SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                ----------------

                                   Form 10-Q

                    quarterly Report Pursuant to Section 13
                    or 15 (d) of the Securities Act of 1934

               For the quarterly period ended September 30, 2000

                        --------------------------------

                       Commission File Number: 333-76683

                              Formica Corporation
             (Exact name of registrant as specified in its charter)

               Delaware                                34-1046753
   (State or other jurisdiction of     (I.R.S. Employer Identification No.)
    incorporation or organization)

                           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)

                               David T. Schneider
                   Vice President and Chief Financial Officer
                           15 Independence Boulevard
                                Warren, NJ 07059
                                 (908) 647-8700
    (Name, address, including zip code, and telephone number, including area
                          code, of agent for service)

Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.

                                YES X       NO
                                   ---        ----


Title                                Shares Outstanding as of September 30, 2000
-----                                -------------------------------------------

Common Stock, $.01 par value
per share                                    100 Shares Outstanding


<PAGE>


                              FORMICA CORPORATION

                                     Index

                                                                            Page

Part I. Financial Information
 Item 1.     Financial Statements
             Condensed Consolidated Balance Sheets as of September 30,
               2000 and December 31, 1999                                      1
             Condensed Consolidated Statements of Operations for the Three
               and Nine Months Ended September 30, 2000 and 1999               2
             Condensed Consolidated Statements of Cash Flows for the Nine
               months ended September 30, 2000 and 1999                        3
             Notes to the Condensed Consolidated Financial Statements          4
 Item 2.     Management's Discussion and Analysis of Financial Condition
               and Results of Operations                                       9
 Item 3.     Quantitative and Qualitative Disclosure of Market Risk           15

Part II. Other Information

 Item 1.      Legal Proceedings                                               15
 Item 4.      Submission of Matters to a Vote of Security Holders             15
 Item 6.      Exhibits and Reports on Form 8-K                                15

Signatures                                                                    16




<PAGE>


                              FORMICA CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in millions, except share data)


                                                   September 30,  December 31,
                                                       2000           1999
                                                   ------------   ------------
                        ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                          $   10.0      $      7.8
   Accounts receivable, net                              123.6            84.4
   Inventories                                           152.6           119.7
   Prepaid expenses and other current assets              28.9            11.5
   Deferred income taxes                                  16.0            14.7
                                                      --------      ----------
                Total current assets                     331.1           238.1

PROPERTY, PLANT AND EQUIPMENT, net                       386.5           307.3

OTHER ASSETS:
   Intangible assets, net                                160.9           161.1
   Other noncurrent assets                                10.0            11.3
                                                      --------      ----------
                Total assets                          $  888.5      $    717.8
                                                      ========      ==========

         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Current maturities of long-term debt               $   31.0      $     28.2
   Accounts payable                                       66.8            37.2
   Accrued expenses                                       80.2            56.8
                                                      --------      ----------
                Total current liabilities                178.0           122.2

LONG-TERM DEBT                                           452.1           362.9
DEFERRED INCOME TAXES                                    132.9           125.4
OTHER LIABILITIES                                         41.5            30.0
                                                      --------      ----------
                Total liabilities                        804.5           640.5

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock - par value $.01 per share -
     authorized 1,000 shares, none issued
     or outstanding                                          -               -
   Common stock - par value $.01 per share -
     authorized 2,000 shares, issued and
     outstanding 100 shares                                0.1             0.1

   Additional paid-in capital                            217.0           137.0
   Accumulated deficit                                   (94.9)          (54.4)
   Accumulated other comprehensive loss                 ( 38.2)           (5.4)
                                                      --------      ----------
          Total stockholders' equity                      84.0            77.3
                                                      --------      ----------
          Total liabilities and stockholders' equity  $  888.5      $    717.8
                                                      ========      ==========


         See notes to the condensed consolidated financial statements.


                                    Page 1
<PAGE>



                                  FORMICA CORPORATION
                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (in millions)

<TABLE>
                                              Three Months Ended      Nine Months Ended
                                                September 30,           September 30,
                                            ---------------------   ---------------------
                                              2000         1999       2000         1999
                                            -------      --------   --------     --------
<S>                                          <C>           <C>      <C>          <C>
NET SALES                                    $199.2        $145.1   $  554.5     $ 439.7

COST OF PRODUCTS SOLD                         147.8         103.7      406.0       313.6

INVENTORY MARKDOWN FROM RESTRUCTURING          --            --          1.9        --
                                            -------      --------    ---------  ---------

                Gross profit                   51.4          41.4      146.6       126.1

SELLING, GENERAL AND
  ADMINISTRATIVE EXPENSES                      46.7          36.5      142.7       115.0

PROVISION FOR RESTRUCTURING                     0.4          --          7.6        --

COST OF TERMINATED ACQUISITIONS                --            --          0.4        --
                                            -------      --------    ---------  ---------

                Operating income (loss)         4.3           4.9       (4.1)       11.1

INTEREST EXPENSE                              (14.4)         (9.5)     (36.5)      (28.5)

OTHER INCOME                                    1.6           0.8        3.9         2.4
                                            -------      --------    ---------  ---------

LOSS BEFORE PROVISION FOR INCOME TAXES         (8.5)         (3.8)     (36.7)      (15.0)

INCOME TAX PROVISION                           (0.9)         (0.1)      (3.8)       (2.0)
                                            -------      --------    ---------  ---------

                Net loss                    $  (9.4)     $   (3.9)   $ (40.5)   $  (17.0)
                                            =======      ==========  =========  =========
</TABLE>


         See notes to the condensed consolidated financial statements.

                                    Page 2
<PAGE>


                              FORMICA CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in millions)

                                                            Nine Months Ended
                                                              September 30,

                                                      ----------------------
                                                        2000          1999
                                                      ---------     --------

CASH PROVIDED BY (USED IN) OPERATIONS                 $    16.0     $  (11.4)



INVESTING ACTIVITIES:
   Capital expenditures and investments, net              (15.8)       (17.0)
   Acquisitions, net of cash acquired                    (175.5)       (15.6)
                                                      ---------     --------
          Net cash used in investing activities          (191.3)       (32.6)


FINANCING ACTIVITIES:
   Proceeds from borrowings, net of financing fees        133.2        222.9
   Equity contribution                                     80.0         --
   Repayments of debt                                     (38.0)      (201.9)
                                                      ---------     --------
          Net cash provided by financing activities       175.2         21.0


EFFECTS OF EXCHANGE RATE CHANGES ON CASH                    2.3         (0.3)
                                                      ---------     --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            2.2        (23.3)

CASH AND CASH EQUIVALENTS AT THE BEGINNING
  OF PERIOD                                                 7.8         31.6
                                                      ---------     --------

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD        $    10.0     $    8.3
                                                      =========     ========


         See notes to the condensed consolidated financial statements.


                                    Page 3
<PAGE>


                              FORMICA CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1)   BASIS OF PRESENTATION:
      The accompanying unaudited condensed consolidated financial statements
      have been prepared in accordance with generally accepted accounting
      principles for interim financial information and with the instructions to
      Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
      include all of the information and footnotes required by generally
      accepted accounting principles for complete financial statements. In the
      opinion of management, the interim financial statements reflect all
      material adjustments of a normal recurring nature considered necessary
      for a fair presentation of the financial position, results of operations
      and cash flow. In addition, management is required to make estimates and
      assumptions that affect the amounts reported and related disclosures.
      Estimates, by their nature, are based on judgments and available
      information. Operating results reported for the interim periods are not
      necessarily indicative of the results that may be expected for the entire
      year and any other subsequent interim periods.

      Earnings per share data are not presented because the common stock of
      Formica Corporation ("Formica" or the "Company") is not publicly traded
      and the Company is a wholly-owned subsidiary of FM Holdings, Inc.
      ("Holdings"). Holdings is a wholly-owned subsidiary of Laminates
      Acquisition Co. ("Laminates"), thereby Laminates is the ultimate parent
      of Formica.

      For further information, refer to the audited consolidated financial
      statements and footnotes thereto for the year ended December 31, 1999
      included in the Company's Form 10-K filed with the Securities and Exchange
      Commission (the "SEC").

(2)   ACQUISITION:

      On March 31, 2000, Decorative Surfaces Holding AB ("DSH") acquired
      Perstorp Surface Materials AB ("PSM"), a worldwide producer of decorative
      and industrial laminates, finished foils, printed paper and other
      surfacing materials from Perstorp AB (Sweden) for approximately $177.5
      million (including approximately $2.0 million of transaction costs),
      subject to any post-closing obligations. The consideration paid to
      Perstorp AB was determined through arms-length negotiations between DSH
      and Perstorp AB.

      The PSM acquisition and related fees and expenses were financed with
      $110.0 million of term loan proceeds under a new senior credit facility
      and the issuance of approximately $80.0 million of warrants, common stock
      and preferred stock of Laminates and Holdings to 1) DLJ Merchant Banking
      Partners II, L.P. and related funds, 2) CVC Capital Partners Limited and
      3) management. The $110.0 million in term loans was provided by PSM
      Funding, Inc., an affiliate of DLJ Merchant Banking Partners II, 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 PSM acquisition, to Formica once certain
      conditions were satisfied. Formica was not required to pay any
      consideration for that contribution, but was to assume the $110.0 million
      in debt incurred to finance the acquisition. (See Note 4)

      On May 26, 2000, Holdings contributed all of the stock of DSH to Formica.
      DSH was a wholly-owned subsidiary of Holdings (the parent company of
      Formica) whose sole asset was its investment in PSM. The acquisition was
      accounted for on an as-if pooling basis because it is a combination of
      entities under common control. Accordingly, Formica's historical financial
      statements include PSM's financial position, results of operations and
      cash flows after reflecting the acquisition and related purchase
      accounting by DSH on March 31, 2000 for all periods beginning April 1,
      2000. Formica has allocated the total cost of the acquisition of PSM as
      follows (in millions):

      Acquisition Consideration..................................... $175.5
      Estimated Fees and Expenses...................................    2.0
                                                                     ------
      Total Consideration........................................... $177.5
                                                                     ======

      Payment of Debt............................................... $ 76.1
      Net Tangible Assets...........................................   85.7
      Goodwill and Other Intangible Assets..........................   15.7
                                                                     ------
                                                                     $177.5
                                                                     ======

      The allocation of the consideration paid by DSH for the assets and
      liabilities of PSM is based on preliminary estimates of the fair value of
      such assets and liabilities. Due to the capital intensive nature of the
      PSM business, the excess of the purchase price over the book value of net
      assets acquired has been primarily allocated to property, plant and
      equipment. A formal appraisal of the assets and liabilities is underway.
      Accordingly, the actual allocation of such consideration may differ from
      the preliminary estimates after the completion of the independent
      valuation and other procedures to be performed. As a result of the
      acquisition, Formica has been reviewing all operations within PSM (see
      Note 5). The Company recorded a charge of approximately $2.2 million in
      the second quarter to reflect the estimated impact following this review,
      primarily related to an increase in doubtful accounts and inventory
      write-offs.



                                    Page 4
<PAGE>


      The following unaudited pro forma consolidated results of operations for
      the three and nine months ended September 30, 2000 and 1999 assume the
      acquisition had occurred at the beginning of 1999 (in millions):

<TABLE>

                                              Three months ended                Nine months ended
                                       September 30,    September 30,     September 30,    September 30,
                                           2000             1999               2000             1999
                                       -------------    -------------    --------------    -------------
<S>                                     <C>              <C>              <C>              <C>
             Net sales                  $  199.2         $  198.8         $  607.7         $  611.1
             Net loss                       (9.4)            (4.3)           (43.2)           (17.0)
</TABLE>

      In management's opinion, the unaudited pro forma combined results of
      operations are not indicative of the actual results that would have
      occurred had the acquisition been consummated at the beginning of 1999,
      or of future results.

(3)   INVENTORIES:

      Major classes of inventories are as follows:

                                          September 30,    December 31,
                                              2000            1999
                                          -------------    ------------
                                                  (in millions)

          Finished goods                     $ 94.0          $  84.5
          Work-in-process                      17.5             11.6
          Raw materials                        63.3             45.1
                                             ------          -------
          Total                               174.8            141.2
          Less, reserves                       22.2             21.5
                                             ------          -------
                                             $152.6          $ 119.7
                                             ======          =======

(4)   LONG-TERM DEBT:

      In connection with the acquisition of PSM (See Note 2), PSM Funding, Inc.
      syndicated and increased the term loan facility to $140.0 million at the
      time of the contribution of DSH to Formica. The additional $30.0 million
      was used to reduce outstanding borrowings under Formica's existing credit
      facility at the time of the contribution and to make any payments in
      connection with the closing. Formica's existing credit facility was
      amended and restated to include, as a separate tranche of term
      borrowings, the $140.0 million term loan. 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 new term
      loan will be, at Formica's option, either 2.25% over the Base Rate or
      3.5% over LIBOR. Interest rates on the other tranches of the credit
      facility were also increased by 0.5% in connection with this transaction.

      The Company's Credit Facility contains financial covenants requiring the
      Company to maintain minimum earnings before interest, taxes, depreciation
      and amortization; minimum coverage of interest expense and fixed charges;
      and a maximum leverage ratio. The Company is in compliance with all
      financial covenants as of September 30, 2000.

(5)   RESTRUCTURING:

      Prior to May 1, 1998, the management of the Company formulated a plan to
      restructure certain operations and provided a restructuring provision of
      $6.6 million included as part of its purchase accounting, with
      approximately $2.7 million of the restructuring provision remaining at
      December 31, 1999. During the three and nine months ended September 30,
      2000, the Company spent $0.8 million and $1.8 million, respectively, of
      the restructuring provision primarily relating to severance payments. In
      the third quarter, the Company reversed the remaining $0.5 million
      restructuring liability against the initial purchase accounting. The
      remaining balance of this restructuring provision of $0.4 million at
      September 30, 2000 is related to severance payments and will be
      substantially completed by the end of 2000.

      On March 1, 2000, the Company's management committed to a formal plan to
      restructure certain operating activities in North America, which will
      reduce total headcount by over 200 employees. As part of this
      restructuring, the Mt. Bethel, Pennsylvania manufacturing facility was
      closed and its operations were subsequently transferred to the Company's
      Odenton, Maryland manufacturing facility. The Company provided a
      restructuring provision of $6.0 million during the first quarter of 2000.
      The restructuring provision can be broken down as follows: assets held
      for disposal, facility closure and lease terminations ($3.1 million),
      markdown of inventory resulting from the elimination of product lines
      ($1.9 million) and severance and severance-related items ($1.0 million).
      During the three and nine


                                    Page 5
<PAGE>


                              FORMICA CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT


      months ended September 30, 2000, the Company spent $2.4 million and $3.3
      million, respectively, of this restructuring provision. In addition, the
      Company wrote-off $2.0 million of the restructuring provision liability
      against property plant and equipment relating to the Mt. Bethel assets
      held for disposal. The remaining balance of the restructuring provision at
      September 30, 2000 was $0.7 million consisting of $0.5 million of facility
      closure and lease terminations and $0.2 million of severance and
      severance-related items. The restructuring plan will be substantially
      completed in 2000. The Company has identified an additional $3.0 million
      of charges, indirectly related to the restructuring of the North America
      operations, of which $0.2 million and $1.6 million was incurred in the
      three and nine months ended September 30, 2000, respectively. The balance
      is expected to be incurred up to and through the first quarter of 2001.

      As of the consummation date of the PSM acquisition, management began a
      process to assess the organization as well as the facilities acquired
      with the purpose of formulating a structure for the combined
      organization. This plan is under review and a complete cost assessment
      will not be finalized until the end of 2000. Reserves for organizational
      restructuring in the amount of $14.5 million were established as part of
      purchase accounting in the second quarter. During the three and nine
      months ended September 30, 2000, the Company has spent $1.2 million and
      $1.5 million, respectively, of this provision. The remaining balance of
      the restructuring provision was $13.0 million at September 30, 2000. The
      preliminary organizational restructuring plan, which primarily relates to
      the European operations, includes the closing of offices and a select
      curtailment of operations, the optimization of the utilization of assets
      and a reduction of headcount in excess of 300 employees. This
      restructuring is expected to be completed in 2001. Once the approved
      formal plan is implemented and underway, this could potentially result in
      a change in the estimated range for the reserves established. In
      addition, the Company incurred approximately $0.1 million and $0.3
      million of restructuring-related expenses associated with the acquisition
      of PSM during the three and nine months ended September 30, 2000,
      respectively.

      On June 1, 2000, the Company's management committed to a formal plan to
      restructure certain of its operations within Europe and provided a
      restructuring provision of $1.5 million in the second quarter of 2000.
      These actions are being taken in conjunction with the integration of the
      PSM operations. The plan will result in a reduction in headcount of 25
      employees. The restructuring plan includes the closure of a Company
      warehouse in Europe with subsequent relocation of operations to elsewhere
      in Europe. The restructuring provision consists of the following:
      facility closure costs ($0.5 million) and severance and severance-related
      items ($1.0 million). During the three and nine months ended September
      30, 2000 the Company has spent $0.2 million of this provision. The
      remaining balance of the restructuring provision at September 30, 2000
      was $1.3 million consisting of $0.5 million of facility closure costs and
      $0.8 million of severance and severance-related items. Under the current
      timetable, the Company projects that the restructuring plan will be fully
      completed by mid-year 2001. The Company has also identified an estimated
      additional $0.1 million in charges which was spent in the third quarter
      and $0.2 million in capital spending of which $0.1 million was spent in
      the third quarter, indirectly related to the restructuring of the
      European distribution operations. The Company anticipates the additional
      spending will occur mostly during the fourth quarter of 2000.

      Depending on the amount and timing of the Company's restructuring
      activities, cash flows and results of operations could be materially
      affected in a particular quarter.

(6)   CONTINGENT MATTERS:

      The Company is involved in various proceedings relating to environmental
      matters. It is the Company's policy to accrue liabilities for remedial
      investigations and clean-up activities when it is probable that such
      liabilities have been incurred and when they can be reasonably estimated.
      In the ordinary course of business, the Company has been or is the
      subject of or party to various pending litigation and claims. Currently,
      the Company has been named as a potentially responsible party at several
      Superfund sites and has reserved approximately $3.6 million and $3.9
      million at September 30, 2000 and December 31, 1999, respectively, for
      these matters to recognize a reasonable estimate of the probable
      liability. While it is not possible to predict with certainty the outcome
      of any potential litigation or claims, the Company believes any known
      contingencies, individually or in the aggregate, will not have a material
      adverse impact on its financial position or results of operations.
      However, depending on the amount and timing of an unfavorable resolution
      of this contingency, it is possible that the Company's future cash flows
      could be materially affected in a particular quarter.

      Formica's operations are subject to federal, state, local and foreign
      environmental laws and regulations governing both the environment and the
      work place. The Company believes that it is currently in substantial
      compliance with such laws and the regulations promulgated thereunder.

      On April 5, 1999, the Company received a subpoena covering the period
      from January 1, 1994 until April 1, 1999 from a federal grand jury in
      connection with an investigation into possible antitrust violations in
      the United States market for high-pressure laminate. The Company has
      produced documents and provided other information in response to the
      subpoena, and a number of present or former Formica employees have
      appeared for testimony before the grand jury or have been interviewed by
      the Staff of the Antitrust Division of the U.S. Department of Justice in


                                    Page 6
<PAGE>


                              FORMICA CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENT

      connection with the investigation. The Company intends to continue its
      cooperation with the investigation. The Company is unable to determine at
      this time the effect, if any, that this matter may have on its financial
      position, results of operations or cash flows.

      Formica Corporation and other manufacturers of high-pressure laminate
      ("HPL") have been named as defendants in purported class action
      complaints filed in federal and certain state courts. The complaints,
      which all make similar allegations, allege that Formica and other HPL
      manufacturers in the United States have engaged in a contract,
      combination or conspiracy in restraint of trade in violation of state and
      federal antitrust laws and seek damages of an unspecified amount. The
      actions are in their earliest stages. Formica Corporation intends to
      defend vigorously against the allegations of the complaints.

      Formica is involved in pending litigation in the usual course of
      business. In the opinion of management, such litigation will not have a
      material adverse effect on the Company's financial position, results of
      operations or cash flows. Formica continually evaluates its estimated
      legal liabilities as a matter of policy. The Company's estimated range of
      liability is based on known claims. There can be no assurances that
      Formica will not become involved in future proceedings, litigation or
      investigations, that such liabilities will not be material or that
      indemnification pursuant to certain indemnification rights will be
      available.

(7)   COMPREHENSIVE INCOME (LOSS):

      Total comprehensive (loss) income was ($26.3) million and ($73.3) million
      for the three and nine months ended September 30, 2000, respectively and
      $3.1 million and ($21.8) million for the three and nine months ended
      September 30, 1999, respectively. The difference between comprehensive
      income (loss) and net loss results from foreign currency translation
      adjustments.

(8)   RELATED PARTY TRANSACTIONS

      In order to fund normal working capital requirements, the Company has
      entered into certain borrowing arrangements with Laminates Acquisition
      Co., the parent of FM Holdings, Inc. These arrangements are short-term in
      nature and generally bear no interest. At September 30, 2000 and December
      31, 1999, there was approximately $1.0 million outstanding under these
      arrangements.

      DLJ Capital Funding, an affiliate of DLJ Merchant Banking, has and will
      receive customary fees and reimbursement of expenses in connection with
      the arrangement and syndication of the Credit Facility and as a lender
      thereunder. Laminates Funding, Inc., an affiliate of DLJ Merchant
      Banking, was a purchaser of a portion of the bridge notes and received
      customary fees and expenses in connection therewith. Donaldson, Lufkin &
      Jenrette Securities Corporation, also an affiliate of DLJ Merchant
      Banking, acted as the initial purchaser of the Senior Subordinated Notes.

      Formica and its subsidiaries may from time to time enter into financial
      advisory or other investment banking relationships with Donaldson, Lufkin
      & Jenrette Securities Corporation or one of its affiliates whereby
      Donaldson, Lufkin & Jenrette Securities Corporation or its affiliates
      will receive customary fees and will be entitled to reimbursement for all
      related reasonable disbursements and out-of-pocket expenses. Formica
      expects that any arrangement will include provisions for the
      indemnification of Donaldson, Lufkin & Jenrette Securities Corporation
      against a variety of liabilities, including liabilities under the federal
      securities laws.

(9)   SEGMENT INFORMATION:

      The Company is principally engaged in a single line of business: the
      design, manufacture and distribution of decorative surfacing products.
      Substantially all revenues result from the sale of decorative surfaces
      and related products through domestic and international distributors and
      direct accounts. The Company's operations are managed on a geographic
      basis and, therefore, reportable segments are based on geographic areas.
      In the second quarter of 2000, the Company's market presence in Europe,
      the Americas and Asia was increased as a result of the PSM acquisition.
      Segment revenues are defined as net sales to external customers of each
      segment less freight expense and sales allowances. All significant
      intercompany sales and expenses have been eliminated in determining
      segment revenues and segment profit (loss).


                                    Page 7


<PAGE>


                                            FORMICA CORPORATION
                            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
                                                               Three Months Ended       Nine Months Ended
                                                                  September 30,            September 30,
                                                               -------------------     -------------------
                                                                 2000       1999        2000       1999
                                                               --------   --------     --------   --------
                                                                    (in millions)             (in millions)
<S>                                                            <C>        <C>          <C>          <C>
        Segment revenues:
          United States                                        $   79.3   $   82.3     $  241.8   $  247.5
          Americas - Other                                         27.0       11.3         65.9       34.7
          Europe                                                   68.2       32.7        182.2      106.9
          Asia                                                     24.7       18.8         64.6       50.6
                                                               --------   --------     --------   --------
                 Total                                         $  199.2   $  145.1     $  554.5   $  439.7
                                                               ========   ========     ========   ========

        Segment profit (loss):
          Americas                                             $   (2.7)   $  (1.5)    $  (19.2)  $   (6.9)
          Europe                                                    3.7        3.5          7.2       10.7
          Asia                                                      3.3        2.9          7.9        7.3
                                                               --------   --------     --------   --------
                 Total                                         $    4.3   $    4.9     $   (4.1)  $   11.1
                                                               ========   ========     ========   ========

        Depreciation and amortization (included in segment
          Americas                                             $   10.2   $    8.4     $   28.9   $   24.7
          Europe                                                    4.1        2.0         11.1        6.5
          Asia                                                      1.0        0.9          3.4        2.6
                                                               --------   --------     --------   --------
                 Total                                         $   15.3    $  11.3     $   43.4   $   33.8
                                                               ========   ========     ========   ========

        A reconciliation of total segment profit (loss) to
          Segment (loss) profit                                $    4.3   $    4.9     $   (4.1)  $   11.1
          Interest expense                                        (14.4)      (9.5)       (36.5)     (28.5)
          Other income                                              1.6        0.8          3.9        2.4
                                                               --------   --------     --------   --------
                 Loss before provision for income taxes        $   (8.5)  $   (3.8)    $  (36.7)  $  (15.0)
                                                               ========   ========     ========   ========

                                                             September 30,   December 31,
                                                                 2000            1999
                                                             -------------   ------------
                                                                       (in millions)
        Total assets:
          United States                                        $  419.1        $  451.0
          Americas - Other                                         85.3            37.3
          Europe                                                  293.5           152.4
          Asia                                                     90.6            77.1
                                                               --------        --------
                 Total                                         $  888.5        $  717.8
                                                               ========        ========
</TABLE>


                                                   Page 8

<PAGE>


      Item 2. Management's Discussion and Analysis of Financial Condition and
             Results of Operations

      Overview

      Formica is engaged in the design, manufacture and distribution of
      decorative surfacing products. Formica was founded in 1913 and created the
      world's first decorative laminate in 1927. In May 1985, a group led by
      management and Shearson Lehman purchased Formica from American Cyanamid
      Company. In 1989, Formica was sold to FM Acquisition Corporation in a
      buyout led by Dillon, Read & Co. Inc. In January 1995, BTR Nylex Ltd., an
      Australian company and a subsidiary of BTR plc, acquired Formica. In May
      1998, Laminates Acquisition Co. ("Laminates") acquired Formica (the
      "Acquisition").

      Recent Developments

      Perstorp Surface Materials Acquisition: (See Note 2 to the Condensed
      Consolidated Financial Statements for further detail) On March 31, 2000,
      Decorative Surfaces Holding AB ("DSH") acquired Perstorp Surface
      Materials AB ("PSM"), a worldwide producer of decorative and industrial
      laminates, finished foils, printed paper and other surfacing materials
      from Perstorp AB (Sweden) for approximately $177.5 million (including
      approximately $2.0 million of transaction costs), subject to any
      post-closing obligations. The consideration paid to Perstorp AB was
      determined through arms-length negotiations between DSH and Perstorp AB.


      Restructuring Charges: (See Note 5 to the Condensed Consolidated Financial
      Statements for further detail ) On March 1, 2000, the Company's management
      committed to a formal plan to restructure certain operating activities in
      North America, which will reduce total headcount by over 200 employees. As
      part of this restructuring, the Mt. Bethel, Pennsylvania manufacturing
      facility was closed and its operations were subsequently transferred to
      the Company's Odenton, Maryland manufacturing facility. The Company
      provided a restructuring provision of $6.0 million during the first
      quarter of 2000.

      As of the consummation date of the PSM acquisition, management began a
      process to assess the organization as well as the facilities acquired
      with the purpose of formulating a structure for the combined
      organization. This plan is under review and a complete cost assessment
      will not be finalized until the end of 2000. Reserves for organizational
      restructuring in the amount of $14.5 million were established as part of
      purchase accounting in the second quarter.

      On June 1, 2000, the Company's management committed to a formal plan to
      restructure certain of its operations within Europe and provided a
      restructuring provision of $1.5 million in the second quarter of 2000.
      These actions are being taken in conjunction with the integration of the
      PSM operations. The plan will result in a reduction in headcount of 25
      employees.

      Depending on the amount and timing of the Company's restructuring
      activities, cash flows and results of operations could be materially
      affected in a particular quarter.

      Litigation: (See Note 6 to the Condensed Consolidated Financial
      Statements) Formica Corporation and other manufacturers of high-pressure
      laminate ("HPL") have been named as defendants in purported class action
      complaints filed in both federal and certain state courts. The
      complaints, which all make similar allegations, allege that Formica and
      other HPL manufacturers in the United States have engaged in a contract,
      combination or conspiracy in restraint of trade in violation of state and
      federal antitrust laws and seek damages of an unspecified amount. The
      actions are in their earliest stages. Formica Corporation intends to
      defend vigorously against the allegations of the complaints.

      Results of Operations:

      Nine Months Ended September 30, 2000 Compared to Nine Months Ended
      September 30, 1999

      Net Sales. Net sales for 2000 were $554.5 million, compared to net sales
      of $439.7 million for 1999, an increase of $114.8 million, or 26.1%. The
      acquisition of PSM accounted for $126.2 million of the increase, which was
      offset by the impact of unfavorable foreign exchange. Sales in the
      Americas increased to $307.7 million from $282.2 million in 1999. This
      increase is the result of the acquisition of PSM, which accounted for
      $31.7 million. Net sales in Asia increased to $64.6 million in 2000 from
      $50.6 million in 1999, an increase of $14.0 million, or 27.7%, resulting
      primarily from the addition of the PSM business, which accounted for $6.3
      million of the increase, as well as increased volume. Net sales in Europe
      increased $75.3 million to $182.2 million in 2000 from $106.9 million in
      1999. The acquisition of PSM accounted for $88.2 million of the increase.

      Gross Profit. Gross profit for 2000 was $146.6 million, compared to gross
      profit of $126.1 million for 1999, an increase of $20.5 million, or 16.3%.
      Gross profit as a percentage of net sales in 2000 decreased to 26.4% from
      28.7% in 1999. The 2000 period includes $1.9 million related to the
      markdown in inventory from the restructuring of the North America
      operations. Excluding the restructuring charge, gross profit increased
      $22.4 million in 2000, or as a percentage of sales to 26.8 %.


                                    Page 9


<PAGE>

      Gross Profit in the Americas decreased to $76.7 million in 2000 from
      $77.5 million in 1999. The $0.8 million decrease primarily resulted from
      the $5.4 million contribution from PSM, offset by the $1.9 million
      markdown in inventory from the restructuring of the North America
      operations, and increased raw material prices. Gross profit as a
      percentage of net sales for the Americas decreased to 24.9% in 2000 from
      27.5% in 1999, principally as a result of the markdown in inventory from
      the restructuring of the North America operations and increased raw
      material prices. Gross profit in Europe and Asia increased $21.3 million
      to $69.9 million in 2000 from $48.6 million in 1999, or 43.8%, of which
      PSM contributed $24.5 million. The effects of foreign exchange
      translation, competitive pricing pressures and higher raw material costs
      negatively impacted gross profit margins compared to last year. As a
      percentage of net sales, gross profit in Europe and Asia decreased to
      28.3% in 2000 from 30.9% in 1999.

      Selling, General and Administrative Expenses. Selling, general and
      administrative expenses for 2000 were $142.7 million compared to $115.0
      million for 1999, an increase of $27.7 million. Selling, general and
      administrative expenses excluding PSM were $118.0 million for 2000
      compared to $115.0 million in 1999. Selling, general and administrative
      expenses, as a percent of net sales, were 25.7% in the 2000 period
      compared to 26.2% in the 1999 period. Excluding the expenses related to
      the acquisition of PSM of approximately $2.8 million, selling, general
      and administrative expenses were $115.2 million in the 2000 period
      compared to $115.0 million in 1999.

      Restructuring Charges (See Note 5 to the Condensed Consolidated Financial
      Statements). On March 1, 2000, the Company's management committed to a
      formal plan to restructure certain operating activities in North America.
      The Company provided a restructuring provision of $6.0 million during the
      first quarter of 2000. During the nine months ended September 30, 2000,
      the Company spent $3.3 million of the restructuring provision. In
      addition, the Company wrote-off $2.0 million of the restructuring
      provision liability against property plant and equipment relating to the
      Mt. Bethel assets held for disposal. The remaining balance of the
      restructuring provision at September 30, 2000 was $0.7 million consisting
      of $0.5 million of facility closure and lease terminations and $0.2
      million of severance and severance-related items. The restructuring plan
      will be substantially completed in 2000. The Company has identified an
      additional $3.0 million of charges, indirectly related to the
      restructuring of the North America operations, of which $1.6 million was
      incurred in the nine months ended September 30, 2000. The balance is
      expected to be incurred up to and through the first quarter of 2001.

      As of the consummation date of the PSM acquisition, management began a
      process to assess the organization as well as the facilities acquired
      with the purpose of formulating a structure for the combined
      organization. Reserves for organizational restructuring in the amount of
      $14.5 million were established as part of purchase accounting in the
      second quarter. During the nine months ended September 30, 2000, the
      Company has spent $1.5 million of this provision. The remaining balance
      of the restructuring provision was $13.0 million at September 30, 2000.
      The preliminary organizational restructuring plan, which primarily
      relates to the European operations, includes the closing of offices and a
      select curtailment of operations, the optimization of the utilization of
      assets and a reduction of headcount in excess of 300 employees. This
      restructuring is expected to be completed in 2001. In addition, the
      Company incurred approximately $0.3 million of restructuring-related
      expenses associated with the acquisition of PSM during the nine months
      ended September 30, 2000.

      On June 1, 2000, the Company's management committed to a formal plan to
      restructure certain of its operations within Europe and provided a
      restructuring provision of $1.5 million in the second quarter of 2000.
      During the nine months ended September 30, 2000 the Company has spent
      $0.2 million of this provision. The remaining balance of the
      restructuring provision at September 30, 2000 was $1.3 million consisting
      of $0.5 million of facility closure costs and $0.8 million of severance
      and severance-related items. The Company has also identified an estimated
      additional $0.1 million in charges which was spent in the third quarter
      and $0.2 million in capital spending of which $0.1 million was spent in
      the third quarter, indirectly related to the restructuring of the
      European distribution operations. The Company anticipates the additional
      spending will occur mostly during the fourth quarter of 2000.

      Cost of Terminated Acquisitions. During the nine month period ended
      September 30, 2000, the Company incurred a $0.4 million charge relating
      to expenses from the cost of a terminated acquisition, primarily for
      legal and other professional fees.

      Operating Income (Loss). The operating loss for 2000 was $4.1 million
      compared to an operating income of $11.1 million for 1999. The 2000
      period includes restructuring charges of $9.5 million, acquisition costs
      of $2.8 million and a cost of terminated acquisitions of $0.4 million.
      After taking into account the 2000 charges, the operating income was $8.6
      million in 2000 compared to operating income of $11.1 million in 1999,
      for the reasons stated above.

      EBITDA. EBITDA decreased to $43.2 million in 2000 compared to $47.3
      million in 1999. After taking into account the 2000 period restructuring
      costs, acquisition costs and cost of terminated acquisitions (described
      above), EBITDA, as adjusted, was $55.9 million in 2000 compared to $47.3
      million in 1999.

      Interest Expense. Interest expense increased $8.0 million to $36.5
      million in 2000 from $28.5 million for 1999. The increase in interest
      expense is due to the additional debt incurred in 2000 for the
      acquisition of PSM and additional debt incurred in the latter part of
      1999, partially offset by a write-off in the 1999 period of deferred
      financing fees related to the refinancing of the bridge notes.

                                    Page 10
<PAGE>


      Income Taxes. Income tax expense increased to $3.8 million in 2000
      compared to $2.0 million in 1999. The increase in income tax expense is
      primarily the result of an increase in the taxable income in certain
      foreign countries.

      Net Loss. Net loss was $40.5 million in 2000 compared to a net loss of
      $17.0 million in 1999, due to the reasons described above.

      Three Months Ended September 30, 2000 Compared to Three Months Ended
      September 30, 1999

      Net Sales. Net sales for 2000 were $199.2 million, compared to net
      sales of $145.1 million for 1999, an increase of $54.1 million, or 37.3%.
      The acquisition of PSM accounted for $58.0 million of the increase, which
      was offset by the impact of unfavorable foreign exchange. Net sales in
      the Americas increased $12.7 million to $106.3 million in 2000 from $93.6
      million in 1999, primarily due to the acquisition of PSM, which accounted
      for $15.5 million, and improved laminate pricing in the U.S., partially
      offset by lower volume. Net sales in Asia increased to $24.7 million in
      2000 from $18.8 million in 1999, an increase of $5.9 million, or 31.4%,
      resulting primarily from the addition of the PSM business, which
      accounted for $2.7 million of the increase, as well as increased volume.
      Net sales in Europe increased $35.5 million to $68.2 million in 2000 from
      $32.7 million in 1999. The acquisition of PSM accounted for $39.8 million
      of the increase.

      Gross Profit. Gross profit for 2000 was $51.4 million, compared to gross
      profit of $41.4 million for 1999, an increase of $10.0 million, or 24.2%,
      of which PSM contributed $12.5 million. Gross profit as a percentage of
      net sales in 2000 decreased to 25.8% from 28.5% in 1999, primarily due to
      the addition of the PSM business.

      Gross Profit in the Americas increased to $25.2 million in 2000 from $24.8
      million in 1999, of which PSM contributed $2.5 million. Gross profit as a
      percentage of net sales for the Americas decreased to 23.7% in 2000 from
      26.5% in 1999, principally as a result of increased raw material costs and
      the decrease in volume partially offset by improved pricing levels. Gross
      profit in Europe and Asia increased to $26.2 million in 2000 from $16.6
      million in 1999, of which PSM contributed $10.0 million. The effects of
      foreign exchange translations negatively impacted gross profit margins
      compared to last year. As a percentage of net sales, gross profit in
      Europe and Asia collectively decreased to 28.2% in 2000 from 32.2 % in
      1999.

      Selling, General and Administrative Expenses. Selling, general and
      administrative expenses for 2000 were $46.7 million compared to $36.5
      million for 1999, an increase of $10.2 million. As a percent of net sales,
      selling, general and administrative expenses decreased to 23.4% in the
      2000 period compared to 25.2% in the 1999 period. Excluding the effects of
      PSM, selling, general and administrative expenses were $35.9 million for
      2000 compared to $36.5 million in 1999. Excluding the expenses related to
      the acquisition of PSM of approximately $0.3 million, selling, general and
      administrative expenses were $35.6 million in the 2000 period compared to
      $36.5 million in 1999.

      Restructuring Charges (See Note 5 to the Condensed Consolidated Financial
      Statements). During the third quarter of 2000, the Company spent $2.4
      million of the North America restructuring provision, as well as incurring
      an additional $0.2 million of indirectly related restructuring charges for
      the North America operations.

      During the third quarter of 2000, the Company spent $1.2 million of the
      PSM organizational restructuring reserve, as well as incurring an
      additional $0.1 million of restructuring-related expenses.

      During the third quarter of 2000, the Company spent $0.2 million of the
      European restructuring provision, as well as incurring an additional $0.1
      million of indirectly related restructuring charges for the European
      operations.

      Operating Income (Loss). The operating income for 2000 was $4.3 million
      compared to an operating income of $4.9 million for 1999. The 2000 period
      includes restructuring charges of $0.4 million and acquisition costs of
      $0.3 million. After taking into account the 2000 charges, the operating
      income was $5.0 million in 2000 compared to operating income of $4.9
      million in 1999, for the reasons stated above.

      EBITDA. EBITDA increased to $21.2 million in 2000 compared to $17.0
      million in 1999. After taking into account the 2000 period restructuring
      and acquisition charges (described above), EBITDA, as adjusted, was $21.9
      million in 2000 compared to $17.0 million in 1999.

      Interest Expense. Interest expense increased to $14.4 million in 2000 from
      $9.5 million for 1999. The increase in interest expense is due to the
      additional debt incurred in 2000 for the acquisition of PSM and additional
      debt incurred in the latter part of 1999.

      Income Taxes. Income tax expense increased to $0.9 million in 2000
      compared to $0.1 million in 1999. The increase in income tax expense is
      primarily the result of an increase in the taxable income in certain
      foreign countries.

      Net Loss. Net loss was $9.4 million in 2000 compared to a net loss of $3.9
      million in 1999, due to the reasons described above.

      Liquidity and Capital Resources

      Formica's principal sources of liquidity are cash flows from operations,
      borrowings under the Credit Facility and local credit facilities obtained
      by some of Formica's foreign subsidiaries. Formica's principal uses of
      cash will be



                                    Page 11
<PAGE>


      debt service requirements to service the acquisition-related debt
      described below, capital expenditures and future acquisitions.

      As of September 30, 2000, Formica had approximately $483.1 million of
      indebtedness outstanding compared to $391.1 million as of December 31,
      1999. Formica's significant debt service obligations could, under certain
      circumstances, have material consequences to security holders.

      Working capital was $153.1 million at September 30, 2000 compared to
      $115.9 million at December 31, 1999. The increase was primarily the
      result of the acquisition of PSM that increased working capital by
      approximately $51.5 million. Management believes that Formica will
      continue to require working capital levels consistent with past
      experience and that current levels of working capital, together with
      borrowing capacity available under the Credit Facility and the continued
      effort by management to manage working capital, will be sufficient to
      meet expected liquidity needs in the near term.

      In connection with the Acquisition in 1998, Formica's parent raised
      approximately $137.1 million through the issuance of common and preferred
      stock to the DLJMB Funds, the institutional investors and Messrs. Langone
      and Schneider. The Laminates 8% Preferred Stock has an 8% cumulative
      dividend that is paid in cash when, as and if declared by the Laminates
      board. The Holdings 15% Senior Exchangeable Preferred Stock due 2008 has a
      15% cumulative dividend which is not payable in cash until May 2003 and is
      exchangeable at Holdings' option for 15% subordinated debentures of
      Holdings. Dividends from Formica, which are restricted by the provisions
      of the Credit Facility and the indenture governing the Notes described
      below, are the primary source of funding for payments with respect to
      Holdings and Laminates securities. In addition, Formica sold $200.0
      million of senior subordinated unsecured increasing rate bridge notes (the
      "Bridge Notes") and, together with its subsidiaries, borrowed $80.0
      million of term loans under the Credit Facility. The Bridge Notes were
      refinanced in February 1999 as noted below.

      In February 1999, Formica issued $215.0 million of 10 7/8% Senior
      Subordinated Notes due March 1, 2009 (the "Notes") and repaid the Bridge
      Notes. The Notes mature in 2009. Interest on the Notes is payable
      semiannually in cash. The Notes and related indenture place certain
      restrictions on Formica and its subsidiaries, including the ability to pay
      dividends, issue preferred stock, repurchase capital stock, incur and pay
      indebtedness, sell assets and make certain restricted investments.

      The Credit Facility includes a $120.0 million revolving credit facility,
      an $85 million term loan and a $140.0 million term loan. The $120.0
      million revolving credit facility may be increased by up to $25.0 million
      at the request of Formica, with the consent of the banks providing the
      increased commitments, and will terminate on May 1, 2004. The $85 million
      and $140.0 million term loans will mature in 2004 and 2006 respectively.
      At September 30, 2000, $57.7 million was outstanding against the revolving
      credit facility. The term loans under the Credit Facility totaled $215.1
      million at September 30, 2000 and amortize over the life of the Credit
      Facility.

      Borrowings under the Credit Facility generally bear interest based on a
      margin over the base rate or, at Formica's option, the reserve-adjusted
      LIBOR rate. The applicable margin varies based upon Formica's ratio of
      consolidated debt to EBITDA. Formica's obligations under the Credit
      Facility are guaranteed by Laminates, Holdings and all existing or future
      domestic subsidiaries of Formica (the "subsidiary guarantors") and are
      secured by substantially all of the assets of Formica and the subsidiary
      guarantors, including a pledge of capital stock of all existing and
      future subsidiaries of Formica (provided that, with a single exception,
      no more than 65% of the voting stock of any foreign subsidiary shall be
      pledged) and a pledge by FM Holdings, Inc. of the stock of Formica and by
      Laminates Acquisition Co. of the stock of FM Holdings, Inc. The Credit
      Facility contains customary covenants and events of default. The Company
      is in compliance with the financial covenants as of September 30, 2000.

      In conjunction with the contribution of PSM to Formica by Holdings, the
      Company assumed $110.0 million in debt. PSM Funding, Inc. syndicated and
      increased the term loan facility to $140.0 million at the time of the
      contribution. The additional $30.0 million was used to reduce outstanding
      borrowings under Formica's existing credit facility at the time of the
      contribution and to make any payments in connection with the closing.
      Formica's existing credit facility was amended and restated to include
      the $140.0 million term loan as a separate tranche that 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 new term
      loan will be, at Formica's option, either 2.25% over the Base Rate or
      3.5% over LIBOR. Interest rates on the other tranches of the credit
      facility were also increased by 0.5% in connection with this transaction.

      Formica maintains various local credit facilities in foreign countries
      (primarily in Asia) that provide for borrowings in local currencies.
      Formica may replace the availability of these facilities (in local
      currencies) under the Credit Facility and will maintain some of these
      credit facilities to provide financing for its subsidiaries in these
      countries. Formica expects that these facilities, together with the
      Credit Facility and operating cash flow in these countries, will be
      sufficient to fund expected liquidity needs in these countries.

      As of September 30, 2000 and December 31, 1999, Formica had outstanding
      approximately $29.9 million and $28.4 million, respectively, in letters
      of credit under the Credit Facility to provide credit enhancement and
      support for certain of its credit facilities.



                                    Page 12
<PAGE>


      In the last several years, Formica has implemented a major capital
      investment program that management believes will increase capacity, yield
      manufacturing savings and improve competitiveness. Formica has spent
      approximately $15.8 million on capital expenditures during 2000, and
      anticipates that it will spend an additional $5.0-$7.0 million during the
      remainder of the year. The Credit Facility contains restrictions on its
      ability to make capital expenditures. Based on present estimates, Formica
      believes that the amount of capital expenditures permitted under the
      Credit Facility will be adequate to complete its investment program and
      maintain the properties and businesses of its current operations.

      Formica continues to evaluate acquisitions that will complement or expand
      its decorative surfaces businesses or that will enable it to expand into
      new markets. In connection with any future acquisitions, Formica may
      require additional funding which may be provided in the form of additional
      debt, equity financing or a combination thereof. There can be no
      assurance, however, that any such additional financing will be available
      on acceptable terms.

      Formica anticipates that its operating cash flow, together with
      borrowings under the Credit Facility, will be sufficient to meet its
      anticipated future operating expenses, capital expenditures and debt
      service obligations as they become due. However, Formica's ability to
      make scheduled payments of principal of, to pay interest on or to
      refinance the indebtedness and to satisfy its other debt obligations will
      depend upon its future operating performance, which will be affected by
      general economic, financial, competitive, legislative, regulatory,
      business and other factors beyond its control.

      Formica will continue from time to time to explore additional auxiliary
      financing methods and other means to lower its cost of capital, which
      could include stock issuance or debt financing and the application of the
      proceeds therefrom to the payment of bank debt or other indebtedness.

      Cash flows from operations and funds available under the Company's bank
      credit agreements continue to provide the Company with liquidity and
      capital resources for working capital, capital expenditures and debt
      service requirements.

      Cash provided by operations was $16.0 million for the nine months ended
      September 30, 2000, compared to cash used in operations of $11.4 million
      for the nine months ended September 30, 1999. The increase in cash
      provided by operations is the result of a decrease in accounts receivable
      and inventory and an increase in accounts payable. The decrease in
      accounts receivable and inventories results from an effort to improve the
      management of working capital. Net cash used in investing activities was
      $191.3 million for the nine months ended September 30, 2000 and $32.6
      million for the nine months ended September 30, 1999. The 2000 period
      includes $175.5 million due to the acquisition of PSM. Net cash provided
      by financing activities was $175.2 million for the nine months ended
      September 30, 2000, which included additional financing resulting from
      the acquisition of PSM, and $21.0 million for the nine months ended
      September 30, 1999.

      Effect of Inflation; Seasonality

      Formica does not believe that inflation has had a material impact on its
      financial position or results of operations. Formica's operations are
      modestly influenced by seasonal fluctuations.

      Common European Currency

      The Treaty on European Economic and Monetary Union provides for the
      introduction of a single European currency, the Euro, in substitution for
      the national currencies of the member states of the European Union that
      adopt the Euro. In May 1998 the European Council determined: (i) the 11
      member states that met the requirement for the Monetary Union, and (ii)
      the currency exchange rates amongst the currencies for the member states
      joining the Monetary Union.

      The transitory period for the Monetary Union started on January 1, 1999.
      According to Council Resolution of July 7, 1997, the introduction of the
      Euro will be made in three steps: (i) a transitory period from January 1,
      1999 to December 31, 2001, in which current accounts may be opened and
      financial statements may be drawn in Euros, and local currencies and
      Euros will coexist; (ii) from January 1, 2002 to June 30, 2002, in which
      local currencies will be exchanged for Euros; and (iii) from July 1, 2002
      in which local currencies will disappear.

      Formica cannot give assurance as to the effect of the adoption of the
      Euro on its payment obligations under loan agreements for borrowings in
      currencies to be replaced by the Euro or on its commercial agreements in
      those currencies. However, the Company has not experienced nor does it
      anticipate any problems resulting from the adoption of the Euro.

      Market Risk

      We use financial instruments, including fixed and variable rate debt, to
      finance operations. We occasionally utilize forward contracts to hedge
      certain foreign currency exposures. Forward contracts are entered into
      for periods consistent with underlying exposures and do not constitute
      positions independent of those exposures. We do not enter into contracts
      for speculative purposes and are not a party to any leverage instruments.


                                    Page 13
<PAGE>


      Foreign Currency Exchange Rate Risk

      Our operating results are subject to significant fluctuations based upon
      changes in the exchange rates of other currencies in relation to the U.S.
      dollar. Although we will continue to monitor our exposure to currency
      fluctuations and, when appropriate, use financial hedging techniques in
      the future to minimize the effect of these fluctuations, we cannot assure
      you that exchange rate fluctuations will not harm our business in the
      future.

      Forward-Looking Information

      This report (as well as other public filings, press releases and
      discussions with Company management) contains and incorporates by
      reference certain forward-looking statements. These statements are
      subject to risks, uncertainties and other factors, which could cause
      actual results to differ from those anticipated. Forward-looking
      statements include the information concerning:

      o   our future operating performance, including sales growth and cost
          savings and synergies following our acquisition by Laminates, and our
          acquisitions of Fountainhead, STEL and Perstorp Surface Materials

      o   our belief that we have sufficient cash flows to support working
          capital needs, capital expenditures and debt service requirements and

      o   our belief that our reduction in selling, general and administrative
          expenses, as a percentage of sales, will not affect our net sales

      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.

      What Factors Could Affect the Outcome of Our Forward-Looking Statements?

      You should understand that the following important factors, in addition
      to those discussed elsewhere in this Form 10-Q, and in Formica's Form
      10-K 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

      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
      acquisitions, we have incurred significant indebtedness. The level of our
      indebtedness could have important consequences to us, including:

      o   limiting our ability to obtain additional debt financing in the future
          for working capital, capital expenditures or acquisitions

      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 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.


                                    Page 14
<PAGE>


      Recent Accounting Pronouncements

      In June 1998, SFAS No. 133-"Accounting for Derivative Instruments and
      Hedging Activities" was issued ("SFAS No. 133"). In June 1999, SFAS No.
      137-"Accounting for Derivative Instruments and Hedging Activities -
      Deferral of the Effective Date of FASB Statement No. 133" was issued which
      deferred the effective date of SFAS No. 133 to all fiscal quarters of
      fiscal years beginning after June 15, 2000. In June 2000, SFAS No. 138 was
      issued, which amended SFAS No. 133. These SFAS's require all derivatives
      to be measured at fair value and recognized as assets or liabilities on
      the balance sheet. Changes in the fair value of derivatives should be
      recognized in either net income or other comprehensive income, depending
      on the designated purpose of the derivative. SFAS No. 133, as amended by
      SFAS No. 138, is not expected to have a material impact on the Company's
      financial position or results of operations.

      Contingent Matters

      Refer to Note 6 of the Notes to Condensed Consolidated Financial
      Statements for a discussion of legal contingencies.

Item 3. Quantitative and Qualitative Disclosure of Market Risk

      The information called for by this item is provided under Item
      2--Management's Discussion and Analysis of Financial Condition and
      Results of Operations."

Part II. Other Information

Item 1. Legal Proceedings

      o   See Note 6 of the Notes to Condensed Consolidated Financial Statements
          for a discussion of legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

      o   In September 2000, R.E. Cartledge was elected to the Formica
          Corporation Board of Directors.

Item 6. Exhibits and Reports on Form 8-K

      o   On July 12, 2000, Formica filed a Form 8-K describing being named as
          a defendant in class  action lawsuits.

      o   On August 1, 2000, Formica filed a Form 8-K/A, the first amendment to
          the May 31, 2000 Form 8-K relating to the acquisition of Decorative
          Surfaces Holding AB.

The following exhibit is included herein:

         (12) Computation of Ratio of Earnings to Fixed Charges         Page E-1
         (27) Financial Data Schedule (for electronic submission only)  Page E-2


                                    Page 15
<PAGE>


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
                                                  ---------------------------
                                                  Registrant)


                                                   /s/ David T. Schneider
                                                  ---------------------------
                                                  (David T. Schneider -
                                                  Chief Financial Officer)


                                                  November 13, 2000
                                                  ---------------------------
                                                  (Date)



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