H a l f -ye a r r e p o rt
2002

Adhesives Business Helps to Improve First Half-Year Results
Dear shareholders

The positive development of the adhesives business and the unsatisfactory market situationin Flooring and Belting mark the first half-year of 2002. In the last quarter, the improvement ofbusiness against the previous quarter continued for the second time. Total sales of CHF 721.9
million were reached, corresponding with a 3.4 % increase (related to the continued operations,excluding the divested Carpets Business). This includes sales of the acquired Swift Adhesives
Business as of April 19, 2002.
Compared with the strong first half-year 2001, the consolidated profit of CHF 24.5 million (previous year CHF 33.1 million) is weaker not least due to unfavorable exchange rates. Negative
influences could be partly compensated by measures initiated already last year for cost reduction
and productivity improvement. The acquisition of the Swift Adhesives Business in April 2002
with its attractive profit margins has had a clearly positive impact on the business result.

Development of results

The 2002 half-year results also comprise the Swift Adhesives Business acquired on April 19,2002. Net sales are at CHF 721.9 million, including CHF 75.0 million of the Swift activities. Basedon the continued activities, this corresponds with a 3.4 % increase in Swiss Francs or 7.6 %in local currencies. The operating profit before depreciation and amortization (EBITDA) is
CHF 4.4 million or 4.7 % below the previous year, with some CHF 4 million being due to unfavorable exchange rates. With CHF 11.1 million, the EBITDA contribution of the Swift activities isclearly above expectations. The return on sales (EBITDA / net sales) is at 12.2 % (previous year13.3 %). The operating profit after depreciation and amortization (EBIT) is at CHF 44.4 million,
CHF 6.2 million or 12.3 % below the previous year’s level. This includes the Swift Business withCHF 7. 8 million after deduction of CHF 1.6 million amortization for goodwill paid.
Based on the continued activities and excluding the Swift activities, net sales decreased by 7. 8 %to CHF 644.3 million, in currency-adjusted terms 4 %, compared with the first half of the previous year. As a result, the corresponding operating profit (EBIT) declined by CHF 14.2 million(of which CHF 2.3 million alone relate to exchange rates) to CHF 36.4 million. This decreaseof the operating profit in the first half-year is due to reduced sales as a result of a difficult economic situation. Except for Adhesives, all the Businesses suffered from these conditions. Also,
the contribution margin declined slightly because of shifts in the product mix. Substantial costsavings were implemented in response to the result development.

1)
Summary of incomestatementÜbersichtErfolgsrechnung 1)

Net sales of continued activities

First six months
2001
m CHF

effectivecurrency
adjusted

721.9

698.5

3.4

7.6

Net sales of divested acitvities
Net sales of Group% change on 2001

2002
m CHF

93.5
721.9

792.0

–8.9

–5.1

88.3

92.7

–4.7

–0.1

–12.3

–6.9

–26.0

–20.2

Operating profit before depreciation and amortization (EBITDA)
Continued activities
Divested activities

10.1

Operating profit (EBIT)
Continued activities

44.4

Divested activities
Consolidated profit1)

50.6
5.8

24.5

33.1unaudited

The consolidated profit after tax for the first half-year 2002 is CHF 24.5 million. Including
the respective financing costs, the profit of the divested Carpet Business was more than compensated by the two and a half months profit contribution of the Swift Business in the half-year
results 2002.
Financial situation

The balance sheet total as per June 30, 2002 increased by CHF 361.3 million compared withthe end of the previous year. This is the result of the inclusion of the operating assets of the Swift
Adhesives Business of CHF 362.3 million. As per end of June 2002, some CHF 160 million ofthese additions to assets relate to goodwill and acquired trademark rights. The assigned values inintangible assets and tangible assets should be considered as preliminary and can slightly varyin the audited financial statements for the year 2002.
Current assets rose slightly for seasonal reasons compared with the end of the previous year.
On a comparable basis, however, they are some CHF 7 million below the level at the end of June
2001. In the period under review, investments in fixed assets were only CHF 16.2 million (previous year CHF 27.1 million) i.e. they are clearly below depreciation. Net financial debt increasedby CHF 322.6 million to CHF 557. 8 million, compared with the end of the previous year, mainly
as a result of borrowings for the Swift acquisition. The company’s liquidity is at CHF 133.6 million
still good, associated with a solid equity basis. The decrease of the shareholder’s equity, compared to the end of 2001, is mainly due to currency exchange rates and the dividend payment.
The gearing (net financial debt as a percentage of equity) is 92 % at the end of June. We areexpecting a substantial improvement of this key financial ratio by the end of 2002 as a result ofan anticipated free cash flow on previous year’s level.

Summary of balance
sheet
Bilanzübersicht

1)

1)

31.12.2001
m CHF

30.6.2001
m CHF

Long-term assets

930.5

716.4

764.9

Tangible assets

628.4

576.1

665.4

Intangible assets

181.6

23.2

15.1

Deferred taxes, investments in associates and other long-term assets

120.5

117.1

84.4

Current assets

762.4

615.2

761.9Inventories

265.9

227.0

291.8

Receivables, prepaid expenses and deferred charges

362.9

261.7

341.2

Marketable securities and cash

133.6

126.5

128.9

1 692.9

1 331.6

1 526.8

Total assets
Shareholders’ equity

605.0

652.2

703.8

1 087.9

679.4

823.0

Financial debt

691.4

361.7

440.7

Trade payables

121.9

79.4

100.3

Other liabilities and provisions

274.6

238.3

282.0

1 692.9

1 331.6

1 526.8

Liabilities

Total shareholders’ equity and liabilities
1)

30.6.2002
m CHF

unauditedBusiness development by geographic areas and product groups *Excluding acquisitions, business was declining in the major European countries reflecting
the development of the overall economy. This was particularly true for Germany and Switzerland,
but also for Scandinavia and Great Britain. In France, a labor conflict in January had an additional negative impact on sales. The activities in Eastern Europe continued their dynamic development with a sales plus of nearly 20 %. Their share in total Group sales is more than 4 %.
Including the acquisitions made over the last 12 months, an essential strengthening of businesscan be noticed in Southern Europe and especially in North America. The share of the North
American business in Group sales of the first half-year is more than 19 % (previous year 14 %)and will further increase.
Linoleum could once again slightly increase its relative share in the total floor covering market
which was declining in most important European countries, especially so in Germany. Thesales decrease could be limited to 3.3 % in Europe. Despite the maintained market shares within
this product category, noticeable lower sales were recorded especially in Germany, Switzerland,and France. However, linoleum sales could be kept up in Scandinavia, Great Britain, and particularly in the United States. There, sales could even be further increased despite a difficult economic
situation, and the second half-year can be started with good order books thanks to the development of additional sales channels. All in all, total Linoleum sales in the period under review
were CHF 187. 5 million, or 3.9 % less than in the previous year.

The situation with Vinyl proves to be more difficult. The Western European market was underpressure. Our efforts to position our branded products in the premium price segment wereonly partly successful in the past six months. Despite the fact that prices could be maintained andmarket shares could be improved, considerable declines in sales had to be recorded due to thegeneral market situation – especially in Germany, Switzerland, and the Benelux countries. Thisdevelopment is in contrast to the successful further expansion of business activities with cushion
vinyls in Great Britain, Eastern Europe, and Asia. Business with specialized floor coverings produced in Giubiasco (Switzerland) for applications in the high-tech industry remained as difficult
as before. All in all, the Vinyl Business suffered a 5.9 % decline to CHF 156.0 million.

* all percentages are currency-adjusted.

Net sales FlooringÜbersicht Erfolgsrechnung 1)

First six months% change to 2001

2002
m CHF

2001
m CHF

effectivecurrency
adjusted

Linoleum

187.5

202.5

–7.4

–3.9

Vinyl

156.0

171.9

–9.2

–5.9

Others

27.8

33.7

–17.5

–13.9

Total continued activities

371.3

408.1

–9.0

–5.5

Divested activities

93.5

The Adhesives Business recorded internal growth of 3 %, with industrial applications and adhesives for floor and wall applications contributing more or less to the same extent. Forbo gained
additional market shares especially in the Benelux countries and in France. With the acquisition
of Spanish adhesives producer Carzuh in September 2001, the share in the European adhesives
business for car applications could be expanded substantially, and the position in Southern
Europe was strengthened considerably. Including all the acquisitions made in 2001, the resulting
sales growth is more than 14 %.
The global Belting Business, which essentially depends on original equipment manufacturers(OEM) and investments in the logistics infrastructure, continues to suffer from the general
economic conditions. The OEM business is particularly hard hit by this development, whereas
the business with direct customers for belting replacement was somewhat more positive.
Compared with a very strong first half-year 2001, the total decline in local currencies is 11.5%,
with Europe, Asia and America being affected to more or less the same extent. Signs of a recovery
in the USA cannot yet be confirmed with certainty. The great efforts made in recent years toimprove the service offer and the cost situation are paying off and allow a strengthening of ourleading global market position.

Net sales IndustrySpecialtiesÜbersicht
Erfolgsrechnung 1)

Adhesives 1)

1)

First six months% change to 2001

2002
m CHF

2001
m CHF

effective

currency
adjusted

197.8

108.7

82.0

89.0

Belting

152.8

181.7

–15.9

–11.5

Total

350.6

290.4

20.7

26.1

thereof Swift April 19 to June 30, 2002 CHF 75.0 m

Growth through acquisitions

The expansion in the adhesives business that started already in 2001 was continued consistently
in the first half-year 2002. With the acquisition of SABA Klebstoff- und Abdichtungssysteme
GmbH (Germany) in March 2002, Forbo strengthened its position in the adhesives market for
car interior trims. The take-over of the Swift adhesives business from Reichhold Inc. in April
2002 was an important strategic step in that it gave Forbo access to the attractive North American
market. Besides, the Forbo Group is expanding with this acquisition its market position inEurope both geographically and technologically while using numerous synergies. So far, Forbo
has been a producer of mainly adhesives for floor/wall applications, shoes, car interior trims,assembly and furniture. With Swift the Group is now more strongly entering the paper, packaging
and labeling adhesives segments. All in all, the business with industrial adhesives is gaining considerably in importance. With this move, Forbo turns into a global market player also in theadhesives industry and enters the top league of adhesives producers. At the same time the focusof the Forbo product portfolio is shifting in favor of these activities.

The Integration of Swift is making good progress. Today, the Forbo Adhesives Business is classified into two main segments, i.e. adhesives for floor/wall applications, and adhesives for industrial uses. Geographically speaking, the latter is spread over five regions, one in North America
and four in Europe. In North America, the carving out of the business from the ReichholdGroup and the optimization of the production sites are in process. In Europe, the integration of
the Swift sites into the existing Forbo organization has priority. The necessary integration andrestructuring measures are progressing with the goal of intensifying the customer relationships,
strengthening the market positions, and thus reaching a further profit improvement.
As reported earlier, the purchase price for the Swift activities was about USD 210 million. Thisincludes the acquisition and integration costs. The purchase price was financed by means of abridging loan from two banks. It is our intention to replace this short-term credit by long-term
financing.

Summary of income statement Swift Adhesives

19.4.–30.6.2002
m CHF

Net sales

75.0

Operating profit before depreciation and amortization (EBITDA)

11.1

Operating profit (EBIT)

7.8

EBIT in % of net sales

10.4

In the period from April 19 to June 30, 2002, the Swift Adhesives Business recorded net salesof CHF 75.0 million. The operating profit before depreciation and amortization (EBITDA)
at CHF 11.1 million was clearly above the expectations. The operating profit after depreciation
on tangible assets of CHF 1.7 million and amortization on goodwill of CHF 1.6 million is
CHF 7.8 million. As a result, return on sales amounts to 10.4 %, but this ratio for the entire year
2002 is likely to be somewhat lower due to the additional costs and the adverse currency
development.
Employees

As per June 30, 2002 Forbo employed 5 677 people, 652 of them at Swift. On a comparable basis,
this is a decrease of 132 employees compared to the end of 2001.
Outlook

We are convinced that the strategy of focus and growth we have embarked on is correct. In
spite of difficult conditions in our key markets, we firmly keep to our objective of achieving an
operating profit that is above the previous year’s level. The successful integration of the Swiftactivities will make an essential contribution to this objective, since in the second half year
this business will impact the sales and profits of the entire period. However, reaching this goal
will essentially depend on the further general economic development.
Forbo Holding AGKarl Janjöri
Chairman of the Board of Directors
Eglisau/Zurich, July 25, 2002

Werner Kummer
Chief Executive Officer

Stock Exchange Information

Issued and outstanding shares
Market prices

Stock market capitalization

30.6.2002

1 306 640

High

CHF 585

Low

CHF 453

30.6.2002

CHF 546

30.6.2002

m CHF 713

Dates

Media release on the results of the first nine months: October 28, 2002 (after stock exchange closure)
Annual results media conference: March 25, 2003
Financial analysts presentation: March 25, 2003
Annual General Meeting: April 29, 2003

Interim report in accordance with Stock Exchange Listing Requirements, Annex II, Rule No. 12