PROSPECTUS SUPPLEMENT File Pursuant to Rule
(To Prospectus dated May 19, 2000) 424(b)(3) of the Rules and
and Regulations Under the Securities
Act of 1933
Registration Statement
No. 333-76683
FORMICA CORPORATION
10 7/8% Series B Senior Subordinated Notes Due 2009
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RECENT DEVELOPMENTS
We have attached to this prospectus supplement, and incorporated by reference
into it, the Form 8-K Current Report of Formica Corporation filed with the SEC
on May 31, 2000.
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This prospectus supplement, together with the prospectus, is to be used by
Donaldson, Lufkin & Jenrette Securities Corporation in connection with offers
and sales of the notes in market-making transactions at negotiated prices
related to prevailing market prices at the time of sale.
Donaldson, Lufkin & Jenrette Securities Corporation may act as principal or
agent in such transactions.
June 7, 2000
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) May 26, 2000
FORMICA CORPORATION
(Exact name of registrant as specified in its character)
Commission File Number: 333-76683
Delaware 34-104-6753
(State or other jurisdiction of (I.R.S.
incorporation or organization) Employer Identification No.)
15 Independence Boulevard
Warren, NJ 07059
(908) 647-8700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 26, 2000, Formica Corporation (the "Company") completed the
previously announced acquisition of all of the stock of Decorative Surfaces
Holding AB ("DSH"), from FM Holdings Inc. ("Holdings"). Holdings is the parent
company of Formica Corporation. DSH had originally been established by DLJ
Merchant Banking Partners, one of the principal shareholders of Laminates
Acquisition Co. ("Laminates"), Holdings' parent, in March 2000, but was
subsequently transferred to Holdings. On March 31, 2000, DSH acquired Perstorp
Surface Materials AB ("PSM") from Perstorp AB (Sweden) for approximately $175.5
million, subject to post-closing adjustment. The consideration paid to Perstorp
was determined through arms'-length negotiations between DSH and Perstorp.
The PSM acquisition and related fees and expenses was financed with $110.0
million of term loan proceeds under a new senior credit facility provided to DS
Holding Inc. and the issuance of approximately $80.0 million of warrants,
common stock and preferred stock of Laminates and Holdings to DLJ Merchant
Banking Partners II, L.P. and related funds, CVC Capital Partners, Limited and
management. The $110.0 million in term loans was provided by PSM Funding, Inc.,
an affiliate of DLJ Merchant Banking Partners II, L.P., one of the principal
shareholders of Laminates.
Holdings had previously announced its intention to contribute the stock of
DSH together with unused proceeds raised through the debt and equity issued in
connection with the acquisition to Formica once certain conditions were
satisfied. Formica was not required to pay any consideration for that
contribution, but will assume the $110.0 million in debt incurred to finance
the acquisition and an additional $30.0 million of revolving loans borrowed
under the new senior credit facility provided to DS Holding Inc., proceeds from
which will be used to pay amounts due under Formica's existing credit facility
immediately prior to the contribution and the obligation to make any
post-closing adjustment payments. Immediately after the contribution of DSH to
Formica, DSH was merged with and into Formica. The $110.0 million term loan and
the $30.0 million revolving loan will be folded into Formica's existing credit
facility as a separate tranche of term borrowings. The new tranche will mature
in 2006 and will require 1% annual amortization (payable quarterly) until March
31, 2005, with all remaining amounts payable in increments of $27.6 million
quarterly thereafter until maturity. Interest on the term loan will be, at our
option, either 2.25% over the Base Rate or 3.5% over LIBOR. Interest rates on
the other tranches of the credit facility will also be increased by 0.5% in
connection with this transaction.
PSM is a worldwide producer of decorative and industrial laminates,
finished foils, printed paper and other surfacing materials. PSM has been
active in the surfacing materials industry since 1955 and is one of the leading
brands in decorative surfaces and employs approximately 1,700 employees
worldwide. PSM has production and distribution facilities in Perstorp, Sweden;
Burstadt, Germany; Aycliffe and Christchurch, United Kingdom; Kolho, Finland;
St. Avold, France; Valencia, Spain; Sao Paulo and Embu, Brazil; Beijing, China;
and Bangkok, Thailand. The principal assets of PSM include property, plant and
equipment at those various facilities, and current assets, including inventory
and receivables. PSM has used these assets in connection with its business, and
we intend to continue to use these assets for the decorative laminates
business.
Formica Corporation is one of the leading companies in the decorative
surfacing products market, producing high pressure laminate, solid surfacing
materials and laminate flooring in the United States, Canada, the United
Kingdom, France, Spain, Taiwan and China.
In addition to bringing a strong European franchise, Formica believes that
PSM represents an important strategic opportunity for Formica. Formica believes
that there are opportunities in rationalizing manufacturing, purchasing,
marketing, selling and administrative functions, which will create a
synergistic combination. Formica also believes there are opportunities to
improve gross profit margins through raw material sourcing benefits. Management
believes the acquisition will accelerate additional growth for the Company and
provide the basis for synergies and cost savings.
Forward-Looking Information
This report contains certain forward-looking statements. These statements
are subject to risks and uncertainties. Forward-looking statements include the
information concerning our future operating performance, including sales growth
and cost savings and synergies following our acquisition of Perstorp Surface
Materials.
In addition, statements that include the words "believes," "expects,"
"anticipates," intends," "estimates," "will," "should," "may," or other similar
expressions are forward-looking statements. For those statements, we claim the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
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What Factors Could Affect the Outcome of Our Forward-Looking Statements?
You should understand that the following important could affect the future
results of Formica and could cause those results or other outcomes to differ
materially from those expressed in our forward-looking statements.
Industry and Market Factors
o changes in economic conditions generally or in the markets served by the
Company
o fluctuations in raw material and energy prices
o product specifier preferences and spending patterns and
o competition from other decorative surfaces producers
Operating Factors
o our ability to combine our recently acquired businesses while maintaining
current operating performance levels during the integration period(s) and
the challenges inherent in diverting our management's focus and resources
from other strategic opportunities and from operational matters
o our ability to implement our cost savings plans without adversely
impacting our net sales and
o our ability to attract, hire and retain suitable personnel
Factors Relating to our Debt and the Notes
We have substantial debt, which could limit our cash available for other
uses and harm our competitive position. In connection with our acquisition by
Laminates, we incurred significant indebtedness. The level of our indebtedness
could have important consequences to us, including:
o limiting cash flow available for general corporate purposes, including
acquisitions, because a substantial portion of our cash flow from
operations must be dedicated to debt service
o limiting our ability to obtain additional debt financing in the future for
working capital, capital expenditures or acquisitions
o limiting our flexibility in reacting to competitive and other changes in
the industry and economic conditions generally and
o exposing us to risks inherent in interest rate fluctuations because some
of our borrowings may be at variable rates of interest, which could result
in higher interest expense in the event of increases in interest rates
You should read the section called "Risk Factors" in the Registration
Statements on Form S-1 (file no. 333-76683) that we filed with the SEC, for
additional information about risks that may cause our actual results and
experience to differ materially from those contained in forward-looking
statements.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND SCHEDULES
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The historical Balance Sheet and Statement of Net Revenues over Direct
Expenses of PSM as of and for the year ended December 31, 1999 are currently
being prepared. The historical financial statements as of and for the year
ended December 31, 1999 will be submitted in an 8-K/A within 60 days of this
filing.
(b) PRO FORMA FINANCIAL INFORMATION
The Unaudited Pro Forma Condensed Combined Statement of Operations for the
year ended December 31, 1999 and the Unaudited Condensed Combined Balance Sheet
and Statement of Operations as of and for the three month period ended March
31, 2000 is in the process of being prepared. The historical PSM financial
information as of December 31, 1999 and for the year then ended and as of and
for the three month period ended March 31, 2000 which are needed to prepare the
related pro forma financial statements for these periods is subject to
discussions, review and finalization by Perstorp AB and Formica management. The
Pro Forma Combined Condensed Statement Of Operations for the year ended
December 31, 1999 and the Unaudited Condensed Combined Balance Sheet and
Statement of Operations as of and for the period ended March 31, 2000 will be
submitted in an 8-K/A within 60 days of this filing on form 8-K.
EXHIBITS See index to exhibits on page 4 of this Form 8-K.
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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.
Formica Corporation
Dated: May 30, 2000 By: /s/ David T. Schneider
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David T. Schneider
Vice President and Chief Financial
Officer
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Item 7(c) EXHIBITS
Exhibit
Number Exhibit Description
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2.1 Certificate of Merger between Formica and DSH
2.2 Share Transfer Agreement between Perstorp Nederland B.V. and
Decorative Surfaces Holding AB
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