Sealy Corporation and Subsidiaries, f.k.a. The Ohio Mattress Company and Subsidiaries, et al. - Page 4

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          B.    The 1970 Public Offering                                                     
                Petitioners were privately owned before 1970 and thus were                   
          not subject to the reporting requirements of the Securities and                    
          Exchange Act of 1934 (the 1934 Act), ch. 404, 48 Stat. 881                         
          (current version at 15 U.S.C. secs. 78a-78lll (1994)).  The Ohio                   
          Mattress Co. first offered its stock for public sale in February                   
          1970.  The reporting requirements of the 1934 Act have applied to                  
          petitioners since 1970.                                                            
                The 1934 Act requires petitioners to file quarterly and                      
          annual financial reports with the Securities and Exchange                          
          Commission (SEC).  Petitioners incurred expenses of $1,808,309 in                  
          taxable years 1989 to 1992 for professional services to comply                     
          with reporting, filing, and disclosure requirements imposed by                     
          the 1934 Act.  Petitioners paid auditing and professional fees to                  
          KPMG Peat Marwick, Ernst & Whinney, and Ernst & Young to                           
          represent petitioners before the SEC’s chief accountant’s office                   
          and to prepare SEC registration statements  S-1 and S-4 relating                   
          to public securities offerings.  Petitioners incurred these                        
          expenses to comply with section 13(a)(2) of the 1934 Act, 15                       
          U.S.C. sec. 78m, which requires petitioners to file quarterly and                  
          annual reports with the SEC and to have the annual reports                         
          audited by an independent public auditor.                                          
          C.    Petitioners’ Employee Benefits Plans                                         
                Before 1985, petitioners adopted various employee benefit                    
          plans for their employees.  As employee benefit plan                               




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