Falken Industries Ltd: Clean Plus® Product Group, Enhances Its Image by Increasing its Purchasing Power Subsidies

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Falken Industries Ltd - Clean Plus® Product Group spokesman Rishard Lebbe, announced today that the pricing and review committee for the Clean Plus® Product Group had authorized, effective September 1, 2005, further assistance to distributors and retailers in difficult and emerging markets.

Lebbe emphasized: "This is wholly in keeping with Falken's stated global strategies for distributor and customer support and expansion of volumes and economies of scale."

Executive Vice President Helle A. Madsø added: "It is and has always been Clean Plus® policy to provide high end quality convenience products at prices everyone can afford."

"Falken's concerns for meeting the expectations and needs of all its customers is here again demonstrated" added Lebbe. "The pricing committee's weighed average approach to the Clean Plus® Product Group's global strategies will plant the seed for lasting customer loyalties and prove an, albeit long term but extraordinary investment" said Andrew Eakin, New Business Development Officer.

Existing Purchasing Power Subsidies were awarded in the form of Order Hardship Discounts and were, at their former cap of 10% designed for, and suitable for the EC. These subsidies were however proven woefully inadequate to face, credibly, the difficulties of certain economies included in Falken's Global Strategies. Falken's new policy increases the maximum Purchasing Power hardship discount to 25%.

"Increased volumes resulting from sales to countries otherwise excluded from high end quality products such as Clean Plus® will generate economies of scale which should greatly compensate, even eliminate wholly, the cost of the new higher subsidies "added Pascal Maillach, Vice President Product Engineering.

John Carricaburu, Assistant Vice president, Operational Marketing supported the view point : "Legendary Clean Plus top quality high end affordable products which have always conclusively held the quality and/or price advantage over competitors, now are pointedly targeted to price driven or emerging economies targeted by our global expansion and strategies."

Board Chairman, Reidar Grøstad concluded: "As Falken's Clean Plus® Product Group continues its efforts to span ocean after ocean, management was confronted with different and new markets needing, without reducing Clean Plus® quality, greater support to fuel lower prices to the end user. Falken expertise in hedging and manufacturing efficiencies including its current expansion of production capacities should be instrumental in leveraging expected greater volumes to finance the cost of these subsidies. The coverage of the Clean Plus® brand is obviously expanded and our business is Clean Plus®."

The Purchasing Power Subsidy is a discount over and above all purchase and order efficiency discounts and is intended to lower the distribution purchase price so that the price to the end-consumer will be substantially lower. Purchasing Power Subsidies are not intended to enhance a distributor's or retailer's margins, their purpose is to increase profits through volumes, by lowering prices to the end customer.

The increase in the Purchasing Power Subsidy does not repeal or affect the US dollar parity subsidy discount awarded to compensate any weakness in the US dollar as against the Euro. Falken customers situated in NAFTA or CAFTA countries or in US dollar dependent countries will continue, as in the past, to have their currency risk hedged and subsidized by the Falken – Clean Plus® Product Group.

Andrew Eakin offered this closing statement: "The last price increase on any Clean Plus® product goes back to 2001 and no price increase is scheduled nor has been authorized for 2005, at least through June 30, 2006. This results of Falken's continuing success in generating volumes and efficiencies of scale."

John Carricaburu, concluded : "Falken's ability to steadfastly hold its prices to 2001 levels, and now effectively lower them, is all the more remarkable that all competitors operating in our markets are reported to have, for the most of them, several times increased their prices, all while Clean Plus® products were already then as now, more favorably positioned."

Falken management as a whole expressed its delight in this further demonstration of its commitment to develop greater volumes and efficiencies through better service and an understanding of its customer's operating conditions.

About Falken Industries LTD:

Falken Industries Ltd. is a leading American manufacturer of innovative wet wipe products with production facilities in France. Its core product group is the leading Clean Plus® brand of high performance products - http://www.cleanplus.com through which it ensures the development and commercialization of specialty cleaning and maintenance products for consumer and industrial applications.

Through its affiliate in St Pierre les ElBeuf, Falken also pursues the development of its non-competing private label business which contributes materially to economies of scale in raw materials costs.

Clean Plus® Auto Care is a recognized success by both clients and competitors due to its unique market positioning, high quality, and price advantage.

Distribution is ensured through Falken's unique "Super Distribution" concept. Super Distribution Agreements provide successful distributors with a contractual exclusivity for a given geographic area and market segment.

Currently, the Clean Plus® and related product lines are sold throughout Europe and in an expanding portion of the rest of the world. The Company's clients include: the largest distribution networks in the automotive sector, major gasoline station chains, exclusive retail auto aftermarket chains in Europe; and a distribution network in the cleaning and health sectors. The Company regularly sells products to government agencies and a large number of national and multinational firms.    

All products are sold in 11 languages and are manufactured to service the whole of the European market. Consumer products are manufactured and available in different editions, i.e., NE Northern European; CE Central Europe; SE Southern Europe; US The United States and South America, and C – Commonwealth, Canada.

The Clean Plus® line of products is divided into 2 segments, the consumer line and the professional line.

Disclosure:

This press release includes statements that may constitute "forward-looking" statements, usually containing the words "believe", "estimate", "project", "expect" or similar expressions. These statements are made, to the extent relevant, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, acceptance of the Company's current and future products and services in the marketplace, the ability of the Company to develop effective new products and receive regulatory approvals of such products, competitive factors, dependence upon third-party vendors, and other risks. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

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