Fitch Affirms JohnsonDiversey; Outlook Remains Negative.

CHICAGO -- Fitch Ratings has affirmed JohnsonDiversey, Inc.'s (JohnsonDiversey) ratings as follows:

--Senior secured bank credit facilities at 'BB-/RR1';

--Senior subordinated debt rating at 'B-/RR4';

--Issuer default rating (IDR) at 'B-'.

In addition, Fitch assigns an IDR of 'B-' for JohnsonDiversey Holdings Inc.'s and affirms the senior discount notes rating of 'CCC/RR6'.

The Rating Outlook for both remains Negative.

The rating affirmation is supported by the progress JohnsonDiversey has made on its divestiture program and subsequent net debt reduction of $390 million during the second quarter of 2006. Recovery analysis reflects a balance of lower debt and also a lower asset base with no change in recovery. The polymer business was sold to BASF for approximately $470 million and the purchase price represented an EBITDA multiple of 10 times (x).

JohnsonDiversey continues to make progress on its previously announced restructuring plan which started in November 2005. Program to date, approximately $175 total costs incurred; $82 million in restructuring expenses, primarily related to involuntary terminations associated with the withdrawal from the service-oriented laundry and ware washing business in the US and $93 million in SG&A including $46 million non-cash asset write-downs. Headcount reductions of 749 of which 360 are related to cost reduction initiatives and organizational redesign. The remainder of the headcount reduction is associated with the company's exit from the service-oriented laundry and ware washing business in the US.

The recent asset sales will provide JohnsonDiversey greater financial flexibility to fund and complete the current restructuring program, since free cash flow has been weak. Cost pressure from raw materials have not been completely offset by pricing initiatives although on a sequential basis gross margins have improved since the fourth quarter of 2005 through the second quarter of 2006.

Rating concerns continue to include the likelihood that the company will need to re-borrow cash under existing credit lines to have the liquidity to complete the restructuring program. The company did draw the full amount ($100 million) under its delayed draw term facility in July 2006. Free cash flow for 2006 and 2007 are expected to be negative before turning positive in 2008. Additionally Fitch assumes that in 2006, 2007, and 2008 the company will realize $30 million, $75 million and $150 million respectively in annual savings as a result of the current restructuring program.

The Negative Rating Outlook incorporates the challenges noted above as well as the potential for cash payment of PIK interest as well as a possible put of JohnsonDiversey Holdings stock held by Unilever. As always, the volatile cost environment for key raw materials that JohnsonDiversey uses for its professional products is also of concern. Fitch expects raw material prices to continue to be unstable, and there may be short periods of softening in prices during the second half of 2006. However, overall prices are likely to be maintained at recent levels as the chemical industry proceeds to its next cyclical peak between 2006 and 2007.

JohnsonDiversey's recent actions have enhanced liquidity and provide financial flexibility that will allow them to execute its on-going restructuring program during the next two to three years. Additional cash sources to fund the restructuring program are likely to include potential divestitures, availability under its existing accounts receivable securitization (A/R) program, and cash from operations. Operating results in the near term are expected to continue to be affected by volatile and high raw material costs, and margins are likely to be under pressure if price initiatives are unsuccessful.

Commencing in November 2007, JohnsonDiversey Holdings will need to start paying cash interest on the 10.67% senior discount notes due 2013. However, under the terms of the notes Holdings will not be required to pay the portion of interest on the notes on any interest payment date that exceeds the amount JohnsonDiversey Inc. can dividend or distribute to Holdings on that date in compliance with the restrictive covenants under the JohnsonDiversey Inc. credit facilities and JohnsonDiversey Inc senior subordinated notes. The failure to pay this interest will not constitute a default under the indenture for the notes. All accrued and unpaid interest is due and payable at maturity, regardless of the above mentioned limitations.

On May 1, 2006, in association with the divestiture of the Polymer Business, Commercial Markets Holdco, Inc. ('Holdco'), which is the parent of JohnsonDiversey Inc. direct parent, JohnsonDiversey Holdings, Inc. (Holdings), Marga B.V., a subsidiary of Unilever, and Holdings amended and restated the Stockholders' Agreement dated as of May 3, 2002 among the parties (as amended and restated, the Stockholders' Agreement). Holdco and Marga B.V. own 66 2/3% and 33 1/3%, respectively, of the outstanding shares of Holdings. Under the original stockholders' agreement, at any time after May 3, 2007, Holdings had the option to purchase, and Unilever had the right, under certain conditions, to require Holdings to purchase the shares of Holdings and senior discount notes of Holdings then beneficially owned by Marga B.V. In September 2003, Unilever sold its senior discount notes of Holdings to third parties in a private transaction and therefore, no longer owns those notes.

The Put and Call Option dates were changed on May 1, 2006. Under the New Stockholders' Agreement, at any time after May 3, 2008, Marga B.V. has the right to require Holdings to purchase the shares beneficially owned by Marga, B.V. Holdings has the option to purchase the shares beneficially owned by Marga B.V. at any time after May 3, 2010. This soft put by Marga B.V. could force Holdings and JohnsonDiversey to refinance its debt structure to finance the cost of the shares. While a concern, it is far too early to speculate as to the outcome.

JohnsonDiversey had an EBITDA-to-gross interest expense of 2.3x, debt-to-EBITDA of 3.22x, and total adjusted debt-to-EBITDAR, incorporating gross rent, of 5.39x for the 12-months ending June 30, 2006. These credit metrics compare to EBITDA-to-gross interest expense of 2.52x, debt-to-EBITDA of 3.89x, and total adjusted debt-to-EBITDAR, incorporating gross rent, of 5.67x at 2005 year end. Balance sheet debt was approximately $1.02 billion at the end of the second quarter. Additionally, the company has reduced the size of the A/R securitization program to $75 million in July. The total adjusted debt amount includes operating leases, A/R securitization program balance and JohnsonDiversey Holdings' senior discount note. At the end of the second quarter, JohnsonDiversey continues to have sufficient cash balances of $135 million including liquidity under unused and committed revolving credit facilities totaling $167 million.

JohnsonDiversey, Inc. is a global player in the I&I cleaning market and sells its products into the following market segments: floor care, food service, restroom/housekeeping, laundry, and food processing. In addition, JohnsonDiversey is a global supplier of water-based acrylic polymer resins for printing, packaging, coatings, and plastics markets. The company is owned by JohnsonDiversey Holdings, Inc., which is owned by Commercial Markets Holdco (67%) and Unilever (33%). For the 12-months ending June 30, 2006, JohnsonDiversey had $3.1 billion in net sales and $316 million in Operating EBITDA.

Fitch's Recovery Ratings (RR), introduced in 2005, are a relative indicator of creditor recovery on a given obligation in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors, including a Case Study webcast, can be found at www.fitchratings.com/recovery.

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