Isola Group, North America Announces Price Increases

CHANDLER, ARIZONA, September 22, 2006 – Isola Group S.a.r.l., a designer, developer and manufacturer of high performance base materials for the printed circuit board industry, today announced a fourth quarter price increase for the North American market to cover the unprecedented raw material increases incurred in the third and fourth quarter of this year.

According to Ray Sharpe, Isola CEO, commenting on the global situation, “The copper foil increases have been driven by an almost doubling of the raw copper market prices through 2006, combined with tight supply and high demand. Despite recent small drops in the copper LME, it still sits above June levels and we do not expect copper foil suppliers to pass these decreases on, as they also try to recover lost margins. Driven by oil and petrochemical costs, we have also taken large increases in resins costs of more than 20% in 2006, adding to the margin erosion from the escalating copper foil costs. Isola has taken steps to secure quarterly pricing for the fourth quarter with our key suppliers. If the copper LME and oil prices stabilize at current levels, we are hopeful that raw material costs will at least remain flat for the first quarter 2007, but this cannot be guaranteed with the current tight supply and strong demand.”

Brian McDermott, Isola Vice President of Sales and Technical Support for North America, commented regarding the specific situation in North America, “Isola’s July price increase in North America fell well short of covering the actual third quarter raw material cost increases, resulting in serious margin erosion on sales in July and August. The combined third and fourth quarter copper foil cost increases will be more than 40%. Clearly, more than 60% material content, Isola cannot absorb these raw material increases and neither can our printed circuit board fabrication customers. These raw material increases are global and Asian laminate manufacturers have passed on similar or higher increases. We expect that our OEM customers understand this and will accept the required increases in printed circuit board prices to cover the unprecedented raw material cost increases the electronic industry has experienced in 2006. This is essential to keep a viable laminate and printed circuit board infrastructure in North America that can continue to invest in new materials and technology. Isola is working to identify and qualify new copper and resin suppliers and negotiating longer pricing in an effort to mitigate cost increases in the future.”

The following price increases will be implemented on October 1, 2006 to cover the combined cost increases for the third and fourth quarters of 2006.

The laminate price increases will be as follows:

H/H laminate base price + $0.20/sq. ft.
1 oz copper adder per side over H/H laminate base price +$0.08/sq. ft.

Additional heavy copper adders based on copper weight

Prepreg price increase +$0.06/sq. ft.

Isola’s premium of 20% for 24 hour QTA service remains unchanged.

22 September 2006

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