GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC, 10-K405, 2000-03-30

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC
10-K405, 2000-03-30
CHEMICALS & ALLIED PRODUCTS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __TO __
COMMISSION FILE NUMBER 1-13404

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GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
(Exact name of Registrant as specified in its charter)

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

DELAWARE 22-3649282
(STATE OF OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

ONE LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 929-2606

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE

Indicate by check mark 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 (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in the definitive proxy or information
statement incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The number of outstanding shares of the Registrant's Common Stock as of
March 1, 2000 was 1,000. There is no established trading market for the
Registrant's Common Stock.

Documents Incorporated by Reference:

The Proxy Statement of the Registrant's parent company, The General
Chemical Group, Inc., for the Annual Meeting of Stockholders to be held on May
9, 2000, is incorporated by reference into Part III.

<PAGE>

PART I

ITEM 1. BUSINESS

GENERAL

General Chemical Industrial Products Inc. (the "Company" or "GCIP"), a
wholly-owned subsidiary of The General Chemical Group Inc. ("GCG"), is a leading
producer of soda ash and calcium chloride in North America with manufacturing
facilities in the United States and Canada.

The Company was formed on April 30, 1999, as part of the separation by
GCG of its Manufacturing and Performance Products businesses from its soda ash
and calcium chloride business through a distribution of stock of GenTek Inc.
("GenTek") to stockholders of GCG (the "Spinoff"). Pursuant to the Spinoff, GCG
transferred its soda ash and calcium chloride business to GCIP and transferred
its Manufacturing and Performance Products businesses to GenTek. As a result of
the Spinoff, GenTek became a separate, publicly-traded company on the New York
Stock Exchange ("NYSE"). GCG continues to trade on the NYSE using the GCG
symbol. The Company is GCG's principal asset, and GCG owns all of the share
capital of the Company.

The Company produces natural soda ash through General Chemical (Soda
Ash) Partners ("GCSAP"), a partnership of which GCIP owns a 51 percent equity
interest and is the managing partner. The other partners of GCSAP are
subsidiaries of ACI International Limited, which is wholly-owned by
Owens-Illinois, Inc. ("Owens-Illinois"), and TOSOH Corporation ("TOSOH"). The
Company, through GCSAP, produces natural soda ash by refining mined trona
deposits at its plant in Green River, Wyoming. The Green River basin, where all
but one of the U.S. producers of natural soda ash are located, contains the
largest known, economically recoverable trona deposits in the world.

The Company also produces synthetic soda ash and calcium chloride using
the Solvay process at its plant in Amherstburg, Ontario. The Solvay process
produces low-density light soda ash, which is preferred in certain detergent and
chemical processes. This production process, which is energy and labor
intensive, is considerably more costly than refining natural soda ash.

THE SODA ASH AND CALCIUM CHLORIDE BUSINESSES

SODA ASH

Soda ash is used in the manufacture of glass, sodium-based chemicals,
and detergents. It is also used in water treatment, pulp and paper and other
industrial end-use applications. Approximately one-half of the global soda ash
industry demand is attributable to glass production. The glass production market
is comprised of manufacturers of bottles and other containers, commercial,
residential and automobile windows, mirrors, fiberglass, television tubes,
lighting ware, tableware, glassware and laboratory ware.

The following table sets forth estimated global end-market soda ash
consumption, by volume(1):

Glass ........................................... 54%
Chemicals........................................ 24%
Detergents....................................... 7%
Water treatment and other........................ 15%

(1) Developed from industry sources.

Total industry production of soda ash in the U.S. and Canada during
1999 was approximately 11.7 million tons with U.S. producers estimated to have
exported approximately 4.5 million tons. The total annual world market for soda
ash currently is estimated at 35 million tons.

<PAGE>

EXPORTS. Almost all of the soda ash produced outside the United States
is synthetic soda ash, which involves significantly more energy, labor and raw
materials than the natural refining process used in the United States and, as a
result, is more costly. The production cost differential between natural and
synthetic soda ash is generally sufficient to offset the costs of transporting
U.S.-produced soda ash into export markets. As a result, the U.S. producers of
natural soda ash successfully compete in most regions with local sources of
synthetically produced soda ash.

The Company, along with the other four U.S. producers of natural soda
ash, is a member of American Natural Soda Ash Company ("ANSAC"), a soda ash
export cooperative organized in 1984 under an exemption from U.S. antitrust laws
provided under the Webb-Pommerene Act. Through this cooperative, all five U.S.
producers export soda ash to all parts of the world except Canada and the
European Union member countries. The primary export markets served by this
cooperative are Asia and Latin America and to a lesser extent the Middle East,
Africa and Eastern Europe. Each individual member's allocation of this
cooperative's volume is based on the member's total nameplate capacity, with any
member's expansion phased-in over a multi-year period for allocation purposes.
ANSAC is the exclusive distributor of the soda ash of its members; however,
members can distribute soda ash directly to their international affiliates for
their own consumption, subject to certain limitations. Certain countries have
from time to time considered limiting or prohibiting sales of products through
export cooperatives such as ANSAC on grounds that they are anti-competitive,
though the Company is not aware of any pending or threatened activity in this
regard that would be material to its business.

SODA ASH PRICING AND CAPACITY UTILIZATION. The Company's principal
product is soda ash, and the profitability of its operations is affected by the
market price of soda ash more than any other factor. The price of soda ash has
fluctuated in recent years and is affected by numerous factors beyond the
Company's control, such as increases in industry capacity, decreases in demand
for soda ash in either the U.S. or the export market (or its end-use products
such as glass, sodium-based chemicals and detergents) and the change in price
and/or availability of substitute products. U.S. domestic demand for soda ash
has been subject to fluctuations based on, among other factors, global economic
conditions, the rate of economic growth in developing regions such as Asia and
Latin America and currency fluctuations.

From 1989 to 1991, industry soda ash prices increased from $77 to $84
per ton, mainly due to the surge in exports. From 1991, soda ash prices declined
to a low of $70 per ton in 1994 because of a number of capacity expansions
before again increasing to $83 per ton in 1996 on the continued growth of
exports. Since 1996, industry soda ash prices have fallen to $69 per ton in
1999, primarily due to capacity expansions from late 1996 to late 1998 of
approximately 2.0 million tons, including a 700,000 ton expansion by FMC
Corporation, and an 800,000 ton expansion by OCI, combined with the reduced
export demand resulting from the Asian crisis.

<PAGE>

The following chart indicates the average industry price of U.S. soda
ash per ton and global capacity utilized during the period from 1989 to 1999.

<TABLE>
<CAPTION>
AVERAGE PRICE GLOBAL CAPACITY
YEAR PER TON (1) UTILIZATION (2)
---- ----------- ---------------
<S> <C> <C>
1989....................................... $77 97
1990....................................... 83 97
1991....................................... 84 91
1992....................................... 81 90
1993....................................... 74 88
1994....................................... 70 91
1995....................................... 74 90
1996....................................... 83 89
1997....................................... 77 91
1998....................................... 75 87
1999....................................... 69 86(3)
</TABLE>

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(1) Based on data from the U.S. Geological Survey (not adjusted for inflation),
FOB production facility.
(2) Based on 95 percent of nameplate capacity as reported by industry sources.
(3) Company estimate.

SODA ASH CAPACITY EXPANSIONS. Since 1982, no new natural soda ash
plants have been built in North America. During this period, capacity expansion
in the United States has been achieved by expansion of existing facilities and
improved operating efficiencies with such new natural soda ash capacity
generally being offset by the closure of older, higher-cost synthetic soda ash
plants outside the United States. American Soda, a joint venture between
American Alkali and The Williams Companies, has announced its intention to
solution mine nahcolite reserves in White River, Colorado, for processing into
soda ash and sodium bicarbonate. American Soda's management has estimated that
the capacity of this facility will be one million tons of soda ash per year.
American Soda has announced that it expects this facility to become operational
in the fourth quarter of 2000.

Regarding existing soda ash producers, in late 1998, Oriental Chemical
completed an 800,000 ton expansion of its Green River facility. Upon completion
of the expansion, due to current soda ash market conditions, Oriental Chemical
"mothballed" 900,000 tons of previously constructed capacity at the facility. In
addition, Solvay Minerals announced the delay of its previously planned 400,000
ton U.S. expansion, originally scheduled for completion in late 1998, until the
fourth quarter of 2000. During the fourth quarter of 1999, FMC announced it was
reducing capacity at its Granger, Green River facility by 650,000 tons.
Additionally, in January 2000, IMC closed its 300,000 ton Matthes and Weber
facility in Duisburg, Germany.

CALCIUM CHLORIDE

In addition to soda ash, the Company produces calcium chloride, which
is sold predominantly into the highway and road maintenance and the oil field
services markets. Calcium chloride, a co-product of the synthetic soda ash
process utilized by the Company's Amherstburg plant, is used primarily on
Canada's extensive network of unpaved roads for dust control and roadbed
stabilization during the summer and on U.S. highways and roads for melting ice
during the winter. Other applications include retail ice control, concrete
additives, water treatment, newsprint recycling and food processing.

<PAGE>

COMPETITION

SODA ASH

The worldwide soda ash industry is comprised of a number of domestic
and international producers, some of which produce large volumes of soda ash in
multiple geographic regions. Solvay S.A., with natural soda ash operations in
the U.S. and multiple synthetic facilities in Eastern and Western Europe, is the
world's single largest producer of soda ash, with total estimated capacity of
approximately 8.6 million tons. FMC Corporation's 1999 acquisition of Tg Soda
Ash, Inc. increased FMC Corporation's combined total capacity to more than 4.8
million tons, of which 0.6 million tons are currently mothballed.

Given the global nature of the soda ash industry and major soda ash
consumers, we compete with both international and North American soda ash
producers. The international soda ash producers include Brunner Mond plc.,
Penrice Soda Ash Products Pty Ltd. (currently owned by IMC Global), Solvay S.A.
and various Eastern European and Asian producers.

Soda Ash capacity outside of North America is as follows:
<TABLE>
<CAPTION>

CAPACITY IN
THOUSANDS
REGION OF TONS(1)
------ ----------
<S> <C>
Eastern Europe................................... 6,900
Western Europe................................... 7,600
China............................................ 8,500
Other Asian Countries............................ 4,600
Rest of World.................................... 2,000
------
Total capacity outside North America............. 29,600
======
</TABLE>
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(1) Estimated in 1998 annual nameplate capacity; derived from industry sources.

The Company's North American soda ash competitors are listed below:

<TABLE>
<CAPTION>
1999 ANNUAL
NAMEPLATE CAPACITY
OWNER/MANAGING PARTNER LOCATION IN TONS (1)
- ---------------------- -------- ------------------
<S> <C> <C>
General Chemical Industrial Products Inc.... Wyoming 2,800
Amherstburg 500
------
3,300
FMC Corporation............................. Wyoming 4,200(2)
Oriental Chemical Co........................ Wyoming 2,200(3)
Solvay Minerals, Inc. ...................... Wyoming 2,300
IMC Global(4) .............................. California 1,500
------
Total North American Capacity 13,500
======
</TABLE>

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(1) Estimated 1999 annual nameplate capacity; derived from industry sources.
(2) Excludes 650,000 tons of mothballed capacity.
(3) Excludes 900,000 tons of mothballed capacity, but includes 800,000 tons of
new capacity.
(4) Currently held by IMC Global through its wholly-owned subsidiary, North
American Chemical Company.

<PAGE>

CALCIUM CHLORIDE

The Company is the largest producer of calcium chloride in Canada and
the second largest producer of calcium chloride in North America with 450,000
tons of capacity. Major competitors are The Dow Chemical Company, TETRA
Technologies, Inc., Ambar, Inc. and various local producers in Canada. In the
United States, we are the third largest distributor of calcium chloride behind
Dow Chemical and TETRA Technologies. It is estimated that Dow Chemical has
700,000 tons of capacity. The next largest U.S. producer is TETRA Technologies,
which operates four plants with estimated total capacity of 350,000 tons. Ambar,
Inc. an oil services company, converted an existing salt evaporation facility in
Michigan to calcium chloride production. This Michigan facility came onstream
with announced capacity of 300,000 tons.

In certain markets, calcium chloride competes with a number of substitute
products. For example, in the highway ice control market, calcium chloride
competes with alternative de-icers such as rock salt and magnesium chloride. As
such, the Company also competes with the producers of these substitute products.

RESERVES AND CONTROL OF RESOURCES

The Company mines trona ore under leases with the United States
government, the State of Wyoming and the Union Pacific Resources Corporation.
The Company's trona reserves and mines are located in the Green River, Wyoming
area. In the Green River basin, the Green River formation was deposited in a
lake that began in the early Eocene geologic period (approximately 35 million
years ago) as a large body of fresh water, shrank in size and became saline,
expanded and then became fresh water again. In general, the sediments deposited
during the saline phase of this lake, which included the trona deposits, are
called the Wilkins Peak Member, and the overlying and underlying fresh water
deposits are called the Laney Shale Member and Tipton Shale Member,
respectively.

The Company's estimated proven reserves within bed No. 17, which it is
currently mining, consist of approximately 81 million tons of extractable ore.
At the 1999 operating rate of 2.4 million tons of soda ash per year (4.3 million
tons of trona ore), there is approximately a 19-year supply within bed No. 17.
For the three years ended December 31, 1999, annual production of trona ore
averaged approximately 4.3 million tons. In addition, the Company's estimated
recoverable reserves contain three other major mineable trona beds containing
approximately 324 million tons of extractable ore. These beds, which may require
significant capital to access, will provide more than 79 years of added reserves
based on current operating rates.

At the Company's synthetic soda ash plant in Amherstburg, Ontario,
Canada, the Company uses salt and limestone as its raw materials. Based on
current production levels, the Company has approximately 28 years of salt
reserves. Limestone reserves owned by the Company total approximately 15 years,
with an option on an additional six years of reserves. However, the Company is
not currently utilizing its limestone reserves and is instead purchasing all of
its limestone requirements under a long-term contract with a major limestone
producer due to the economic benefit of using purchased limestone.

GENERAL CHEMICAL (SODA ASH) PARTNERS

Since 1986, the Green River plant has been owned by GCSAP, a
partnership of which the Company is the managing partner. The Company owns a 51
percent equity interest and ACI International Limited and TOSOH Corporation,
through wholly owned subsidiaries, respectively, own 25 percent and 24 percent
of the partnership's equity interests. ACI International Limited, a major world
producer of container glass and a customer of GCSAP, was acquired in April 1998
by Owens-Illinois, a worldwide producer of packaging materials. Management
believes that Owens-Illinois and ACI International Limited as a combined entity
is one of the largest single purchasers of soda ash with annual domestic and
international requirements of approximately 2 million tons. TOSOH Corporation is
a leading chemical company and distributor of soda ash in the Japanese market
whose operations previously included a 300,000 ton synthetic soda ash facility
in Nanyo, Japan. In 1997, TOSOH Corporation closed its synthetic soda ash
facility and began purchasing soda ash through ANSAC.

<PAGE>

The Company, GCG prior to the Spinoff, has been the managing partner of
GCSAP since 1986, when the partnership was formed. As managing partner, the
Company has had and will continue to have overall responsibility for management
of the partnership, including with respect to all operational, sales, marketing
and financial matters. However, certain significant actions of the partnership
must be approved by a majority, or in certain instances, all of the partners.
The partnership shall terminate on December 31, 2011, unless extended for an
additional five years or unless the partners decide to terminate it at any time.

The partnership agreement requires the partnership to make quarterly
cash distributions to each of the three partners. The partnership agreement also
prohibits the partners from transferring their equity interests or withdrawing
from the partnership without the consent of the other partners. The obligations
of each partner are guaranteed by its parent. Pursuant to a guaranty agreement,
each parent company has agreed to certain restrictions on its ability to sell
the stock of its partner subsidiary. If the parent company of any partner
proposes to transfer ownership of its partner subsidiary, the non-transferring
parent companies may either:

(1) acquire the transferred partner, or its partnership interest,
pursuant to a right of first refusal; or

(2) require the transferring parent company, or the proposed
purchaser, to acquire the partnership interest held by their own
partner subsidiaries.

PARTNERSHIP WITH CHURCH & DWIGHT

GCSAP and Church & Dwight are partners in a partnership that owns trona
reserves. Church & Dwight is a leading producer of sodium bicarbonate, commonly
known as baking soda, sold under the Arm & Hammer'r' brand. The trona is mined
and processed by GCSAP under a tolling agreement and all of the soda ash
produced is purchased by Church & Dwight under a sales contract.

SEASONALITY AND BACKLOGS

Sales of soda ash are generally not seasonal, except for sales to the
glass container industry, which increase significantly in the summer due to
stronger beverage demand. Sales of calcium chloride are concentrated in late
spring and summer for dust control and late fall and winter for de-icing. As a
result, sales are generally lowest in the first quarter and highest in the
second quarter.

Due to the nature of our business, there are no significant backlogs.

ENVIRONMENTAL MATTERS

The Company's mining and production operations, which have been
conducted at its Green River and Amherstburg sites for many years, are subject
to numerous laws and regulations relating to the protection of human health and
the environment in the U.S. and Canada. The Company has an established program
to ensure that its facilities comply with environmental laws and regulations.
However, as a result of its operations, the Company is involved from time to
time in administrative and judicial proceedings and inquiries relating to
environmental matters. In addition, modifications or changes in enforcement of
existing laws and regulations or the adoption of new laws and regulations in the
future, particularly with respect to environmental and safety standards, or the
discovery of additional or unknown environmental contamination could require
expenditures which might be material to the Company's results of operations or
financial condition. For further discussion of the Company's efforts to comply
with the environmental laws and regulations to which its operations are subject,
as well as a discussion of potential liabilities known to the Company under such
laws and regulations, see "Item 7 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Environmental Matters".

<PAGE>

GCG, as the former parent of GenTek, may under certain circumstances be
found liable for obligations of GenTek related to the use or transport of
hazardous substances or environmental contamination at facilities of GenTek for
periods prior to the Spinoff. Although GenTek has agreed to indemnify and hold
GCG harmless with respect to all such liabilities and to bear all of GCG's
expenses for defending any claims related to these matters, GCG's, and as a
result the Company's, results of operations or financial condition could be
materially adversely affected in the event GenTek is unable or unwilling to
perform its indemnification obligations.

EMPLOYEES/LABOR RELATIONS

As of December 31, 1999, the Company had 1,041 employees, 310 of whom
were full-time salaried employees, 719 were full-time hourly employees and 12
were hourly employees working in nonunion facilities.

Three union contracts, covering 730 employees at the Green River,
Wyoming and Amherstburg, Ontario facilities, have durations of three years and
were renewed during 1999.

Set forth below is information with respect to each of the Company's
executive officers and/or key employees.

DeLyle W. Bloomquist, 41, is Vice President and Chief Operating Officer
of GCG and Director and the President and Chief Executive Officer of the
Company. Mr. Bloomquist was from 1996 until the Spinoff the Vice President and
General Manager, Industrial Chemicals of General Chemical Corporation. Mr.
Bloomquist was the Director of General Chemical Corporation's Corporate
Distribution Department between 1995 and 1996. Between 1993 and 1995, he served
as Controller, Industrial Chemicals of General Chemical Corporation.

David S. Graziosi, 34, is Vice President - Finance of both GCG and the
Company. Mr. Graziosi was the Director of Finance for GenTek, Inc. from August
1999 to February 2000. Mr. Graziosi held several financial management positions
in Sun Chemical Group B.V. from August 1996 to August 1999. Between September
1994 and July 1996, he served as an Assistant Finance Director of
Colgate-Palmolive Company in both the U.S. and South Africa.

ITEM 2. PROPERTIES

The Company's headquarters is located in Hampton, New Hampshire. The
locations and uses of major properties of the Company are as follows:

LOCATION USE
-------- ---
UNITED STATES
Green River, Wyoming Trona Mine and Manufacturing
Facility
* Hampton, New Hampshire Headquarters
* Parsippany, New Jersey Offices

CANADA
Amherstburg, Ontario Manufacturing Facility
* Mississauga, Ontario Offices
Brook, Ontario Calcium Chloride Brine Fields

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* Leased
8

<PAGE>

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in claims, litigation, administrative
proceedings and investigations relative to environmental matters. Although the
amount of any liability that could arise with respect to these actions cannot be
accurately predicted, the opinion of management based upon currently-available
information is that any such liability not covered by insurance will have no
material adverse effect on the Company's results of operations or financial
condition. See also "Item 7. -- Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Environmental Matters".

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No items were submitted to a vote of security holders of the Company,
through the solicitation of proxies or otherwise, during the fourth quarter of
fiscal 1999.

<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

There is currently no established trading market for the Company's
Common Stock. As of March 1, 2000, GCG was the sole stockholder of record of the
Company's Common Stock. Certain restrictions in the Company's credit agreement
limit the ability of the Company to pay dividends.

In September 1999, the NYSE modified its continued listing criteria to
require, among other things, that a listed company have a market capitalization
of not less than $50 million and total shareholder equity of not less than $50
million. On February 28, 2000, GCG received notice from the NYSE that it is no
longer in compliance with either of these criteria. In order to maintain the
continued listing of its Common Stock on the NYSE, GCG is following the NYSE
rules and procedures applicable to listed companies which fail to meet these
criteria. In the event that the NYSE accepts to maintain GCG's listing, GCG will
be subject to monitoring by the NYSE for compliance through September 2001. At
this time, GCG cannot give any assurances that the NYSE will accept to maintain
GCG's listing for this period. If the NYSE accepts to maintain the listing and
GCG continues to fail to meet the continued listing criteria (i.e. each of its
market capitalization and shareholders' equity not being less than $50 million)
after September 2001, GCG's Common Stock could be delisted from the NYSE. In the
event GCG is delisted, GCG will seek to list or have quoted its Common Stock on
another securities exchange or national quotation system.

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data of the Company have
been derived from and should be read in conjunction with the Company's
Consolidated Financial Statements.
<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues.................................. $265,333 $298,945 $289,700 $261,469 $256,793
Operating profit.............................. 62,296 77,924(1) 68,281 41,049(2) 30,607(3)
Minority interest............................. 19,458 31,635 24,253 16,666 12,787
Income before interest and income taxes....... 44,224 46,963(1) 44,587 24,342(2) 19,159(3)
Net income.................................... $ 20,957 $ 24,280(1) $ 22,264 $ 9,424(2) $4,946(3)
OTHER DATA:
Capital expenditures.......................... $ 9,251 $ 34,934 $ 30,468 $ 18,498 $ 24,061
Depreciation and amortization................. 14,157 15,646 16,798 16,999 17,801
Ratio of earnings to fixed charges (4)........ 3.9x 4.9x 4.3x 2.8x 2.1x
BALANCE SHEET DATA (AT END OF PERIOD):
Cash, cash equivalents and short-term
investments................................ $ 928 $ 1,609 $ 1,352 $ 1,127 $ 24,688
Total assets.................................. 212,493 241,086 262,175 248,714 289,754
Long-term debt................................ -- -- -- -- 150,919
Total equity (deficit)........................ 53,354 62,795 85,505 75,292 (48,744)
</TABLE>

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(1) Includes a one-time charge of $5.7 million ($3.5 million after tax) due
primarily to awards made under the restricted unit plan.
(2) Includes incremental accruals of $2.3 million ($1.4 million after tax)
principally related to cost of sales ($.9 million) for the reclamation of
brine wells and selling, general and administrative expense ($1.4 million)
primarily due to product delivery litigation.
(3) Includes a one-time charge of $1.9 million ($1.2 million after tax) related
to the Spinoff.
(4) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of income before minority interest and income taxes and
extraordinary items plus fixed charges. Fixed charges consist of interest
expense, including the amortization of deferred financing costs, and that
portion of rental expense that management believes to be representative of
interest. Pro forma for the refinancing transactions, the ratio of earnings
to fixed charges for 1998 would be 2.3x.

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

The Company is a leading global producer of soda ash and North American
producer of calcium chloride. The Company produces natural soda ash at its
facility in Green River, Wyoming, and synthetic soda ash and calcium chloride at
its facility in Amherstburg, Ontario. The Company's principal product is soda
ash, and the profitability of its operations is affected by the market price of
soda ash more than any other factor. The price of soda ash has fluctuated in
recent years due to numerous factors, such as changes in industry capacity and
global demand for soda ash, and the change in price and/or availability of
substitutes for end-products using soda ash. In 1997, 1998 and 1999, due in part
to unfavorable soda ash prices, we experienced decreases in profits compared to
prior year levels. In 1999 soda ash prices for U.S. producers were $69 per ton,
approximately $6 per ton below the 1998 level. For a discussion of factors
affecting the prices of and demand for soda ash, see "Item 1 - Business - The
Soda Ash and Calcium Chloride Businesses - Soda Ash - Soda Ash Pricing and
Capacity Utilization".

GCIP's Green River facility, including the plants and leases for mining
trona ore, are owned and operated through General Chemical (Soda Ash) Partners,
a partnership in which GCIP owns a 51 percent partnership interest and of which
GCIP is the managing partner. See "Item 1 - Business - General Chemical (Soda
Ash) Partners".

On April 30, 1999, GCG completed the separation of its Manufacturing
and Performance Products businesses from its soda ash and calcium chloride
business through a distribution of stock of GenTek to stockholders of GCG.
Pursuant to the Spinoff, GCG transferred its soda ash and calcium chloride
business to GCIP and transferred the Manufacturing and Performance Products
businesses to a wholly-owned subsidiary, GenTek, and distributed the stock of
GenTek to shareholders of GCG. As a result of the Spinoff, GenTek became a
separate, publicly traded company on the New York Stock Exchange. GCG continues
to trade using the GCG symbol. GCG owns and operates GCIP, and GenTek owns and
operates the segments comprising the Manufacturing and Performance Products
businesses. GCIP is GCG's principal asset, and GCG owns all of the share capital
of the Company.

Prior to April 30, 1999, the soda ash and calcium chloride business had
not been operated as a separate, stand-alone business and had shared with the
GenTek business various financial, administrative and managerial expertise
relevant to operating as an independent public company. After the Spinoff, as a
separate, stand-alone business, the soda ash and calcium chloride business'
results and profits may not be comparable to those before the Spinoff.

The Financial Statements of the Company for periods prior to April 30,
1999 include an allocation of certain assets, liabilities and expenses from
GenTek. In the opinion of management, expenses have been allocated to the soda
ash and calcium chloride business on a reasonable and consistent basis using
management's estimate of services provided to the Company. However, such
allocations are not necessarily indicative of the level of expenses which might
have been incurred had the Company been operated as a separate, stand-alone
entity during the periods presented or incurred after the Spinoff. For further
information on the basis of presentation of the historical financial data of the
Company, see "Item 8 - Financial Statements and Supplementary Data - Summary of
Significant Accounting Policies".

This discussion should be read in conjunction with the Company's
Consolidated Financial Statements and the respective notes thereto included in
Item 8.

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth statement of operations data for each of
the three years ended December 31, 1997, 1998 and 1999 and the corresponding
percentage of the net revenues for the relevant periods presented.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1997 1998 1999
---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net revenues....................................... $289.7 100% $261.5 100% $256.8 100%
Gross profit....................................... 84.9 29 59.1(1) 23 49.7 19
Selling, general and administrative expense........ 16.7 6 18.1(1) 7 19.0(2) 7
Operating profit................................... 68.3 23 41.0(1) 16 30.6 12
Interest expense................................... 12.7 4 11.7 4 13.7 5
Minority interest.................................. 24.3 8 16.7 6 12.8 5
Net income......................................... 22.3 8 9.4(1) 4 4.9(2) 2

</TABLE>

- ----------
Note: May not add due to rounding.

(1) Includes incremental accruals of $2.3 million ($1.4 million after tax)
principally related to environmental spending and litigation.

(2) Includes a one-time charge of $1.9 million ($1.2 million after tax)
principally related to the Spinoff.

1999 AS COMPARED WITH 1998

Net revenues for 1999 were $256.8 million, which was $4.7 million, or 2
percent below the prior year level. This decrease reflects lower soda ash
pricing ($18.8 million) partially offset by higher volumes of both soda ash and
calcium chloride ($14.1 million).

Gross profit for 1999 was $49.7 million compared with $59.1 million in
the same period of 1998. Gross profit as a percentage of sales decreased to 19
percent in 1999 from 23 percent in 1998. These decreases were primarily related
to the above-mentioned lower pricing and increases in energy costs.

Selling, general and administrative expense as a percentage of net
revenues was unchanged from 1998 at 7 percent.

Minority interest in 1999 was $12.8 million compared with $16.7 million
for 1998, reflecting lower earnings due to weaker soda ash pricing and higher
energy cost.

Interest expense for 1999 was $13.7 million, $2.0 million higher than
the comparable year level due to higher borrowing rates.

Provision for income taxes for 1999 was $.4 million compared with $3.2
million for1998, due to a comparable level of depletion deductions for each year
combined with lower earnings in 1999.

1998 AS COMPARED WITH 1997

Net revenues for 1998 were $261.5 million, which was $28.2 million, or
10 percent, below the prior year level. This decrease reflects lower volumes for
soda ash ($21.0 million), particularly exports to Asia, as well as lower pricing
for soda ash and calcium chloride ($7.2 million).

<PAGE>

Gross profit for 1998 was $59.1 million, compared with $84.9 million in
the same period in 1997. Gross profit as a percentage of sales for 1998
decreased to 23 percent from 29 percent in 1997. These decreases were primarily
due to the above-mentioned lower soda ash volumes and unfavorable pricing.

Selling, general and administrative expense as a percentage of net
revenues increased to 7 percent in 1998 from 6 percent in 1997 primarily due to
the lower sales volume.

Minority interest for 1998 was $16.7 million compared with $24.3
million for 1997, reflecting lower earnings due to lower export volumes and
weaker soda ash pricing.

Interest expense for 1998 of $11.7 million was $1.0 million lower than
the comparable prior year level due to lower borrowing rates.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $24.7 million at December 31, 1999
compared with $1.1 million at December 31, 1998. During 1999 the Company
generated cash flow from operating activities of $31.9 million and received
proceeds from debt of $144.8 million, used cash of $24.1 million for capital
expenditures and transferred $129.0 million to GCG for repayment of pre-Spinoff
debt.

The Company had working capital of $59.5 million at December 31, 1999
as compared with $39.9 million at December 31, 1998. The increase in working
capital principally reflects higher cash balances due to the proceeds from debt
partially offset by the transfer to GCG for repayment of pre-Spinoff debt.

Prior to the Spinoff, the Company's primary sources of liquidity were
cash generated from operations and borrowings under GCG's credit facility.
Following the Spinoff, the Company's liquidity needs arise primarily from
working capital requirements, capital expenditures and interest and principal
payment obligations. The Company's ability to satisfy its capital requirements
will be dependent upon future financial performance, which in turn will be
subject to general economic conditions and to financial, business and other
factors, including factors beyond the Company's control. The Company believes
that its existing capital resources, cash flow generated from future operations
and drawings under its credit facility will enable the Company to maintain
planned operating, capital expenditure and debt service requirements for the
foreseeable future.

On April 30, 1999, the Company completed the offering of $100 million
10-5/8% Senior Subordinated Notes. Approximately $80 million of the net proceeds
was used to fund a distribution to GCG prior to the Spinoff and the balance for
general corporate purposes. In addition, concurrent with the Spinoff, the
Company entered into an $85 million credit facility, of which up to $60 million
is available for borrowing by the Company's Canadian subsidiary in U.S. Dollars
or the Canadian dollar equivalent. The net proceeds under the credit facility
were used to repay existing third-party indebtedness. As of December 31, 1999,
$34 million was available for future borrowings under the credit facility and
$24.7 million of cash was on hand.

The Company is significantly leveraged. Outstanding indebtedness
consists of the notes and $51 million outstanding under the credit facility. The
Company's leverage and debt service requirements resulting from the notes and
credit facility increases its vulnerability to economic downturns, may adversely
affect its ability to obtain additional financing in the future and may place
the Company at a competitive disadvantage because the Company may be more highly
leveraged than certain competitors. The Company's indenture and credit facility
impose operating and financial restrictions on the Company. These covenants
could adversely affect the Company's ability to finance its future operations,
potential acquisitions or capital needs or to engage in business activities that
may be in the interest of shareholders.

<PAGE>

ENVIRONMENTAL MATTERS

On March 13, 2000, the Company's Canadian subsidiary received a letter
from Environment Canada ("EC"). The letter informed the Company that it faces an
alleged violation of the Canadian Fisheries Act, R.S.C., as amended, with
respect to effluent discharges at its Amherstburg, Ontario facility. According
to EC, the Company's chloride level of its effluent discharged to the Detroit
River exceed permitted levels. The Company is currently evaluating various
projects designed to improve the quality of the effluent and intends to propose
a plan to EC with respect to the scope and extent of any corrective action.
Because the evaluation of the projects to be implemented, if any, and the
outcome of the Company's discussions with EC have not yet been completed, the
Company does not have sufficient information to estimate the costs which may be
incurred in connection with this matter. However, depending on the outcome of
these issues, the Company could incur additional expenses and/or capital
expenditures which might be material to the Company's results of operations
and/or financial condition. See "Item 1 - Business - Environmental Matters".

ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133"). FAS 133 requires that all
derivative instruments be measured at fair value and recognized in the balance
sheet as either assets or liabilities. The Statement, as amended, is effective
for fiscal years beginning after June 15, 2000. GCIP is required to adopt this
standard, as amended, in the fiscal year ending December 31, 2001. Management
does not expect that the adoption of FAS 133 will have a material effect on the
Company's results of operations, financial condition or cash flows.

YEAR 2000 ISSUE

Year 2000 issues exist when dates in computer systems are recorded
using two digits (rather than four) and are then used for arithmetic operations,
comparisons or sorting. A two-digit date recording may recognize a date using
"00" as 1900 rather than 2000, which could cause the Company's computer systems
to perform inaccurate computations.

During 1998 and 1999, the Company completed a detailed assessment of
its information systems and other hardware and software. Based upon this
assessment, non-compliant software or hardware were either upgraded to Year 2000
versions, remediated to become Year 2000 compliant or replaced by other hardware
or software which provided Year 2000 compliance and other benefits. As a result
of the Company's Year 2000 readiness efforts, the Company's mission critical
systems successfully distinguished between the year 1900 and 2000 without any
critical system failures. In addition, the Company has not experienced an
adverse impact due to Year 2000 issues at any of its significant suppliers. The
Company will continue to monitor its mission critical applications and equipment
through the normal course of its business operations to ensure that any Year
2000 matters that do arise are addressed promptly.

With regard to financial cost, the Company estimates it incurred $1.0
million on Year 2000 activities through December 31, 1999.

<PAGE>

FORWARD LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking statements.
All statements other than statements of historical facts included in this Annual
Report on Form 10-K may constitute forward-looking statements. The Company has
based these forward-looking statements on its current expectations and
projections about future events. Although it believes that its assumptions made
in connection with the forward-looking statements are reasonable, there can be
no assurances that its assumptions and expectations will prove to have been
correct. These forward-looking statements are subject to various risks,
uncertainties and assumptions including, among other things:

o fluctuation of world soda ash prices due to changes in supply and
demand;

o international economic conditions and U.S. dollar exchange rates;

o reduced soda ash demand from increased use of recycled glass or glass
substitutes;

o a substantial portion of our operations is conducted through a joint
venture which is 51 percent owned by us;

o the effect of the Company's significant leverage on its ability to
raise additional capital or meet its operating, debt service or
capital requirements;

o increases in the cost of energy, transportation or labor;

o unknown environmental contamination at our facilities;

o future modifications to existing environmental, safety and human
health regulations;

o our ability to operate as an independent business as a result of the
Spinoff;

o potential adverse tax consequences of a change of control as a result
of the Spinoff;

o the successful completion of the American Soda project; and

o the outcome of the Company's discussion with EC concerning its
effluent discharges.

The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this report might not occur.

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not expect to enter into financial instruments for
trading purposes. The Company anticipates periodically entering into interest
rate swap agreements to effectively convert all or a portion of floating-rate
debt to fixed-rate debt in order to reduce exposure to movements in interest
rates. Such agreements would involve the exchange of fixed and floating interest
rate payments over the life of the agreement without the exchange of the
underlying principal amounts. The Company also anticipates periodically entering
into currency agreements to partially reduce exposure to movements in currency
exchange rates. Swap and currency agreements will only be entered into with
creditworthy parties.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Stockholder of

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.:

We have audited the accompanying consolidated balance sheets of General
Chemical Industrial Products Inc. and subsidiaries ("the Company") as of
December 31, 1998 and 1999, and the related consolidated statements of
operations, changes in equity (deficit) and cash flows for each of the three
years in the period ended December 31, 1999. Our audits also included the
financial statement schedule listed in the Index at Item 14. These financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of General Chemical Industrial
Products Inc. and subsidiaries as of December 31, 1998 and 1999, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
whole, presents fairly in all material respects the information set forth
therein.

Deloitte & Touche LLP

Parsippany, New Jersey
February 15, 2000
(March 13, 2000 as to Note 12)

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,
-----------------------------------
1997 1998 1999
---- ---- ----
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
Net revenues.................................................. $289,700 $261,469 $256,793
Cost of sales................................................. 204,769 202,338 207,139
Selling, general and administrative expense................... 16,650 18,082 19,047
-------- -------- --------
Operating profit............................................ 68,281 41,049 30,607
Interest expense.............................................. 12,747 11,747 13,741
Interest income............................................... 1,029 930 1,355
Foreign currency transaction (gains) losses................... 185 447 (109)
Other expense, net............................................ 285 524 167
--------- --------- --------
Income before minority interest and income taxes............ 56,093 29,261 18,163
Minority interest............................................. 24,253 16,666 12,787
-------- -------- --------
Income before income taxes.................................. 31,840 12,595 5,376
Income tax provision.......................................... 9,576 3,171 430
-------- -------- --------
Net income.......................................... $ 22,264 $ 9,424 $ 4,946
======== ========= ========
</TABLE>

See the accompanying notes to consolidated financial statements.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
---- ----
(IN THOUSANDS, EXCEPT
SHARE DATA)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents................................ $ 1,127 $ 24,688
Receivables, net......................................... 58,601 57,970
Inventories ............................................ 25,508 25,291
Deferred income taxes.................................... 4,392 6,089
Other current assets..................................... 1,659 3,356
-------- --------
Total current assets................................ 91,287 117,394
Property, plant and equipment, net............................ 141,808 150,038
Other assets ................................................ 15,619 22,322
-------- --------
Total assets........................................ $248,714 $289,754
======== ========
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:

Accounts payable......................................... $ 24,298 $ 27,625
Accrued liabilities...................................... 25,146 30,318
Income taxes payable..................................... 1,988 --
------- --------
Total current liabilities........................... 51,432 57,943
Long-term debt ............................................ -- 150,919
Other liabilities ............................................ 78,561 87,557
-------- --------
Total liabilities................................... 129,993 296,419
-------- --------
Minority interest ............................................ 43,429 42,079
Equity (deficit):
Net investment by The General Chemical Group Inc......... 75,292 --
Common Stock, $.01 par value; authorized 1,000 shares;
issued: 1,000 shares at December 31, 1999.............. -- --
Capital (deficit)........................................ -- (53,940)
Accumulated other comprehensive income................... -- 36
Retained earnings ....................................... -- 5,160
-------- --------
Total equity (deficit).............................. 75,292 (48,744)
-------- --------
Total liabilities and equity (deficit).............. $248,714 $289,754
======== ========
</TABLE>

See the accompanying notes to consolidated financial statements.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1998 1999
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ........................................................ $ 22,264 $ 9,424 $ 4,946
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................................. 16,798 16,999 17,801
Net loss on disposition of long-term assets.................... 696 460 393
(Increase) decrease in receivables............................. (12,085) 12,189 631
(Increase) decrease in inventories............................. (940) (5,754) 217
Increase (decrease) in accounts payable........................ 3,631 (3,460) 3,327
Increase (decrease) in accrued liabilities..................... (5,234) 909 5,172
Decrease in income taxes payable............................... (2,394) (32) (1,988)
Increase in other liabilities and assets, net.................. 2,293 6,946 2,715
Increase (decrease) in minority interest....................... 4,729 128 (1,350)
-------- -------- ----------
Net cash provided by operating activities................... 29,758 37,809 31,864
-------- -------- ----------
Cash flows from investing activities:
Capital expenditures.............................................. (30,468) (18,498) (24,061)
Proceeds from sales or disposals of long-term assets............. 7 101 --
-------- -------- ----------
Net cash used for investing activities...................... (30,461) (18,397) (24,061)
-------- -------- ----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.......................... -- -- 144,776
Net transactions with The General Chemical Group, Inc............. 446 (19,637) (129,018)
-------- -------- ---------
Net cash provided by (used for) financing activities........ 446 (19,637) 15,758
-------- -------- ----------
Increase (decrease) in cash and cash equivalents..................... (257) (225) 23,561
Cash and cash equivalents at beginning of period...................... 1,609 1,352 1,127
-------- -------- ----------
Cash and cash equivalents at end of period............................ $ 1,352 $ 1,127 $ 24,688
======== ======== ==========
Supplemental information:

Cash refunded for income taxes, net of payments......................................... $ 653
==========
Cash paid for interest.................................................................. $ 8,158
==========
</TABLE>

See the accompanying notes to consolidated financial statements.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
FOR THE THREE YEARS ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
NET
INVESTMENT
BY THE ACCUMULATED
GENERAL OTHER
COMMON CHEMICAL CAPITAL COMPREHENSIVE RETAINED COMPREHENSIVE
STOCK GROUP INC. DEFICIT INCOME EARNINGS TOTAL INCOME
------ ----------- --------- ------------- --------- ------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 ...... $ -- $(119,753) $ -- $ -- $ -- $(119,753)
Distribution of GenTek Inc. .... -- 182,548 -- -- -- 182,548
--------- --------- --------- --------- --------- ---------
Balance at December 31, 1996 ...... -- 62,795 -- -- -- 62,795
Net income ..................... -- 22,264 -- -- -- 22,264
Transfers from The General
Chemical Group Inc. .......... -- 446 -- -- -- 446
--------- --------- --------- --------- --------- ---------
Balance at December 31, 1997 ...... -- 85,505 -- -- -- 85,505
Net income ..................... -- 9,424 -- -- -- 9,424
Transfers to The General
Chemical Group Inc. .......... -- (19,637) -- -- -- (19,637)
--------- --------- --------- --------- --------- ---------
Balance at December 31, 1998 ...... -- 75,292 -- -- -- 75,292
Net loss to distribution date .. -- (214) -- -- -- (214)
Net settlements with The General
Chemical Group Inc. .......... -- (129,018) -- -- -- (129,018)
Issuance of common stock to
Stockholders ................. -- 53,940 (53,940) -- -- --
Net income ..................... -- -- -- -- 5,160 5,160 $ 5,160
Foreign currency translation ... -- -- -- 36 -- 36
36
---------
Comprehensive income ........... -- -- -- -- -- -- $ 5,196
--------- --------- --------- --------- --------- --------- =========
Balance at December 31, 1999 ...... $ -- $ -- $ (53,940) $ 36 $ 5,160 $ (48,744)
========= ========= ========= ========= ========= =========
</TABLE>

See the accompanying notes to consolidated financial statements.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

NOTE 1 - BASIS OF PRESENTATION

General Chemical Industrial Products Inc. (the "Company" or "GCIP") is
a leading North American supplier of soda ash and calcium chloride to a broad
range of industrial and municipal customers. The primary end markets for soda
ash include glass production, sodium-based chemicals, powdered detergents, water
treatment and other industrial end uses. Calcium chloride is mainly used for
dust control and roadbed stabilization during the summer and melting ice during
the winter.

The Company is a wholly-owned subsidiary of The General Chemical Group
Inc ("GCG"). The Company was formed on April 30, 1999 as part of the separation
by GCG of its Manufacturing and Performance Products business from its soda ash
and calcium chloride business through a distribution of stock of GenTek Inc.
("GenTek") to stockholders of GCG (the "Spinoff"). In connection with the
Spinoff, GCG transferred its soda ash and calcium chloride business to GCIP and
transferred its Manufacturing and Performance Products business to a
wholly-owned subsidiary, GenTek and distributed the stock of GenTek to
shareholders of GCG. On April 30, 1999, GCG and GenTek became separate
publicly-traded companies on the New York Stock Exchange. GCG continues to trade
using the GCG symbol. GCG owns and operates the Company, and GenTek owns and
operates the businesses comprising the Manufacturing and Performance Products
segments. This transaction resulted in a deficit of approximately $52 million

The transfer of GCG's soda ash and calcium chloride business to the
Company has been reflected at the historical book value of the assets and
liabilities received and accounted for in a manner similar to a pooling of
interests. Accordingly, all prior periods presented have been restated to
reflect the transfer. The financial information included herein does not
necessarily reflect the consolidated results of operations, financial position,
changes in equity and cash flows of the Company had the Company been a separate
stand-alone entity prior to the Spinoff. The consolidated financial statements
include an allocation of certain assets, liabilities and expenses from GCG,
including allocations of general corporate overhead expenses of $1,285, $1,448,
and $475 for the years 1997, 1998 and 1999, respectively. In the opinion of
management, expenses have been allocated to the Company in a reasonable and
consistent basis using management's estimate of services provided to the Company
by GCG. However, such allocations are not necessarily indicative of the level of
expenses which might have been incurred had the Company been operating as a
stand-alone entity during the periods presented or incurred after the Spinoff.

The Company participated in GCG's centralized cash management and
financing program and the accompanying financial statements include an
allocation of net interest expense for periods prior to the Spinoff from GCG. To
the extent the Company has experienced temporary cash needs for working capital
purposes or capital expenditures, such funds have historically been provided by
GCG. The net effect of cash transfers to or from GCG are reflected in net
investment by The General Chemical Group Inc. Net interest expense has been
allocated assuming that the Company's allocated share of GCG's debt would have
been $150,000. The allocations were made consistently in each year, and
management believes the allocations are reasonable. However, these interest
costs would not necessarily be indicative of what the actual costs would have
been had the Company operated as a separate entity prior to the Spinoff.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements reflect the results
of operations and financial position of the Company, including wholly-owned
subsidiaries and General Chemical (Soda Ash) Partners ("GCSAP") of which the
Company owns 51 percent. Minority interests relate solely to partnerships,
primarily GCSAP, in which the Company has a controlling interest. Intercompany
balances and transactions are eliminated in consolidation.

Taxes on income are computed as if the Company were a stand-alone
company prior to the Spinoff. The provision for income taxes for periods prior
to the Spinoff were calculated as if the Company had filed separate tax returns
under its existing structure.

Inventories are valued at the lower of cost or market, using the
last-in, first-out ("LIFO") method for most domestic production inventories and
the first-in, first-out ("FIFO") or average-cost method for all other
inventories. Production inventory costs include material, labor and factory
overhead.

Certain property, plant and equipment are carried at cost and are
depreciated using the straight-line method, using estimated lives which range
from 2 to 30 years. Mines and machinery and equipment of GCSAP are depreciated
using the units-of-production method. Approximately 76 percent of machinery and
equipment and 59 percent of mines and quarries are depreciated using the
units-of-production method.

The Company evaluates the recovery of long-lived assets not held for
sale by measuring the carrying value of these assets against the estimated
future cash flows associated with them. At the time such evaluations indicate
that the future cash flows are not sufficient to recover the carrying value of
such assets, the assets are adjusted to their fair values.

Deferred financing costs associated with various debt issues are being
amortized over the terms of the related debt using the effective interest
method.

The Company provides for the expected costs to be incurred for the
eventual reclamation of mining properties pursuant to local law. Land
reclamation costs are being accrued over the estimated remaining life of the
reserves currently under lease. At December 31, 1998 and 1999, the Company had
accruals of $25,684 and $25,982, respectively, for land reclamation. These
amounts are included in other liabilities on the balance sheet.

The Company recognized deferred tax assets and liabilities based on
differences between financial statement and tax basis of assets and liabilities
using presently enacted tax rates.

The Company does not hold or issue financial instruments for trading
purposes.

All highly liquid instruments purchased with a maturity of three months
or less are considered to be cash equivalents.

The Company recognizes revenue upon shipment of product, net of
freight, with provisions recorded for estimated returns.

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133", "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133). FAS 133 requires that all
derivative instruments be measured at fair value and recognized in the balance
sheet as either assets or liabilities. This Statement, as amended, is effective
for fiscal years beginning after June 15, 2000. The Company is required to adopt
this standard, as amended, in the fiscal year ending December 31, 2001. The
Company does not expect the adoption of FAS 133 to have a material effect on the
Company's results of operations, financial condition or cash flows.

Certain prior-period amounts have been reclassified to conform with the
current presentation.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

NOTE 3 - INCOME TAXES

Income before income taxes is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
United States............................................ $18,746 $ 8,141 $1,910
Foreign.................................................. 13,094 4,454 3,466
------- ------- ------
Total.................................................. $31,840 $12,595 $5,376
======= ======= ======
</TABLE>

The components of the income tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
United States:
Current ............................................... $1,018 $ 3,850 $ 1,527
Deferred .............................................. 2,884 (2,691) (2,355)
Foreign:
Current ............................................... 5,073 1,503 (832)
Deferred .............................................. (739) (94) 2,153
State:
Current ............................................... 706 1,552 612
Deferred .............................................. 634 (949) (675)
------ ------- -------
Total .......................................... $9,576 $ 3,171 $ 430
====== ======= =======
</TABLE>

A summary of the components of deferred tax assets and liabilities is
as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1998 1999
---- ----
<S> <C> <C>

Postretirement benefits.................................. $12,597 $ 11,323
Nondeductible accruals................................... 13,363 16,082
Foreign operations....................................... 4,291 1,451
Other.................................................... 105 --
------- --------
Deferred tax assets................................... 30,356 28,856
------- --------
Property, plant and equipment............................ 15,739 16,228
Pensions................................................. 4,733 3,494
Inventory................................................ (681) 285
Other ................................................... 40 1,429
------ --------
Deferred tax liabilities.............................. 19,831 21,436
------- --------
Valuation allowance...................................... 11,423 7,850
------- --------
Net deferred tax liabilities...................... $ 898 $ 430
======= ========
</TABLE>

The Company has deferred tax assets related to foreign tax credits of
$11,423 and $7,850 at December 31, 1998 and 1999, respectively, against which a
full valuation allowance has been recorded. The Company reversed $4,656, $11 and
$3,573 of previously recorded valuation allowances during 1997, 1998 and 1999,
respectively, primarily related to foreign tax credits that had expired.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

At December 31, 1999, there was $2,045 of accumulated and undistributed
income of foreign subsidiaries. These earnings are intended by management to be
reinvested abroad indefinitely. Accordingly, no applicable U.S. federal deferred
income taxes have been provided nor is a determination of the amount of
unrecognized U.S. federal deferred income taxes practicable.

The difference between the Company's effective income tax rate and the
United States statutory rate is reconciled below:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory rate............................ 35.0% 35.0% 35.0%
State income taxes, net of federal benefit............. 2.7 3.1 (0.8)
Tax effect of foreign operations....................... 1.1 2.4 2.0
Depletion.............................................. (9.1) (16.6) (31.0)
Other.................................................. 0.4 1.3 2.8
----- ----- -----
Total.................................................. 30.1% 25.2% 8.0%
===== ===== ======
</TABLE>

In connection with the Spinoff, GCG entered into a tax sharing
agreement with GenTek which requires GenTek to indemnify and hold harmless the
GCG for consolidated tax liabilities attributable to periods prior to the
Spinoff date.

NOTE 4 - PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Company maintains several defined benefit pension plans covering
substantially all employees. A participating employee's annual postretirement
pension benefit is determined by the employee's credited service and, in most
plans, final average annual earnings with the Company. Vesting requirements are
five years in the U.S. and two years in Canada. The Company's funding policy is
to annually contribute the statutorily required minimum amount as actuarially
determined. The Company also maintains several plans providing postretirement
benefits covering substantially all hourly and certain salaried employees. The
Company funds these benefits on a pay-as-you-go basis. The long-term portion of
accrued postretirement benefit cost of $37,255 and $37,316 at December 31, 1998
and 1999, respectively, is included in other liabilities on the balance sheet.
The Company's share of the consolidated net periodic benefit cost related to
pension benefits, which has been recorded in the accompanying statement of
operations in 1998 and 1997 was $3,282 and $3,277, respectively. The Company's
share of consolidated net periodic benefit cost related to postretirement
benefits, which has been recorded in the accompanying statement of operations in
1998 and 1997 was $2,118 and $2,103, respectively. The Company's share of the
accrued pension obligation, which has been recorded in the accompanying balance
sheet at December 31, 1998 was $8,873. The Company's share of pension assets as
of December 31, 1998 was $15,312 and is included in other assets on the balance
sheet. The disclosures for GCG's Pension Plans and Other Postretirement Benefits
reflects the combined entities, prior to the Spinoff for 1997 and 1998 with the
Spinoff reflected in 1999.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
YEARS ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
--------------------------- -----------------------------
United States: 1997 1998 1999 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Components of Net Periodic Benefit Cost:
Service Cost................................ $ 5,217 $ 5,645 $2,599 $ 1,575 $ 1,568 $ 846
Interest Cost............................... 13,873 14,935 5,606 3,896 4,046 1,300
Expected Return on Plan Assets.............. (13,466) (15,156) (6,010) -- -- --
Amortization of Net
Prior Service Cost.................... 843 910 813 (1,604) (1,604) (849)
(Gain)/Loss........................... 46 10 17 (587) (628) (239)
-------- -------- ------- ------- -------- -------

Net Periodic Benefit Cost................... $ 6,513 $ 6,344 $ 3,025 $ 3,280 $ 3,382 $ 1,058
======== ======== ======= ======= ======= =======

OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
DECEMBER 31, DECEMBER 31,
----------------- -----------------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in Benefit Obligation:
Benefit Obligation at Prior Measurement Date ......... $203,495 $ 236,901 $ 57,522 $ 59,199
Service Cost ......................................... 5,533 2,599 1,568 846
Interest Cost ........................................ 14,856 5,606 4,046 1,300
Actuarial (Gain)/Loss ................................ 22,332 (10,779) (948) (2,462)
Benefits Paid ........................................ (10,649) (6,635) (2,989) (962)
Business Combinations ................................ 1,334 -- -- --
Spinoff .............................................. -- (157,369) -- (42,970)
-------- --------- --------- ---------
Benefit Obligation at Measurement Date ............... $236,901 $ 70,323 $ 59,199 $ 14,951
======== ========= ========= =========
Change in Plan Assets:
Fair Value of Assets at Prior Measurement Date ....... $193,301 $ 203,998 $ -- $ --
Actual Return on Plan Assets ......................... 17,124 29,804 -- --
Employer Contributions ............................... 3,065 3,385 2,989 962
Benefits Paid ........................................ (10,649) (6,635) (2,989) (962)
Business Combinations ................................ 1,147 -- -- --
Spinoff .............................................. -- (159,713) -- --
-------- --------- -------- ---------
Fair Value of Assets at Measurement Date ............. $203,988 $ 70,829 $ -- $ --
======== ========= ========= =========
Reconciliation of Funded Status:

Funded Status ........................................ $(32,913) $ 506 $ (59,199) $ (14,951)
Unrecognized Net
Transition Obligation .......................... 13 -- -- --
Prior Service Cost ............................. 6,178 4,121 (9,500) (4,536)
Gain ........................................... (3,540) (16,213) (8,629) (4,296)
Net Amount Recognized ................................ $(30,262) $ (11,586) $ (77,328) $ (23,783)
======== ========= ========= =========
</TABLE>
26

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

The assumptions used in accounting for the plans were as follows:

1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Discount rate ....................................... 7 1/2% 6 3/4% 7 1/2%
Long-term rate of return on assets................... 9% 9% 9%
Average rate of increase in employee compensation.... 5% 5% 5%
</TABLE>

The assumption used in accounting for the medical plans in 1999 was a
7.5 percent health care cost trend rate. A one percent increase in the health
care trend rate would increase the accumulated postretirement benefit obligation
by $606 at year-end 1999 and the net periodic cost by $32 for the year. A one
percent decrease in the health care trend rate would decrease the accumulated
postretirement benefit obligation by $675 at year-end 1999 and the net periodic
cost by $36 for the year.

The assumption used in accounting for the plans in 1998 was an 8
percent health care cost trend rate (decreasing to 6 3/4 percent in 2001 and
beyond).

The dates used to measure plan assets and liabilities were October 31,
1998 and 1999 for all plans. Pension plan assets are invested primarily in
stocks, bonds, short-term securities and cash equivalents.

<TABLE>
<CAPTION>
OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
CANADA: YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
------------------------------- ------------------------------
1997 1998 1999 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Components of Net Periodic Benefit Cost:
Service Cost............................. $1,352 $ 1,463 $ 1,481 $ 302 $ 332 $ 317
Interest Cost............................ 3,868 3,789 3,728 1,032 1,014 905
Expected Return on Plan Assets........... (4,877) (4,881) (4,980) -- -- --
Amortization of Net
Prior Service Cost................... 90 84 79 -- -- --
Loss................................. 432 458 541 -- -- --
------- ------- ------- ------ ------- ------
Net Periodic Benefit Cost.................... $ 865 $ 913 $ 849 $1,334 $ 1,346 $1,222
======= ======= ======= ====== ======= ======

</TABLE>

OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
DECEMBER 31, DECEMBER 31,
----------------- ----------------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in Benefit Obligation:
Benefit Obligation at Prior Measurement Date..................... $55,493 $59,605 $14,631 $13,690
Service Cost..................................................... 1,457 1,520 330 324
Interest Cost.................................................... 3,773 3,823 1,010 922
Actuarial (Gain)/Loss............................................ 5,823 (4,996) (934) (790)
Foreign Currency Translation..................................... (3,701) 124 (977) 30
Benefits Paid.................................................... (3,240) (3,108) (370) (394)
Spinoff ....................................................... -- (4,109) -- (876)
------- ------- ------- -------
Benefit Obligation at Measurement Date........................... $59,605 $52,859 $13,690 $12,906
======= ======= ======= =======

</TABLE>
27

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

PENSION BENEFITS POSTRETIREMENT BENEFITS
DECEMBER 31, DECEMBER 31,
---------------- ----------------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in Plan Assets
Fair Value of Assets at Prior Measurement Date........... $66,181 $62,805 $ -- $ --
Actual Return on Plan Assets............................. 2,633 4,857 -- --
Employer Contributions................................... 1,643 923 370 394
Foreign Currency Translation............................. (4,412) 131 -- --
Benefits Paid .......................................... (3,240) (3,108) (370) (394)
Spinoff.................................................. -- (4,644) -- --
------- ------- -------- ---------
Fair Value of Assets at Measurement Date................ $62,805 $60,964 $ -- $ --
======= ======= ======== =========
Reconciliation of Funded Status
Funded Status........................................... $ 3,200 $ 8,105 $(13,690) $(12,906)
Unrecognized Net Prior Service Cost..................... 696 582 -- --
Unrecognized Net (Gain)/Loss............................ 13,560 7,635 315 (512)
------- ------- -------- ---------
Net Amount Recognized................................... $17,456 $16,322 $(13,375) $(13,418)
======= ======= ======== =========
</TABLE>

The prepaid pension cost related to the Canadian plans is included in
other assets on the balance sheet.

The assumptions used in accounting for the plans were as follows:

Estimated discount rate ............................... 7 1/2% 6 3/4% 7 1/2%
Estimated long-term rate of return on assets........... 9% 9% 9%
Average rate of increase in employee compensation...... 5 1/4% 5 1/4% 5 1/4%
</TABLE>

The assumption used in accounting for the medical plans in 1999 was an
8.4 percent health care cost trend rate (decreasing to 6 percent in 2003 and
beyond). A one percent increase in the health care trend rate would increase the
accumulated postretirement benefit obligation by $ 2,444 at year-end 1999 and
the net periodic cost by $278 for the year. A one percent decrease in the health
care trend rate would decrease the accumulated postretirement benefit obligation
by $1,935 at year-end 1999 and the net periodic cost by $217 for the year.

The assumption used in accounting for the plans in 1998 was a 8.4
percent health care cost trend rate (decreasing to 6 percent in the year 2003
and beyond).

The dates used to measure plan assets and liabilities were October 31,
1998 and 1999 for all plans. Plan assets are invested primarily in stocks,
bonds, short-term securities and cash equivalents.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Future minimum rental payments for operating leases (primarily for
transportation equipment, offices and warehouses) having initial or remaining
noncancellable lease terms in excess of one year as of December 31, 1999 are as
follows:
<TABLE>
<CAPTION>

Years Ending December 31,
-------------------------
<S> <C>
2000................................................. $13,946
2001................................................. 11,000
2002................................................. 5,165
2003................................................. 3,759
2004 and thereafter.................................. 20,891
-------
$54,761
=======
</TABLE>

Rental expense for the years ended December 31, 1997, 1998 and 1999 was
$12,772, $13,913, and $12,408, respectively.

Parent Guaranty and Transfer Agreement. A restated parent guaranty and
transfer agreement between New Hampshire Oak, a wholly-owned subsidiary of GCG
and the parent of GCIP, and ACI International Limited and TOSOH America, Inc.
provides that in the event that either New Hampshire Oak, ACI International
Limited or TOSOH America, Inc. (such entities being referred to as a
"transferring parent" or "nontransferring parent" as the context requires)
proposes to sell or otherwise transfer or cause to be sold or transferred the
voting securities of GCIP, The Andover Group, Inc. or TOSOH Wyoming, Inc. (the
respective subsidiaries constituting the partners of GCSAP) as the case may be,
the nontransferring parents will have the following options: (1) to purchase the
transferring parent's subsidiary's interest in GCSAP at fair market value; (2)
to require the transferring parent to purchase the nontransferring parents'
subsidiaries' interest in GCSAP at fair market value; (3) to buy the voting
securities to be sold by the transferring parent on the same terms and
conditions and at the same price as the transferring parent proposes to sell or
otherwise transfer or cause to be sold or transferred such voting securities; or
(4) to cause the proposed transferee to purchase the nontransferring parents'
subsidiaries' interest in GCSAP for a price reflecting the price to be paid by
the proposed transferee for such voting securities. In the event that New
Hampshire Oak ceases to own at least 51 percent of GCIP while GCIP is a partner,
GCIP shall pay to The Andover Group, Inc. $2,833.

<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

The Company is involved in certain claims, litigation, administrative
proceedings and investigations relative to environmental matters. Although the
amount of any ultimate liability which could arise with respect to these matters
cannot be accurately predicted, it is the opinion of management, based upon
currently available information and the accruals established, that any such
liability will have no material adverse effect on the Company's financial
condition, results of operations or cash flows.

NOTE 6 - ADDITIONAL FINANCIAL INFORMATION

The following are summaries of selected balance sheet items:

<TABLE>
<CAPTION>
Receivables
DECEMBER 31,
-------------------------
1998 1999
---- ----
<S> <C> <C>
Trade......................................................... $54,857 $54,526
Other......................................................... 6,402 6,123
Allowance for doubtful accounts............................... (2,658) (2,679)
------- -------
$58,601 $57,970
======= =======

Inventories
DECEMBER 31,
-------------------------
1998 1999
---- ----
<S> <C> <C>
Raw materials................................................. $ 3,480 $ 3,603
Work in process............................................... 1,839 1,301
Finished products............................................. 13,297 12,704
Supplies and containers....................................... 6,892 7,683
------- -------
$25,508 $25,291
======= =======

Inventories valued at LIFO amounted to $5,632 and $2,883 at December
31, 1998 and 1999, respectively, which were below estimated replacement cost by
$2,011 and $2,193, respectively. The impact of LIFO liquidations in 1998 and
1999 was not significant.

Property, Plant and Equipment
DECEMBER 31,
-------------------------
1998 1999
---- ----
<S> <C> <C>
Land and improvements......................................... $ 23,162 $ 23,162
Machinery and equipment....................................... 227,649 232,120
Buildings and leasehold improvements.......................... 24,135 28,851
Construction-in-progress...................................... 5,223 19,768
Mines and quarries............................................ 16,415 16,876
-------- ---------
296,584 320,777
Less accumulated depreciation and amortization................ (154,776) (170,739)
--------- ---------
$141,808 $ 150,038
======== =========
</TABLE>

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Accrued Liabilities
DECEMBER 31,
------------------------
1998 1999
---- ----
<S> <C> <C>
Wages, salaries and benefits.................................. $11,064 $11,531
Taxes, other than income taxes................................ 7,638 7,866
Interest...................................................... -- 1,787
Other......................................................... 6,444 9,134
------- -------
$25,146 $30,318
======= =======
</TABLE>

NOTE 7 - RELATED PARTY TRANSACTIONS

MANAGEMENT AGREEMENT

GCG is party to a management agreement with Latona Associates (which is
controlled by a stockholder of the Company) under which GCG receives corporate
supervisory and administrative services and strategic guidance for a quarterly
fee of $361, $285 and $371 in 1997, 1998 and 1999, respectively.

TRANSITION SUPPORT AGREEMENT

GCG and GenTek entered into various transition support agreements that
provide mechanisms for an orderly transition after the Spinoff. For the period
from April 30, 1999 to December 31, 1999, GenTek charged GCG $2,474 related to
these transition support agreements.

OTHER TRANSACTION

The Company supplies soda ash and calcium chloride to GenTek. For the
years ended December 31, 1997, 1998 and 1999, sales to GenTek amounted to
$5,240, $5,336 and $14,696, respectively.

NOTE 8 - LONG-TERM DEBT
<TABLE>
<CAPTION>

Long-term debt consists of the following:

MATURITIES DECEMBER 31, 1999
---------- -----------------
<S> <C> <C>
$85 Million Revolving Credit
Facility-floating rate................ 2004 $ 50,919

Senior Subordinated
Notes - 10 5/8%....................... 2009 100,000
--------
Total Debt................................. 150,919
--------
Less: Current Portion................. --
--------
Net Long-Term Debt......................... $150,919
========

</TABLE>

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(DOLLARS IN THOUSANDS)

On April 30, 1999, in connection with the Spinoff, the Company and its
Canadian subsidiary, General Chemical Canada Ltd., entered into an $85,000
revolving credit facility ("Credit Facility") with certain lenders party
thereto; The Chase Manhattan Bank, as Administrative Agent, The Chase Manhattan
Bank of Canada, as Canadian Administrative Agent, The Bank of Nova Scotia, as
Syndication Agent, and The First National Bank of Chicago as Documentation
Agent. Of this amount, up to $60,000 is available for borrowing by the Canadian
subsidiary. In addition, on April 30, 1999, GCIP issued and sold $100,000
aggregate principal amount of 10 5/8% Senior Subordinated Notes due 2009.

The Company applied the proceeds of its initial borrowing under the
Credit Facility and a portion of the proceeds of the offering of its Senior
Subordinated Notes to repay approximately $127 million of pre-Spinoff debt. On
November 9, 1999, GCIP completed an exchange offer pursuant to which all of
GCIP's unregistered 10 5/8% Senior Subordinated Notes due 2009 (issued on April
30, 1999) were exchanged for registered 10 5/8% Senior Subordinated Notes due
2009 that are identical to the terms of the unregistered notes. The Securities
and Exchange Commission declared effective GCIP's Registration Statement on Form
S-4 with respect to such registered notes on October 6, 1999.

The Senior Subordinated Notes are unsecured while the $85 million
Credit Facility is secured by 100 percent of the capital stock of GCIP, 100
percent of the owned capital stock of, and guarantees from, the direct and
indirect domestic subsidiaries of the Company, 65 percent of certain owned
foreign subsidiaries of the Company and substantially all of the other assets of
the Company. In addition, the portion of the Credit Facility available to the
Company's Canadian subsidiary is secured by substantially all of the assets of
the Company's Canadian subsidiary. The Senior Subordinated Notes and the Credit
Facility contain certain covenants with respect to additional indebtedness,
preferred stock by subsidiaries, restricted payments, transactions with
affiliates, liens, dividends and other payment instructions affecting
subsidiaries, consolidations, mergers, the sale of assets and financial tests.
The Company has not paid dividends since the Spinoff and does not expect to pay
cash dividends in the foreseeable future.

NOTE 9 - FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
CARRYING FAIR
AMOUNT VALUE
------ -----
<S> <C> <C>
Long-term debt............................... $150,919 $149,919
</TABLE>

The fair values of cash and cash equivalents, receivables and payables
approximate their carrying values due to the short-term nature of the
instruments.

The fair value of the Company's long-term debt was based on quoted
market prices for publicly traded notes and discounted cash flow analyses on its
nontraded debt.

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONCLUDED)
(DOLLARS IN THOUSANDS)

NOTE 10-GEOGRAPHIC INFORMATION

Information regarding geographic areas at December 31, and for each of
the years then ended is as follows:
<TABLE>
<CAPTION>

LONG-LIVED
NET REVENUES OPERATING PROFIT ASSETS(4)
---------------------------- ------------------------ ---------------
1997 1998 1999 1997 1998 1999 1998 1999
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>

United States (1) ............... $220,525 $191,884 $185,701 $50,847 $32,403 $23,891 $ 97,866 $101,929
Foreign (2) ..................... 106,052 93,296 100,811 17,434 8,646 6,716 59,561 70,482
Elimination (3) ................. (36,877) (23,711) (29,719) -- -- -- -- --
-------- -------- -------- ------- ------- ------- -------- --------
$289,700 $261,469 $256,793 $68,281 $41,049 $30,607 $157,427 $172,411
======== ======== ======== ======= ======= ======= ======== ========
</TABLE>

- ----------

(1) Includes export sales of $74,032, $60,710 and $62,330 for the years ended
December 31, 1997, 1998 and 1999, respectively.

(2) Principally Canada.

(3) Sales between geographic areas are recorded at prices comparable to market
prices charged to third-party customers and are eliminated in consolidation.

(4) Represents all noncurrent assets except deferred tax assets and financial
investments.

NOTE 11 - UNAUDITED QUARTERLY INFORMATION

<TABLE>
<CAPTION>
1998
-------------------------------------------------------------
FIRST SECOND THIRD FOURTH YEAR
----- ------ ----- ------ ----
<S> <C> <C> <C> <C> <C>
Net revenues.................................. $ 62,343 $ 71,041 $ 64,218 $ 63,867 $ 261,469
Gross profit.................................. 13,209 17,271 14,474 14,177 59,131
Net income ................................... 1,898 4,041 2,885 600 9,424

<CAPTION>
1999
-------------------------------------------------------------
FIRST SECOND THIRD FOURTH YEAR
----- ------ ----- ------ ----
<S> <C> <C> <C> <C> <C>
Net revenues.................................. $ 61,472 $ 69,165 $ 64,117 $ 62,039 $ 256,793
Gross profit.................................. 10,204 15,243 12,402 11,805 49,654
Net income ................................... 979 2,295 1,114 558 4,946

</TABLE>

NOTE 12 - SUBSEQUENT EVENT

<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors. For information relating to the Company's sole director,
Delyle W. Bloomquist, see the information under the caption "Employees/Labor
Relation" in Part I of this report.

Executive Officers. For information relating to the Company's executive
officers, see the information under the caption "Employee/Labor Relations" in
Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

Executive Compensation. For information relating to the compensation of
the Company's executives, see the information under the caption "Compensation of
Directors and Executive Officers" in GCG's Proxy Statement, which is hereby
incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

GCG, the parent company of the Company, is the sole record beneficial
owner of the Company's Common Stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain Relationships and Related Transactions. For information
relating to certain relationships and related transactions of the Company, see
the information under the caption "Certain Relationships and Transactions" in
GCG's Proxy Statement, which is hereby incorporated by reference.

<PAGE>

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K.

EXHIBIT
NO. DESCRIPTION
- --------- -----------

*3.1 -- Amended and Restated Certificate of Incorporation of GCIP

*3.2 -- Amended and Restated By-Laws of GCIP

****10.1 -- Second Amended and Restated Partnership Agreement of GCSAP,
dated June 30, 1992, among GCIP (as assignee of General Chemical
Corporation), The Andover Group, Inc. and TOSOH Wyoming, Inc.

****10.2 -- Amended and Restated Parent Guaranty and Transfer Agreement
dated June 30, 1992, among New Hampshire Oak, Inc., ACI
International Limited and TOSOH America, Inc.

****10.3 -- Amended and Restated Services Agreement, dated June 30, 1992,
between GCIP (as assignee of General Chemical Corporation) and
GCSAP

****10.4 -- Employee Transfer Agreement, dated June 30, 1992, between GCIP
(as assignee of General Chemical Corporation) and GCSAP

****10.5 -- Guaranty, dated as of June 30, 1992, from New Hampshire Oak,
Inc., for the benefit of GCSAP

***10.6 -- Employee Benefits Agreement Among the General Chemical Group Inc.
and General Chemical Corporation

***10.7 -- Intellectual Property Agreement among GCIP, General Chemical
Corporation, GenTek, Inc. and The General Chemical Group Inc.

**10.8 -- Credit Agreement, dated as of April 30, 1999, among GCIP and
General Chemical Canada Ltd. as Borrowers, the several Lenders
from time to time parties thereto, The Chase Manhattan Bank, as
Administrative Agent, The Chase Manhattan Bank of Canada, as
Canadian Administrative Agent, The Bank of Nova Scotia, as
Syndication Agent, and The First National Bank of Chicago as
Documentation Agent.

**10.9 -- Guarantee and Collateral Agreement, dated as of April 30, 1999,
made by GCIP and certain of its subsidiaries in favor of the Chase
Manhattan Bank, as Collateral Agent.

*****10.1 -- Amended and Restated Management Agreement between Latona
Associates Inc. and The General Chemical Group Inc.

***10.11 -- Tax Sharing Agreement between The General Chemical Group Inc. and
GenTek Inc.

*10.12 -- Sublease Agreement between GCIP and General Chemical Corporation

*10.13 -- Transition Support Agreement between The General Chemical
Corporation and GenTek Inc.

**10.14 -- Indenture, dated as of April 30, 1999, between GCIP and U.S. Bank
Trust National Association, as Trustee.

*10.15 -- Exchange and Registration Rights Agreement, dated as of April 30,
1999, among GCIP, Chase Securities Inc., BT Alex, Brown
Incorporated and ING Baring Fulman Selz LLC

12.1 -- Computation of Ratio of Earnings to Fixed Charges

*21.1 -- Subsidiaries of GCIP

27.1 -- Financial Data Schedule

- ----------
*Incorporated by reference to the Registration Statement of GCIP, as amended
(File No. 333-81469) filed with the Securities and Exchange Commission on
June 24, 1999.

**Incorporated by reference to the relevant exhibit to General Chemical Group
Inc's 10-Q for the three months ended March 31, 1999 filed with the
Securities and Exchange Commission on May 17, 1999 (the "GCG First Quarter
1999 10-Q").

<PAGE>

***Incorporated by reference to the Registration Statement of GenTek Inc. as
amended (File No. 001-14789), filed with the Securities and Exchange
Commission on April 8, 1999

****Incorporated by reference to the relevant exhibit to the Registration
Statement of General Chemical Corporation (File No. 33-64824) filed with
the Securities and Exchange Commission on August 11, 1993

*****Incorporated by reference to the relevant exhibit to The General Chemical
Group Inc.'s 10-Q for the three months ended June 30, 1999 filed with the
Securities and Exchange Commission on August 16, 1999.

<PAGE>

FINANCIAL STATEMENTS

See Item 8, beginning on page 17.

FINANCIAL STATEMENT SCHEDULES

See Index to Financial Statement Schedules on page 39.

REPORTS ON FORM 8-K

No report on Form 8-K has been filed by the Company during the last
quarter of the period covered by this report.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in Hampton, State of New
Hampshire on the 30th day of March 2000.

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.

By: /s/ DAVID S. GRAZIOSI
--------------------------------
David S. Graziosi
Vice President-Finance
March 30, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>

/s/ DELYLE W. BLOOMQUIST Director, President, and March 30, 2000
- ------------------------ Chief Executive Officer
DeLyle W. Bloomquist

/s/ DAVID S. GRAZIOSI Vice President-Finance March 30, 2000
- ------------------------ (Principal Financial and
David S. Graziosi Accounting Officer)

</TABLE>
38

<PAGE>

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
INDEX TO FINANCIAL STATEMENT SCHEDULES

Schedule II -- Valuation and Qualifying Accounts..................... 40

Schedules required by Article 12 of Regulation S-X, other than those
listed above, are omitted because of the absence of the conditions under which
they are required or because the required information is included in the
consolidated financial statements or notes thereto.

<PAGE>

SCHEDULE II

GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>

TRANSLATION
BALANCE AT ADDITIONS DEDUCTIONS ADJUSTMENT BALANCE AT
BEGINNING CHARGED TO FROM DURING END OF
OF PERIOD INCOME RESERVES PERIOD PERIOD
--------- ------ -------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997
Allowance for doubtful accounts........... $1,948 $768 $(5) $(22) $2,689
Year ended December 31, 1998
Allowance for doubtful accounts........... $2,689 $ 5 $(5) $(31) $2,658
Year ended December 31, 1999
Allowance for doubtful accounts........... $2,658 $ -- $ -- $ 21 $2,679

</TABLE>

<PAGE>

EXHIBIT INDEX
-------------
Exhibit
No. Description Page
--- ----------- ----
*3.1 -- Amended and Restated Certificate of Incorporation of GCIP

*3.2 -- Amended and Restated By-Laws of GCIP

****10.1 -- Second Amended and Restated Partnership Agreement of GCSAP, dated
June 30, 1992, among GCIP (as assignee of General Chemical
Corporation), The Andover Group, Inc. and TOSOH Wyoming, Inc.

****10.2 -- Amended and Restated Parent Guaranty and Transfer Agreements dated
June 30, 1992, among New Hampshire Oak, Inc., ACI International
Limited and TOSOH America, Inc.

****10.3 -- Amended and Restated Services Agreement, dated June 30, 1992,
between GCIP (as assignee of General Chemical Corporation) and
GCSAP)

****10.4 -- Employee Transfer Agreement, dated June 30, 1992, between GCIP (as
assignee of General Chemical Corporation) and GCSAP

****10.5 -- Guaranty, dated as of June 30, 1992, from New Hampshire Oak, Inc.,
for the benefit of GCSAP

***10.6 -- Employee Benefit Agreement Among the General Chemical Group Inc.
and General Chemical Corporation

***10.7 -- Intellectual Property Agreement among GCIP, General Chemical
Corporation, GenTek, Inc. and The General Chemical Group Inc.

**10.8 -- Credit Agreement, dated as of April 30, 1999, among GCIP and
General Chemical Canada Ltd. as Borrowers, the several Lenders from
time to time parties thereto, The Chase Manhattan Bank, as
Administrative Agent, The Chase Manhattan Bank of Canada, as
Canadian Administrative Agent, The Bank of Nova Scotia, as
Syndication Agent, and The First National Bank of Chicago as
Documentation Agent.

**10.9 -- Guarantee and Collateral Agreement, dated as of April 30, 1999,
made by GCIP and certain of its subsidiaries in favor of the Chase
Manhattan Bank, as Collateral Agent.

*****10.10-- Amended and Restated Management Agreement between Latona Associates
Inc. and The General Chemical Group Inc.

***10.11-- Tax Sharing Agreement between The General Chemical Group Inc. and
GenTek Inc.

*10.12-- Sublease Agreement between GCIP and General Chemical Corporation.

*10.13-- Transition Support Agreement between The General Chemical Group
Inc. and GenTek Inc.

**10.14-- Indenture, dated as of April 30, 1999, between GCIP and U.S. Bank
Trust National Association, as Trustee.

*10.15-- Exchange and Registration Rights Agreement, dated as of April 30,
1999, among GCIP, Chase Securities Inc. BT Alex, Brown Incorporated
and ING Baring Fulman Selz LLC

12.1 -- Computations of Ratio of Earnings to Fixed Charges

*21.1 -- Subsidiaries of GCIP

27.1 -- Financial Data Schedule

- ---------
*Incorporated by reference to the Registration Statement of GCIP, as amended
(File No. 333-81469) filed with the Securities and Exchange Commission on
June 24, 1999.

***Incorporated by reference to the Registration Statement of GenTek Inc. as
amended (File No .001-14789), filed with the Securities and Exchange
Commission on April 8, 1999

<PAGE>

Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges

<TABLE>
<CAPTION>
---------------------------------------------------------------------
Pro forma
for the year
ended
Year ended December 31, December 31,
---------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 1998
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before minority
interest, income taxes,
and extraordinary items......... 48,206 49,905 65,597 56,093 29,261 20,063 25,733
Fixed charges........................ 15,440 17,091 16,726 17,004 16,384 17,877 19,912
------ ------ ------ ------ ------ ------ ------

Total earnings....................... 63,646 66,996 82,323 73,097 45,645 37,940 45,645

Fixed charges:
Interest - expensed............. 12,193 13,777 13,001 12,747 11,747 13,322 14,675
Interest - deferred financing... - - - - 419 600
Interest - rental expense....... 3,247 3,314 3,725 4,257 4,637 4,136 4,637
------ ------ ------ ------ ------ ------ ------
Total fixed charges.................. 15,440 17,091 16,726 17,004 16,384 17,877 19,912

Ratio of Earnings to Fixed charges... 4.1 3.9 4.9 4.3 2.8 2.1 2.3
-------------------------------------------------------------------

</TABLE>

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-K
for the period ended December 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<NAME> GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
<CIK> 0001088382

<S> <C>
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<PERIOD-TYPE> 12-MOS
<CASH> 24,688
<SECURITIES> 0
<RECEIVABLES> 60,649
<ALLOWANCES> 2,679
<INVENTORY> 25,291
<CURRENT-ASSETS> 117,394
<PP&E> 320,777
<DEPRECIATION> (170,739)
<TOTAL-ASSETS> 289,754
<CURRENT-LIABILITIES> 57,943
<BONDS> 150,919
0
0
<COMMON> 0
<OTHER-SE> (48,744)
<TOTAL-LIABILITY-AND-EQUITY> 289,754
<SALES> 256,793
<TOTAL-REVENUES> 256,793
<CGS> 207,139
<TOTAL-COSTS> 207,139
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,741
<INCOME-PRETAX> 5,376
<INCOME-TAX> 430
<INCOME-CONTINUING> 4,946
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,946
<EPS-BASIC> 0
<EPS-DILUTED> 0

</TABLE>