As we anticipated and communicated over the past few quarters, the momentum in domestic volume that has been building continued during the first quarter as unit growth turned positive, due primarily to strength in our promotional and specialty product lines.
David J. McIlquham, Chairman and CEO, Sealy

Sealy Corporation reported net sales for the fiscal quarter ended February 25, 2007 increased 4.3% to $412.6 million from $395.7 million for the comparable period a year earlier on unit volume growth of 12.2%. Partially offsetting this increase was a 7.1% decrease in average unit selling price (AUSP).

"As we anticipated and communicated over the past few quarters, the momentum in domestic volume that has been building continued during the first quarter as unit growth turned positive, due primarily to strength in our promotional and specialty product lines," said David J. McIlquham, Sealy's Chairman and Chief Executive Officer. "We are enthusiastic about the arrival onto our customers' floors, beginning this quarter, of the products which we introduced in January at the Las Vegas Furniture Market."

Sealy's international net sales increased $14.7 million or 18.1% to $95.9 million. The increase internationally represents a 33.2% increase in unit volume, partially offset by a decrease in AUSP primarily due to strategic pricing actions in Canada and increased sales of lower priced products in Europe.

Domestic net sales increased $2.1 million to $316.7 million on a 4.5% increase in volume, partially offset by a 3.7% decrease in AUSP. The increase in volume is primarily attributable to the strong growth of promotional and specialty bedding products. The decrease in AUSP is due to the higher volume of promotional bedding sales and strategic pricing actions on selected Stearns & Foster and TrueForm products.

First quarter gross profit was $177.3 million, or 43.0% of sales, versus $176.7 million, or 44.7% of sales, for the comparable period a year earlier. The decline in gross profit as a percentage of sales was driven by a planned increase in sales of lower margin promotional products, strategic pricing actions, the additional product costs required to bring the majority of our products in compliance with the July 2007 flame retardant regulations and the startup costs associated with the Company's new latex facility in Mountain Top, Pennsylvania. These factors were partially offset by continued improvements in manufacturing efficiencies.

Net income for the first quarter increased 7.2% to $24.6 million versus $23.0 million for the comparable period a year ago. Earnings per fully diluted share were $0.26.