.
  During 1995, the Company and Trace Holdings were granted  summary  judgments and
  dismissed  as  defendants  from all cases in the  federal  courts of the  United
  States and the state  courts of  California.  Appeals for these  decisions  were
  withdrawn and the decisions  are final.  In addition,  two of the cases filed on
  behalf of 903 foreign  plaintiffs  were  dismissed on the grounds that the cases
  could not be brought in the United  States  courts.  This decision is subject to
  appeal.  The  Company  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 the
  Company or Trace Holdings.  Neither the Company nor Trace Holdings  recommended,
  authorized or approved the use of its foam for these  purposes.  While it is not
  feasible  to  predict  or  determine  the  outcome  of these  actions,  based on
  management's   present  assessment  of  the  merits  of  pending  claims,  after
  consultation with the general counsel of Trace Holdings, and without taking into
  account potential indemnity from 
  
                                         9
  7.   LITIGATION (continued)
  
  the manufacturers of polyurethane  covered breast implants,  management believes
  that the  disposition  of matters  that are  pending or that may  reasonably  be
  anticipated to be asserted  should not have a material  adverse effect on either
  the Company's or Trace Holdings'  consolidated  financial position or results of
  operations.  In addition,  the Company is also indemnified by Trace Holdings for
  any such  liabilities  relating  to foam  manufactured  prior to  October  1990.
  Although  Trace  Holdings  has paid the  Company's  litigation  expenses to date
  pursuant to such  indemnification  and management believes Trace Holdings likely
  will be in a position to continue to pay such expenses, there can be no absolute
  assurance  that Trace  Holdings  will be able to provide  such  indemnification.
  Based on  information  available  at this time  with  respect  to the  potential
  liability, and without taking into account the indemnification provided by Trace
  Holdings  and the  coverage  provided  by  Trace  Holdings'  and  the  Company's
  liability  insurance,  the  Company  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 the Company.  If management's
  assessment  of  the  Company's  liability  with  respect  to  these  actions  is
  incorrect, such actions could have a material adverse effect on the Company.
  
       In November 1997, a complaint was filed in the United States District Court
  for the Southern District of Texas alleging that various  defendants,  including
  Crain  through the use of the  CARDIO(R)  process  licensed  from a third party,
  infringed on a patent held by  plaintiff.  The Company is  negotiating  with the
  licensor of the process for the  assumption  of the defense of the action by the
  licensor;  however, the action is in the preliminary stages, and there can be no
  assurance as to the ultimate outcome of the action.
  
       On or about March 17, 1998, five purported class action lawsuits were filed
  in the  Delaware  Chancery  Court,  New  Castle  County,  against  the  Company,
  directors of the Company,  Trace Holdings, and individual officers and directors
  of Trace Holdings:
  
         Brickell Partners v. Marshall S. Cogan, et al.,  No. 16260NC;
         Mimona Capital v. Salvatore J. Bonanno, et al.,  No. 16259NC;
         Daniel Cohen v. Foamex International Inc.,  No. 16263;
         Eileen Karisinki v. Foamex International Inc., et al.,  No. 16261NC and
         John E. Funky Trust v. Salvatore J. Bonanno, et al., No. 16267.
  
       A  sixth  purported   class  action  lawsuit,   Barnett  Stepak  v.  Foamex
  International  Inc.,  et al.,  No.  16277,  was filed on or about March 23, 1998
  against the same  defendants.  The complaints in the six actions  allege,  among
  other things,  that the defendants have violated  fiduciary and other common law
  duties  purportedly owed to the Company's  stockholders in connection with Trace
  Holdings  proposal to acquire all of the shares of the  Company's  common stock.
  The complaints seek, among other things, class certification, a declaration that
  the defendants  have breached their fiduciary  duties to the class,  preliminary
  and permanent  injunctions  baring  implementation of the proposed  transaction,
  rescission of the transaction if consummated,  unspecified compensatory damages,
  and costs and attorneys' fees.
  
       The  Company 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  the  Company.  If  management's  assessment  of the
  Company's  liability  with respect to these actions is  incorrect,  such actions
  could have a material  adverse  effect on the Company's  consolidated  financial
  position.
  
                                         10
  8.   GFI TRANSACTION
  
       On February 27, 1998, the Company and certain of its affiliates completed a
  series of  transactions  designed to simplify  the  Company's  structure  and to
  provide  future  operational  flexibility.  Prior to the  consummation  of these
  transactions, the Company defeased the $4.5 million outstanding principal amount
  of  its  9  1/2%  Senior  Secured  Notes  due  2000.  Foamex  L.P.  settled  its
  intercompany  payables  to  General  Felt with $4.8  million in cash and a $34.0
  million  principal amount promissory note supported by a $34.5 million letter of
  credit  under  the  Credit  Facility  (the  "Foamex/GFI   Note").   The  initial
  transaction  resulted in the transfer  from Foamex L.P. to Trace Foam LLC of all
  of the  outstanding  common  stock of  General  Felt,  in  exchange  for (i) the
  assumption by Trace Foam LLC of $129.0 million of Foamex L.P.'s indebtedness and
  (ii) the transfer by Trace Foam LLC to Foamex L.P. of a 1% non-managing  general
  partnership  interest in Foamex L.P. As a result,  General  Felt ceased  being a
  subsidiary  of Foamex L.P. and was relieved  from all  obligations  under Foamex
  L.P.'s 9 7/8% Senior Subordinated Notes due 2007 and 13 1/2% Senior Subordinated
  Notes due 2005. Upon consummation of the initial  transaction,  Foamex Carpet, a
  newly formed  wholly-owned  subsidiary of the Company,  the Company,  Trace Foam
  LLC, and General Felt entered into an Asset  Purchase  Agreement  dated February
  27, 1998, in which General Felt sold substantially all of its assets (other than
  the Foamex/GFI  Note and its operating  facility in Pico Rivera,  California) to
  Foamex  Carpet in exchange  for (i) $20.0  million in cash and (ii) a promissory
  note issued by Foamex  Carpet to Trace Foam LLC in the amount of $70.2  million.
  The $20.0  million  cash payment was funded with a  distribution  by Foamex L.P.
  Upon  consummation  of these  transactions  contemplated  by the Asset  Purchase
  Agreement,  Foamex Carpet entered into a Credit  Agreement with the institutions
  from time to time party thereto,  as issuing  banks,  and Citicorp USA, Inc. and
  The Bank of Nova Scotia,  as  administrative  agents,  which  provides for up to
  $20.0 million in revolving credit borrowings.  These transactions were accounted
  for in a manner similar to a pooling of interests  since the entities were under
  common  control.   Foamex  Carpet  will  conduct  the  carpet  cushion  business
  previously  conducted  by  General  Felt.  Also,  Trace  Foam  LLC has  retained
  ownership of one of General Felt's operating facilities which is being leased to
  Foamex Carpet and the $34.0 million Foamex/GFI Note.
  
                                         11
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
       The Company  operates  primarily in the flexible  polyurethane and advanced
  polymer foam  products  industry.  The  following  discussion  should be read in
  conjunction  with the condensed  consolidated  financial  statements and related
  notes thereto of the Company  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 4 and 5 of the Company's 1997 Annual Report on Form 10-K/A.
  
       During  1997,  the  Company's  products  were  utilized  primarily  in five
  end-markets;  (i) carpet  cushion and other  carpet  products,  (ii)  cushioning
  foams,  including  bedding  products,  (iii)  furniture  products for  furniture
  manufacturers and distributors, (iv) automotive applications, including trim and
  accessories,  and (v) specialty and technical applications,  including those for
  filtration,  gasketing and sealing.  As a result of the Crain  Acquisition,  the
  Company has added a sixth end market: consumer products.
  
       On March 16,  1998,  the  Company  announced  that its  Board of  Directors
  received an  unsolicited  buyout  proposal  from Trace  Holdings,  the Company's
  principal stockholder. Trace Holdings proposed to acquire all of the outstanding
  common  stock of the  Company  not  currently  owned by Trace  Holdings  and its
  subsidiaries for a cash price of $17.00 per share. Also, Trace Holdings informed
  the Board of  Directors  that  financing  for the  buyout  transaction  would be
  arranged through  Donaldson,  Lufkin & Jenrette  Securities  Corporation and The
  Bank of Nova Scotia/Scotia Capital Markets. As of March 16, 1998, Trace Holdings
  and its  subsidiaries  beneficially  owned  approximately  11,475,000  shares or
  approximately 46% of the outstanding common stock of the Company. In response to
  Trace Holding's  offer, the Company's Board of Directors has appointed a special
  committee to determine the  advisability  and fairness of the proposed buyout to
  the Company's stockholders other than Trace Holdings and its subsidiaries. Trace
  Holding's  proposed  buyout is subject to a number of conditions,  including the
  negotiations of definitive  documents  (which are expected to contain  customary
  closing  conditions);  the filing of a disclosure  statement and other documents
  with the Securities and Exchange Commission; regulatory filings; and approval of
  the transaction by a majority of the Company's stockholders.
  
       On February 27, 1998, the Company and certain of its affiliates completed a
  series of  transactions  designed to simplify  the  Company's  structure  and to
  provide  future  operational  flexibility.  Prior to the  consummation  of these
  transactions, the Company defeased the $4.5 million outstanding principal amount
  of  its  9  1/2%  senior  secured  notes  due  2000.  Foamex  L.P.  settled  its
  intercompany  payables  to  General  Felt with $4.8  million in cash and a $34.0
  million  principal amount promissory note supported by a $34.5 million letter of
  credit  under the Foamex L.P.  credit  facility  (the  "Foamex/GFI  Note").  The
  initial transaction  resulted in the transfer from Foamex L.P. to Trace Foam LLC
  of all of the outstanding  common stock of General Felt, in exchange for (i) the
  assumption by Trace Foam LLC of $129.0 million of Foamex L.P.'s indebtedness and
  (ii) the transfer by Trace Foam LLC to Foamex L.P. of a 1% non-managing  general
  partnership  interest in Foamex L.P. As a result,  General  Felt ceased  being a
  subsidiary  of Foamex L.P. and was relieved  from all  obligations  under Foamex
  L.P.'s 9 7/8% senior subordinated notes due 2007 and 13 1/2% senior subordinated
  notes due 2005. Upon consummation of the initial  transaction,  Foamex Carpet, a
  newly formed  wholly-owned  subsidiary of the Company,  the Company,  Trace Foam
  LLC, and General Felt entered into an Asset  Purchase  Agreement  dated February
  27, 1998, in which General Felt sold substantially all of its assets (other than
  the Foamex/GFI  Note and its operating  facility in Pico Rivera,  California) to
  Foamex  Carpet in exchange  for (i) $20.0  million in cash and (ii) a promissory
  note issued by Foamex  Carpet to Trace Foam LLC in the amount of $70.2  million.
  The $20.0 million cash payment was funded by a distribution  by Foamex L.P. Upon
  consummation of these transactions contemplated by the Asset Purchase Agreement,
  Foamex Carpet entered into a credit agreement with the institutions from time to
  time party  thereto,  as issuing  banks,  and Citicorp USA, Inc. and The Bank of
  Nova Scotia, as administrative agents, which provides for up to $20.0 million in
  revolving credit  borrowings.  These transactions were accounted for in a manner
  similar to a pooling of interests  since the entities were under common control.
  Foamex Carpet will conduct the carpet cushion business  previously  conducted by
  General  Felt.  Also,  Trace Foam LLC has  retained  ownership of one of General
  Felt's operating facilities which is being leased to Foamex Carpet and the $34.0
  million Foamex/GFI Note.
  
       On December  23,  1997,  the Company  acquired  Crain  pursuant to a merger
  agreement with Crain Holdings Corp. for a purchase price of approximately $213.7
  million,  including the  assumption  of debt with a face value of  approximately
  $98.6 million (and an estimated fair value of approximately $112.3 million) (the
  "Crain 
  
                                         12
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
  Acquisition").  In  addition,  fees  and  expenses  associated  with  the  Crain
  Acquisition  are  approximately  $13.2  million.  In  connection  with the Crain
  Acquisition, the Company approved a restructuring/consolidation plan for the two
  entities.  The Company recorded  restructuring charges of $21.1 million relating
  to the  restructuring  of the Company's  operations in connection with the Crain
  Acquisition  and  related  transactions.   In  addition,  the  Company  recorded
  approximately  $1.5 million of severance  and related costs and $8.5 million for
  costs  associated  with the shut  down and  consolidation  of  certain  acquired
  facilities.
  
       On October 6, 1997, the Company sold substantially all of the net assets of
  its  needlepunch  carpeting,  tufted  carpeting and  artificial  grass  products
  business  located at its  facilities  in Dalton,  Georgia  ("Dalton").  Dalton's
  revenues were $10.7 million for the thirteen week period ended March 30, 1997.
  
       Operating  results  for 1998  are  expected  to be  influenced  by  various
  internal and external factors.  These factors include,  among other things,  (i)
  consolidation of the Crain  Acquisition,  (ii) continued  implementation  of the
  continuous  improvement  program to improve the Company's  profitability,  (iii)
  additional  raw  material  cost  increases,  if any, by the  Company's  chemical
  suppliers,  (iv) the Company's  success in passing on to its  customers  selling
  price increases to recover such raw material cost increases and (v) fluctuations
  in interest rates.
  
  13 Week Period  Ended March 29, 1998  Compared to 13 Week Period Ended March 30,
  1997
  
  Results of Operations
  
       Net sales for the first quarter of 1998 were $313.8  million as compared to
  $229.1  million in the first  quarter of 1997,  an increase of $84.7  million or
  37.0%. Carpet cushion products net sales for the first quarter of 1998 increased
  3.8% to $70.5 million from $67.9 million in the first quarter of 1997  primarily
  due to net  sales  from the  Crain  operations  offset  by the sale of Dalton in
  October  which  contributed  net sales of $10.7 million in 1997 and reduction of
  rebond selling prices as compared to 1997 and product mix. Rebond selling prices
  were  approximately  12.0%  lower in the  first  quarter  of 1998  versus  1997.
  Cushioning  products net sales for the first quarter of 1998 increased  86.3% to
  $97.8 million from $52.5  million in the first quarter of 1997  primarily due to
  net sales from the Crain operations and increased volume to our national bedding
  customers and fabricators. Furniture products net sales for the first quarter of
  1998 increased  36.8% to $43.1 million as compared to net sales of $31.5 million
  for the  first  quarter  of 1997  primarily  due to net  sales  from  the  Crain
  operations.  Automotive  products  net  sales  for  the  first  quarter  of 1998
  increased 10.0% to $65.7 million from $59.7 million in the first quarter of 1997
  primarily due to increased  volume.  Technical  products net sales for the first
  quarter of 1998 increased 20.6% to $21.1 million from $17.5 million in the first
  quarter  of 1997  primarily  due to  increased  net  sales  volume  for  felted,
  gasketing,  and  sealing  products.  Consumer  products  net sales for the first
  quarter of 1998 was $156.9 million.  The consumer products category was acquired
  in the December 1997 Crain Acquisition.
  
       Gross profit as a percentage of net sales  decreased to 16.3% for the first
  quarter of 1998 from 18.7% in the first  quarter  of 1997  primarily  due to the
  shift in  product  mix for 1998 as a result  of the Crain  Acquisition.  Crain's
  principal product lines, bedding,  furniture and carpet cushion, have inherently
  lower gross profit margins versus the Company's historical gross profit margins.
  Also,  the gross profit was lower in the first quarter of 1998 since the Company
  carried the full start-up costs related to both organizations.
  
       Income from operations  increased to $28.1 million for the first quarter of
  1998 from $26.8  million in the first  quarter of 1997  primarily  due the Crain
  Acquisition.  The increase in selling,  general and  administrative  expenses is
  primarily due the Crain Acquisition.
  
       Income before  extraordinary  loss  decreased to $6.2 million for the first
  quarter of 1998 as compared to $8.1 million for the first  quarter of 1997.  The
  decrease is primarily due to an increase in interest and debt issuance  expense.
  The increase in interest and debt issuance  expense is primarily due to the debt
  incurred  in  connection  with the Crain  Acquisition  offset  by the  favorable
  effects of the June 1997 refinancing plan.
  
                                         13
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
       The  extraordinary  loss on early  extinguishment  of debt of approximately
  $1.9 million during the first quarter of 1998 primarily relates to the write-off
  of debt issuance costs associated with the GFI Transaction.
  
  Liquidity and Capital Resources
  
       Liquidity and Capital Resources
  
       The  Company  is a holding  company  whose  operations,  as a result of the
  February  27,  1998   transactions,   are  conducted   through  two  wholly-owed
  subsidiaries,  Foamex L.P. and Foamex Carpet. The liquidity  requirements of the
  Company  consist  primarily  of the  operating  cash  requirements  of  its  two
  principal  subsidiaries.  Prior to February 27, 1998,  substantially  all of the
  Company's operations were conducted through Foamex L.P., which at the time was a
  99% owned subsidiary, hence the discussion of historical trends of liquidity and
  capital resources related primarily to Foamex L.P.
  
       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.  The Company believes that
  cash flow from Foamex  L.P.'s  operating  activities,  cash on hand and periodic
  borrowings  under the Credit  Facility,  if necessary,  will be adequate to meet
  Foamex  L.P.'s  liquidity  requirements.  The  ability  to meet  such  liquidity
  requirements  could be impaired  if Foamex L.P.  were to fail to comply with any
  covenants  contained in the Credit Facility and such noncompliance was not cured
  by Foamex L.P. or waived by the lenders.  Foamex L.P. was in compliance with the
  covenants in the Credit Facility as of December 28, 1997 and the Company expects
  Foamex L.P. to be in compliance with such covenants for the foreseeable  future.
  The ability of Foamex L.P. to make distributions to the Company is restricted by
  the terms of its financing agreements; therefore, neither the Company nor Foamex
  Carpet is expected to have access to the cash flow  generated by Foamex L.P. for
  the foreseeable future.
  
       Foamex Carpet's operating cash requirements  consist principally of working
  capital requirements, schedule payments of principal and interest on outstanding
  indebtedness and capital expenditures.  The Company believes that cash flow from
  Foamex Carpet's operating activities, cash on hand and periodic borrowings under
  Foamex  Carpet's  credit  facility  (the "Foamex  Carpet Credit  Facility"),  if
  necessary, will be adequate to meet Foamex Carpet's liquidity requirements.  The
  ability to meet such liquidity  requirements  could be impaired if Foamex Carpet
  were to fail to comply with any covenants  contained in the Foamex Carpet Credit
  Facility and such  noncompliance was not cured by Foamex Carpet or waived by the
  lenders.  The  Company  expects  Foamex  Carpet  to be in  compliance  with such
  covenants  for the  foreseeable  future.  The  ability of Foamex  Carpet to make
  distributions  to the  Company  is  restricted  by the  terms  of its  financing
  agreements;  therefore,  neither the Company nor Foamex L.P. is expected to have
  access to the cash flow generated by Foamex Carpet for the foreseeable future.
  
       Cash and cash  equivalents  increased  $49.0  million  during 1998 to $16.9
  million at March 29, 1998 from $12.0 million at December 28, 1997  primarily due
  to increased borrowings offset by cash used by operating assets and liabilities.
  Working  capital  increased $61.0 million during 1998 to $199.5 million at March
  29, 1998 from $138.5 million at December 28, 19978 primarily due to the increase
  in operating net assets.  Net  operating  assets and  liabilities  (comprised of
  accounts  receivable,  inventories and accounts payable) increased $28.2 million
  during 1998 to $192.5  million at March 29, 1998 from $164.3 million at December
  28, 1997 primarily due to increases in accounts receivable and inventories and a
  decrease in accounts  payable.  The Company's  restructuring/consolidation  plan
  includes accruals of approximately  $26.9 million of cash charges of which $15.6
  million is expected to be paid during 1998.
  
       As of March 29,  1998,  there  were  $124.9  million  of  revolving  credit
  borrowings  under the Credit Facility with unused  availability of approximately
  $25.6 million which includes approximately $49.5 million associated with letters
  of credit  outstanding  which are supported by the Credit Facility.  As of March
  29, 1998,  Foamex Carpet credit facility had used  availability of approximately
  $19.0 million.  Borrowings by Foamex Canada, Inc. as of March 29, 1998 were $5.1
  million  under Foamex  Canada  Inc.'s  revolving  credit  agreement  with unused
  availability of approximately $0.9 million.
  
                                         14
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
       Interest Rate Swaps
  
       The Company  enters into  interest rate swaps to lower funding costs and/or
  to manage interest costs and exposure to changing  interest  rates.  The Company
  does not hold or issue financial instruments for trading purposes.
  
       On January 8, 1998, the Company entered into an amended  interest rate swap
  agreement  which  provides for an interest rate swap  agreement  with a notional
  amount of $150.0 million through June 2002. Under this agreement, the Company is
  obligated to make fixed  payments of 5.78% per annum  through  December 1998 and
  variable  payments  based on LIBOR at the beginning of each six month period for
  the  remainder  of the  agreement,  in exchange  for fixed  payments by the swap
  partner at 6.44% per annum for the life of the agreement,  payable  semiannually
  in arrears.  The newly amended interest rate swap agreement can be terminated by
  the swap partner at the end of each six month period commencing December 1999.
  
       The Company is exposed to credit loss in the event of a  nonperformance  by
  the swap partner; however, the occurrence of this event is not anticipated.  The
  effect of interest  rate swaps was a favorable  adjustment  to interest and debt
  issuance  expense of $0.3 million and $0.9 million for the thirteen week periods
  ended March 29, 1998 and March 30, 1997, respectively.
  
  Environmental Matters
  
       The Company is subject to  extensive  and changing  environmental  laws and
  regulations.  Expenditures to date in connection  with the Company's  compliance
  with  such  laws and  regulations  did not have a  material  adverse  effect  on
  operations,  financial position,  capital expenditures or competitive  position.
  The  amount  of  liabilities   recorded  by  the  Company  in  connection   with
  environmental  matters as of March 29, 1998 was $4.9 million. In addition, as of
  December 28, 1997, the Company has net receivables of approximately $1.1 million
  for  indemnification  of environmental  liabilities  from former owners,  net of
  approximately  $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 the Company to reassess its
  potential  exposure  to  all  pending  environmental  matters,  including  those
  described in the footnotes to the Company's  consolidated  financial statements,
  management  believes that, based upon all currently available  information,  the
  resolution  of all such pending  environmental  matters will not have a material
  adverse  effect  on  the  Company's  operations,   financial  position,  capital
  expenditures or competitive position.
  
  Inflation and Other Matters
  
       There was no significant impact on the Company's  operations as a result of
  inflation  during the  periods  presented.  See  "Results of  Operations"  for a
  discussion of the impact of raw material price increases. In some circumstances,
  market  conditions  or  customer  expectations  may  prevent  the  Company  from
  increasing the price of its products to offset the  inflationary  pressures that
  may increase its costs in the future.
  
       The  Company  has and will  continue  to make  certain  investments  in its
  software  systems and applications to ensure the Company is Year 2000 compliant.
  The Company plans to continue to make  modifications to the identified  software
  during  1998 and test the  changes  during  1998.  The  financial  impact to the
  Company has not been and is not  anticipated  to be  material  to its  financial
  position or results of operation in any given year.
  
       The Company'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.
  
                                         15
  ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS
  
  New Accounting Standards
  
       Statement  of  Financial  Accounting  Standards  No. 130 ("SFAS No.  130"),
  "Reporting  Comprehensive  Income,"  was  issued  by  the  Financial  Accounting
  Standards  Board in June 1997.  This  statement  requires all items that must be
  recognized under accounting  standards as components of comprehensive  income to
  be reported in a financial  statement that is displayed with the same prominence
  as other financial statements. The Company will adopt SFAS No. 130 for 1998.
  
       Statement  of  Financial  Accounting  Standards  No. 131 ("SFAS No.  131"),
  "Disclosures  about  Segments of an Enterprise  and Restated  Information,"  was
  issued by the Financial  Accounting Standards Board in June 1997. This statement
  establishes  standards for reporting  information  about  operating  segments in
  annual  financial  statements  and  requires  reporting  of  selected  financial
  information  about  operating  segments in interim  financial  reports issued to
  stockholders.  It also  establishes  standards  for  related  disclosures  about
  products and services,  geographic areas, and major customers.  The Company will
  adopt SFAS No. 131 for year ended 1998  reporting.  Management is evaluating the
  impact,  if any,  the  standard  will  have  on the  Company's  present  segment
  reporting.
  
                                         16
  Part II - Other Information
  
  Item 1.    Legal Proceedings
  
             Reference  is  made  to  the  description  of the  legal  proceedings
             contained  in the  Company's  Annual  Report on Form  10-K/A  for the
             fiscal year ended December 28, 1997.
  
             The  information  from  Notes 6 and 7 of the  condensed  consolidated
             financial  statements of the Company as of March 29, 1998 (unaudited)
             is incorporated herein by reference.
  
  Item 2.    Changes in Securities
  
             None.
  
  Item 3.    Defaults Upon Senior Securities
  
             None.
  
  Item 4.    Submission of Matters to a Vote of Security Holders.
  
             None.
  
  Item 5.    Other Information
  
             None.
  
  Item 6.    Exhibits and Reports on Form 8-K
  
            (a)  Exhibits
  
  2.1(x)         - Transfer  Agreement,  dated as of  February  27,  1998,  by and
                 between Trace Foam LLC and Foamex L.P.
  2.2(x)         - Asset Purchase Agreement, dated as of February 27, 1998, by and
                 among Foamex  Carpet  Cushion,  Inc.  ("Foamex  Carpet"),  Foamex
                 International,  Trace Foam LLC and General Felt Industries,  Inc.
                 ("General Felt").
  3.1(a)         - Certificate of Limited Partnership of Foamex L.P.
  3.2.1(a)       - Fourth Amended and Restated Agreement of Limited Partnership of
                 Foamex L.P.,  dated as of December  14, 1993,  by and among FMXI,
                 Inc.  ("FMXI") and Trace Foam Company,  Inc.  ("Trace Foam"),  as
                 general  partners,   and  Foamex   International   Inc.  ("Foamex
                 International"),   as  a  limited   partner   (the   "Partnership
                 Agreement").
  3.2.2(b)       - First  Amendment to the Partnership  Agreement,  dated June 28,
                 1994.
  3.2.3(c)       - Second Amendment to the Partnership  Agreement,  dated June 12,
                 1997.
  3.2.4(v)       - Third  Amendment to the Partnership  Agreement,  dated December
                 23, 1997.
  3.2.5(x)       - Fourth Amendment to the Partnership  Agreement,  dated February
                 27, 1998.
  3.3            - Certificate of Incorporation of FMXI.
  3.4            - By-laws of FMXI.
  3.5(k)         - Certificate  of  Incorporation  of Foamex  Capital  Corporation
                 ("FCC").
  3.6(k)         - By-laws of FCC.
  3.7(a)         - Certificate of Incorporation of Foamex International.
  3.8(a)         - By-laws of Foamex International.
  4.1.1(d)       - Indenture, dated as of June 12, 1997, by and among Foamex L.P.,
                 FCC,  the  Subsidiary  Guarantors  and The Bank of New  York,  as
                 trustee,  relating  to  $150,000,000  principal  amount of 9 7/8%
                 Senior   Subordinated  Notes  due  2007  (the  "9  7/8%  Notes"),
                 including  the form of Senior  Subordinated  Note and  Subsidiary
                 Guarantee.
  
                                         17
  4.1.2(v)       - First  Supplemental  Indenture,  dated as of December 23, 1997,
                 between Foamex LLC ("FLLC") and The Bank of New York, as trustee,
                 relating to the 9 7/8% Notes.
  4.1.3(x)       - Second Supplemental  Indenture,  dated as of February 27, 1998,
                 among Foamex L.P. and FCC, as joint and several obligors, General
                 Felt, Foamex Fibers, and FLLC, as withdrawing guarantors, and The
                 Bank of New York, as trustee, relating to the 9 7/8% Notes.
  4.1.4(d)       - Registration  Rights  Agreement,  dated as of June 12, 1997, by
                 and among Foamex L.P., FCC, General Felt, Foamex Fibers,  and all
                 future direct or indirect domestic subsidiaries of Foamex L.P. or
                 FCC, and  Donaldson,  Lufkin & Jenrette  Securities  Corporation,
                 Salomon  Brothers  Inc. and Scotia  Capital  Markets,  as Initial
                 Purchasers.
  4.2.1(v)       - Indenture,  dated as of December 23, 1997,  by and among Foamex
                 L.P.,  FCC, the Subsidiary  Guarantors,  Crain Holdings Corp., as
                 Intermediate  obligator,  and The Bank of New York,  as  trustee,
                 relating  to  $98,000,000  principal  amount  of 13  1/2%  Senior
                 Subordinated Notes due 2005 (the "13 1/2% Notes"),  including the
                 form of Senior Subordinated Note and Subsidiary Guarantee.
  4.2.2(x)       - First  Supplemental  Indenture,  dated as of February 27, 1998,
                 among Foamex L.P. and FCC, as joint and several obligors, General
                 Felt,  Foamex Fibers and FLLC, as withdrawing  guarantors,  Crain
                 Industries,  Inc., as withdrawing  intermediate  obligor, and The
                 Bank of New York, as trustee, relating to the 13 1/2% Notes.
  4.3(x)         - Discharge of  Indenture,  dated as of February 27, 1998, by and
                 among Foamex L.P.,  General Felt, Foamex  International and State
                 Street Bank and Trust Company, as trustee, relating to the 9 1/2%
                 Senior Secured Notes due 2000.
  4.4.1(x)       - Credit  Agreement,  dated as of June 12,  1997,  as amended and
                 restated as of February 27, 1998,  by and among Foamex L.P.,  and
                 FMXI,  the  institutions  from  time to  time  party  thereto  as
                 lenders,  the  institutions  from time to time  party  thereto as
                 issuing  banks,  and  Citicorp  USA,  Inc.  and The  Bank of Nova
                 Scotia, as Administrative Agents.
  4.4.2(x)       - Second  Amended and  Restated  Foamex  International  Guaranty,
                 dated as of February 27, 1998,  made by Foamex  International  in
                 favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.3(x)       - Amended and Restated Partnership Guaranty, dated as of February
                 27,  1998,  made by FMXI in  favor  of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.4(p)       - Foamex Guaranty, dated as of June 12, 1997, made by Foamex L.P.
                 in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.5(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Latin America, Inc. in favor of Citicorp USA, Inc., as Collateral
                 Agent.
  4.4.6(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.7(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by FCC in
                 favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.8(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Mexico II, Inc. in favor of Citicorp  USA,  Inc.,  as  Collateral
                 Agent.
  4.4.9(p)       - Subsidiary Guaranty,  dated as of June 12, 1997, made by Foamex
                 Asia, Inc. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.10(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.11(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex Latin  America,  Inc. in favor of Citicorp  USA,  Inc., as
                 Collateral Agent.
  4.4.12(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex Asia,  Inc. in favor of Citicorp USA,  Inc., as Collateral
                 Agent.
  4.4.13(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex Mexico, Inc. in favor of Citicorp USA, Inc., as Collateral
                 Agent.
  4.4.14(p)      - Subsidiary Pledge Agreement, dated as of June 12, 1997, made by
                 Foamex  Mexico  II,  Inc.  in favor of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  
                                         18
  4.4.15(p)      - Foamex Security  Agreement,  dated as of June 12, 1997, made by
                 Foamex L.P. in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.16(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by Foamex Latin America,  Inc. in favor of Citicorp USA, Inc., as
                 Collateral Agent.
  4.4.17(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by  Foamex  Mexico,  Inc.  in favor of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.18(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by Foamex  Mexico II,  Inc. in favor of Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.19(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by  Foamex  Asia,  Inc.  in  favor  of  Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  4.4.20(p)      - Subsidiary Security Agreement,  dated as of June 12, 1997, made
                 by FCC in favor of Citicorp USA, Inc., as Collateral Agent.
  4.4.21         - Intentionally omitted.
  4.4.22(w)      -  First  Amendment  to  Foamex  Pledge  Agreement,  dated  as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.23(w)      - First  Amendment  to  Foamex  Security  Agreement,  dated as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.24(w)      -  First  Amendment  to  Foamex  Patent  Agreement,  dated  as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.25(w)      - First Amendment to Trademark  Security  Agreement,  dated as of
                 December 23, 1997, by Foamex L.P. in favor of Citicorp USA, Inc.,
                 as Collateral Agent.
  4.4.26(w)      -  Acknowledgment  of  Guaranty  by each of the  guarantors  to a
                 Guaranty dated June 12, 1997 in favor of Citicorp USA, Inc.
  4.4.27(w)      - First Amendment to Pledge  Agreement,  dated as of December 23,
                 1997, by pledgors in favor of Citicorp USA, Inc.
  4.4.28(w)      - Crain Industries Guaranty,  dated as of December 23, 1997, made
                 by Crain in favor of Citicorp USA, Inc.
  4.4.29(x)      - Partnership  Pledge  Agreement,  dated as of February 27, 1998,
                 made by Foamex  International  and FMXI in favor of Citicorp USA,
                 Inc., as Collateral Agent.
  4.5(u)         - Commitment  letter,  dated July 17, 1997, from The Bank of Nova
                 Scotia to Foamex Canada Inc.
  4.6(a)         n 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").
  4.7(a)         - Marely Loan  Commitment  Agreement,  dated as of  December  14,
                 1993, by and between Foamex L.P. and Marely s.a. ("Marely").
  4.8(a)         - DLJ Loan Commitment  Agreement,  dated as of December 14, 1993,
                 by and between Foamex L.P. and DLJ Funding, Inc. ("DLJ Funding").
  4.9.1(p)       -  Promissory  Note,  dated  June  12,  1997,  in  the  aggregate
                 principal  amount of  $5,000,000,  executed by Trace  Holdings to
                 Foamex L.P.
  4.9.2(p)       -  Promissory  Note,  dated  June  12,  1997,  in  the  aggregate
                 principal  amount of  $4,794,828,  executed by Trace  Holdings to
                 Foamex L.P.
  4.10.1(x)      - Credit  Agreement,  dated as of February 27, 1998, by and among
                 Foamex Carpet,  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.
  4.10.2(x)      - Foamex International  Guaranty,  dated as of February 27, 1998,
                 made by Foamex  International  in favor of Citicorp USA, Inc., as
                 Collateral Agent.
  4.10.3(x)      - Foamex International Pledge Agreement, dated as of February 27,
                 1998,  made by Foamex  International  in favor of  Citicorp  USA,
                 Inc., as Collateral Agent.
  4.10.4(x)      - New GFI Security Agreement, dated as of February 27, 1998, made
                 by Foamex  Carpet in favor of Citicorp  USA,  Inc., as Collateral
                 Agent.
  4.10.5(x)      - New GFI Intercreditor Agreement, dated as of February 27, 1998,
                 by  and  among  Foamex  Carpet,  The  Bank  of  Nova  Scotia,  as
                 Administrative  Agent, and Citicorp USA, Inc., as  Administrative
                 Agent and Collateral Agent.
  4.10.6(x)      - FII Intercreditor Agreement,  dated as of February 27, 1998, by
                 and between  Foamex  International  and Citicorp  USA,  Inc.,  as
                 Collateral Agent.
  
                                         19
  4.11.1(x)      -  Promissory  Note of Foamex  L.P. in favor of Trace Foam LLC in
                 the principal amount of $34 million, dated February 27, 1998.
  4.12.1(x)      - Promissory  Note of Foamex Carpet in favor of Trace Foam LLC in
                 the principal amount of $70.2 million, dated February 27, 1998.
  10.1.1(p)      -  Amendment  to  Master  Agreement,  dated  as of June 5,  1997,
                 between Citibank, N.A. and Foamex L.P.
  10.1.2(p)      -  Amended  Confirmation,  dated  as of June  13,  1997,  between
                 Citibank, N.A. and Foamex L.P.
  10.2(h)        - Reimbursement  Agreement,  dated as of March 23, 1993,  between
                 Trace Holdings and General Felt.
  10.3(h)        - Shareholder Agreement, dated December 31, 1992, among Recticel,
                 s.a.  ("Recticel"),  Recticel  Holding  Noord B.V.,  Foamex L.P.,
                 Beamech Group Limited, LME-Beamech,  Inc., James Brian Blackwell,
                 and Prefoam AG relating to foam technology sharing arrangement.
  10.4.1(k)      - Asset Transfer Agreement,  dated as of October 2, 1990, between
                 Trace  Holdings  and  Foamex  L.P.  (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
                 Recticel Foam Corporation ("RFC") and Foamex L.P. (the "RFC Asset
                 Transfer Agreement").
  10.5.2(k)      - First  Amendment,  dated as of December  19,  1991,  to the RFC
                 Asset Transfer Agreement.
  10.5.3(k)      - Schedule 5.03 to the RFC Asset  Transfer  Agreement  (the "5.03
                 Protocol").
  10.5.4(h)      - The 5.03 Protocol Assumption Agreement, dated as of October 13,
                 1992,  between RFC and Foamex L.P.  10.5.5(h) n Letter  Agreement
                 between  Trace  Holdings  and  Recticel  regarding  the  Recticel
                 Guaranty, dated as of July 22, 1992.
  10.6(l)        - Supply Agreement,  dated June 28, 1994, between Foamex L.P. and
                 Foamex International.
  10.7.1(l)      - First Amended and Restated Tax Sharing  Agreement,  dated as of
                 December 14, 1993, among Foamex L.P., Trace Foam, FMXI and Foamex
                 International.
  10.7.2(d)      - First  Amendment to Amended and Restated Tax Sharing  Agreement
                 of Foamex L.P.,  dated as of June 12,  1997,  by and among Foamex
                 L.P., Foamex International, FMXI and Trace Foam.
  10.7.3(w)      - Second Amendment to Amended and Restated Tax Sharing  Agreement
                 of Foamex  L.P.,  dated as of  December  23,  1997,  by and among
                 Foamex L.P., Foamex International, FMXI, and Trace Foam.
  10.7.4         - Third  Amendment to Amended and Restated Tax Sharing  Agreement
                 of Foamex L.P.,  dated as of February  27,  1998,  by and between
                 Foamex L.P., Foamex International and FMXI.
  10.8.1(m)      - Tax Distribution  Advance  Agreement,  dated as of December 11,
                 1996, by and between Foamex L.P. 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
                 International.
  10.9.1(h)      - Trace Foam Management  Agreement  between Foamex L.P. 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 L.P. and Trace Foam.
  10.9.3(d)      - First Amendment to Management  Agreement,  dated as of June 12,
                 1997, by and between Foamex L.P. and Trace Foam.
  10.10.1(k)     - Salaried Incentive Plan of Foamex L.P. and Subsidiaries.
  10.10.2(k)     - Trace Holdings 1987 Nonqualified Stock Option Plan.
  10.10.3(k)     - Equity Growth Participation Program.
  10.10.4(o)     - The Foamex L.P.  Salaried  Pension Plan  (formerly  the General
                 Felt Industries,  Inc.  Retirement Plan for Salaried  Employees),
                 effective as of January 1, 1995.
  
                                         20
  10.10.5(u)     - The Foamex  L.P.  Hourly  Pension  Plan  (formerly  "The Foamex
                 Products  Inc.  Hourly  Employee  Retirement  Plan),  as  amended
                 December 31, 1995.
  10.10.6(u)     - Foamex L.P. 401(k) Savings Plan effective October 1, 1997.
  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.
  10.12.1(a)     - Warrant Exchange  Agreement,  dated as of December 14, 1993, by
                 and between Foamex L.P. and Marely.
  10.12.2(a)     - Warrant Exchange  Agreement,  dated as of December 14, 1993, by
                 and between Foamex L.P. and DLJ Funding.
  10.13(t)       - Warrant  Agreement,  dated as of June 28, 1994,  by and between
                 Foamex International and Shawmut Bank.
  10.14(o)       - Stock Purchase Agreement, dated as of December 23, 1993, by and
                 between   Transformacion   de  Espumas  u  Fieltros,   S.A.,  the
                 stockholders which are parties thereto, and Foamex L.P.
  10.15.1(r)     - Asset Purchase  Agreement,  dated as of August 29, 1997, by and
                 among  General  Felt,  Foamex L.P.,  Bretlin,  Inc. and The Dixie
                 Group.
  10.15.2(s)     - Addendum to Asset  Purchase  Agreement,  dated as of October 1,
                 1997, by and among General Felt, Foamex L.P.,  Bretlin,  Inc. and
                 The Dixie Group.
  10.16.1(x)     - Supply Agreement, dated as of February 27, 1998, by and between
                 Foamex L.P. and General Felt (as assigned to Foamex Carpet).
  10.16.2(x)     -  Administrative  Services  Agreement,  dated as of February 27,
                 1998, by and between Foamex L.P. and General Felt (as assigned to
                 Foamex Carpet).
  10.17          - Tax Sharing  Agreement,  dated as of February 27, 1998, between
                 Foamex International and Foamex Carpet.
  23.1           - Consent of Independent Accountants, Coopers & Lybrand L.L.P.
  27             - Financial  Data Schedule for the year ended  December 28, 1997.
  ----------------------------
  
  (a)  Incorporated   herein  by  reference  to  the  Exhibit  to  Foamex   L.P.'s
       Registration Statement on Form S-1, Registration No. 33-69606.
  
  (b)  Incorporated  herein by reference to the Exhibit to the Form 10-K of Foamex
       for the fiscal year ended January 1, 1995.
  
  (c)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred May 28, 1997.
  
  (d)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form 8-K of Foamex reporting an event that occurred June 12, 1997.
  
  (e)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex and FCC on Form S-4, Registration No. 33-65158.
  
  (f)  Incorporated  herein by reference to the Exhibit to the Form 10-Q of Foamex
       for the quarterly period ended June 30, 1996.
  
  (g)  Incorporated  herein  by  reference  to the  Exhibit  to  the  Registration
       Statement of Foamex,  FCC and General Felt on Form S-1,  Registration  Nos.
       33-60888, 33-60888-01, and 33-60888-02.
  
  (h)  Incorporated  herein by reference to the Exhibit to the Form 10-K Statement
       of Foamex and FCC for fiscal 1992.
  
                                         21
  (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.
  
  (r)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on August 29, 1997.
  
  (s)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex L.P. reporting an event that occurred on October 6, 1997.
  
  (t)  Incorporated  by  reference  to the  Exhibit  to the  Form  10-Q of  Foamex
       International for the quarterly period ended July 3, 1994.
  
  (u)  Incorporated  by  reference  to the Exhibit to the Form 10-Q of Foamex L.P.
       for the quarterly period ended September 28, 1997.
  
  (v)  Incorporated  herein by reference  to the Exhibit to the Current  Report on
       Form  8-K  of  Foamex  L.P.,   Foamex   Capital   Corporation   and  Foamex
       International reporting an event that occurred December 23, 1997.
  
  (w)  Incorporated  herein  by  reference  to the  Exhibit  in  the  Registration
       Statement of Foamex on Form S-4, Registration No. 333-45733.
  
  (x)  Incorporated  herein  by  reference  to the  Current  Report on Form 8-K of
       Foamex International reporting an event that occurred on February 27, 1998.
  
       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.
  
                                         22
  SIGNATURES
  
       Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                          FOAMEX INTERNATIONAL INC.
  
  Date:   May 18, 1998                    By:/s/ Kenneth R. Fuette
                                             -------------------------
                                             Kenneth R. Fuette
                                             Chief Financial Officer