Flooring News and Information

Warren, NJ, Nov. 14— Formica Corporation’s results for the third quarter ended September 30 includes the results of Perstorp Surface Materials AB for all periods beginning April 1, 2000 on. The company also said that it had received an extension of its existing waiver from its bank syndicate related to certain financial covenants under its $345 million credit facility. This extended waiver is effective through February 9.

Net sales for the quarter decreased $17.4 million, or 8.5%, to $188.4 million vs. $205.8 million for the same prior year period. This decrease is primarily due to lower volume, which was exacerbated late in the quarter by a drop-off in shipments related to the post September 11th slowdown and a $6.7 million unfavorable foreign exchange impact on sales. For the nine months, net sales were $576.9 million, compared to $573.2 million for the same prior year period, an increase of $3.7 million, or 0.6%. This increase was primarily due to the inclusion of PSM sales in 2001, partially offset by lower laminate volume and a $26.6 million unfavorable foreign exchange impact on sales.

On an unadjusted basis, EBITDA for the quarter decreased $8.1 million to $13.1 million in 2001 compared to $21.2 million for the same prior year period. After taking into account restructuring charges in the quarter in both 2001 and 2000, EBITDA, as adjusted, was $14.6 million, compared to $21.9 million a year ago, a decrease of $7.3 million. EBITDA for the nine month period increased $1.7 million to $44.9 million from $43.2 million in the prior year period. After taking into account restructuring charges in both 2001 and 2000, and terminated acquisition costs in 2000, EBITDA for the nine months, as adjusted, was $47.1 million and $55.9 million last year, a decrease of $8.8 million.

A waiver from the bank syndicate was received on August 13 and was due to expire on November 9. On November 9th the company received a waiver extension, which expires on February 9. This extension was requested due to further global economic uncertainty caused by the events of September 11th. During the extended waiver period the company, in conjunction with its equity owners, will continue its discussions with its banks to amend the future requirements of the covenants under the Credit Agreement. The terms of the extension of the waiver call for an increase in the non-cash or paid in kind interest spread, the funding of $8.4 million in a collateral account with the Agent Bank for the Syndicate representing interest and principal due under the bank facility between November 9th and December 31, as well as the provision of additional collateral.

Vincent Langone, chairman, president and CEO of Formica Corporation stated, "We are pleased with the successful extension of the waiver period, which comes during what is widely acknowledged as one of the most turbulent times in recent economic history. While the weakness and uncertainty in the global markets presents challenges for all companies doing business today, we are confident that the cost reduction measures previously put in place, along with the benefits of the integration of the Formica and PSM operations, will enable us to continue to build a strong global company. We look forward to continuing discussions with our equity owners and bank syndicate concerning a mutually satisfactory amendment to the existing Credit Facility."