<PAGE>

SELECTED FINANCIAL DATA TABLE
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Fiscal Year                         1999             1998             1997             1996             1995             1994
-----------------------------------------------------------------------------------------------------------------------------
<S>                          <C>              <C>              <C>              <C>              <C>              <C>
Sales from
continuing
operations                   $95,459,661      $94,722,511      $87,745,980      $80,886,062      $83,332,624      $71,423,471
-----------------------------------------------------------------------------------------------------------------------------
Income from
continuing
operations                     9,698,642        8,213,869        7,790,487        6,476,410        5,723,963        5,044,410
-----------------------------------------------------------------------------------------------------------------------------
Basic and diluted
earnings per
common share
from continuing
operations                           .87              .71              .67              .56              .49              .44
-----------------------------------------------------------------------------------------------------------------------------
Cash dividends declared
per common share                     .27              .20              .18              .15              .19              .11
-----------------------------------------------------------------------------------------------------------------------------
Cash dividends
paid per
common share                         .25              .19              .16              .14              .12              .11
-----------------------------------------------------------------------------------------------------------------------------
Total assets                  68,999,827       66,535,475       63,652,616       56,487,356       53,690,814       45,974,984
-----------------------------------------------------------------------------------------------------------------------------
Long-term debt                   328,040          423,402          512,525          572,453          628,461          680,805
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

ALL PER SHARE DATA HAS BEEN RESTATED TO REFLECT THE 5% STOCK DIVIDENDS IN 1997,
1996 AND 1994 AND THE 10% STOCK DIVIDEND IN 1995.


4
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS

     THE INFORMATION CONTAINED IN THIS ANNUAL REPORT INCLUDES FORWARD-LOOKING
STATEMENTS AS DEFINED IN SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. THESE FORWARD-LOOKING STATEMENTS INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES, INCLUDING DEMAND FROM MAJOR CUSTOMERS, COMPETITION, CHANGES IN
PRODUCT OR CUSTOMER MIX OR REVENUES, CHANGES IN PRODUCT COSTS AND OPERATING
EXPENSES, AND OTHER FACTORS DISCLOSED THROUGHOUT THIS ANNUAL REPORT AND THE
COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. THE ACTUAL
RESULTS THAT THE COMPANY ACHIEVES MAY DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
STATEMENTS DUE TO SUCH RISKS AND UNCERTAINTIES. THE COMPANY UNDERTAKES NO
OBLIGATION TO REVISE ANY FORWARD-LOOKING STATEMENTS IN ORDER TO REFLECT EVENTS
OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE OF THIS REPORT. READERS ARE URGED
TO CAREFULLY REVIEW AND CONSIDER THE VARIOUS DISCLOSURES MADE BY THE COMPANY IN
THIS REPORT AND IN THE COMPANY'S OTHER REPORTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION THAT ATTEMPT TO ADVISE INTERESTED PARTIES OF THE RISKS AND
UNCERTAINTIES THAT MAY AFFECT THE COMPANY'S FINANCIAL CONDITION, RESULTS OF
OPERATIONS OR CASH FLOWS.


OVERALL SUMMARY

     Net sales in fiscal 1999 increased 0.8% to $95,459,661 from $94,722,511 in
fiscal 1998. Net income in fiscal 1999 increased 18.1% to $9,698,642 from
$8,213,869 in fiscal 1998. Basic and diluted earnings per share in fiscal 1999
were $.87 compared to $.71 in fiscal 1998. Return on average shareholders'
equity was 17.8% for 1999, compared to 16.0% for fiscal 1998. Book value per
share at October 3, 1999 was $5.07 compared to $4.67 one year ago.

RESULTS OF OPERATIONS

     The general economic environment in our markets has improved slightly with
the overall improvement in the economy. While this improvement had a favorable
impact on earnings, management will continue to focus efforts on programs aimed
at improving profitability and controlling costs.

NET SALES
     For the year ended October 3, 1999, sales increased $737,150, a 0.8%
increase from 1998, due to a decrease of $57,762 in Industrial segment sales and
an increase of $794,912 in Water Treatment segment sales. The Industrial
decrease is due to a significant decrease in the selling price of caustic soda
partially offset by an increase in volumes of caustic soda and the majority of
other product sales in this segment. The Water Treatment segment increase is due
to an increase in volumes.

     For the year ended September 27, 1998, sales increased $6,976,531, an 8.0%
increase from fiscal 1997, due to an increase of $5,281,794 in the Industrial
segment sales, and $1,694,737 in the Water Treatment segment sales. The
Industrial segment sales increased due to an increase in the volume and selling
price (and the cost) of caustic soda and to increasing business in food grade
products and pharmaceutical chemicals, which accounted for slightly more than
one-half of the increase. The increase in Water Treatment segment sales was due
to an increase in volumes.

GROSS MARGINS
     Gross margin, as a percentage of sales, was 25.1% in fiscal 1999, 23.6% in
fiscal 1998 and 24.3% in fiscal 1997. The gross margin variations are due to a
number of variables in the segments as explained below.

     Gross margin, as a percentage of sales, for the Industrial segment was
22.5% in fiscal 1999, 22.0% in fiscal 1998 and 22.8% in fiscal 1997. The 1999
increase over 1998 was due to the Company's ability to maintain relatively
constant profit margins of a


                                                                              5
<PAGE>

major product line while the cost of the materials were decreasing. The 1998
decrease over 1997 was due to lower profit margins on a major product line while
the cost and selling price of the product line was increasing throughout the
year. The Company attempts to maintain relatively constant dollar margins as the
cost of this product line increases and decreases. The cost of this product is
normally subject to fluctuations and such fluctuations are expected to continue
in future periods. By maintaining relatively stable dollar margins, the gross
margin percentage will decrease when the cost of the product is increasing and
will increase when the cost of the product is decreasing. The Company has also
generally been able to, and expects to continue to, adjust its selling prices as
the cost of materials and other expenses change, thereby maintaining relatively
stable gross margins.

     The Company's caustic soda operations are located on the Mississippi River,
enabling the Company to receive caustic soda through barge transportation. When
the river has flooded, the Company has received caustic soda by tank cars.
Although the use of tank cars has resulted in additional costs, results of
operations have not been materially impacted. Based on this experience, the
Company does not expect any future flooding to have a material impact on the
Company's financial condition, results of operations, or cash flows.

     Gross margin, as a percentage of sales, for the Water Treatment segment was
31.2% in fiscal 1999, 27.4% in fiscal 1998 and 27.9% in fiscal 1997. The 1999
increase over 1998 was due to a decrease in materials costs. The 1998 gross
margin was relatively constant versus 1997.

SELLING, GENERAL AND ADMINISTRATIVE
     Selling, general and administrative expenses increased 8.8% and 7.1% in
fiscal 1999 and fiscal 1998 respectively, over the previous years. The 1999
increase over 1998 was mainly due to increases in the sales staff and to
increases in employee salaries and benefits costs. The 1998 increase over 1997
was due to increases in employee salaries and benefits cost and to costs related
to upgrading the computer and phone systems.

LITIGATION AND SETTLEMENT COSTS RELATED TO 1995 FIRE
     The Company paid and expensed $2.9 million in settlement and legal costs
and for other costs in connection with the Company's defense of a lawsuit filed
against it in Minnesota entitled DONNA M. COOKSEY, ET AL. V. HAWKINS CHEMICAL,
INC. AND THE LYNDE COMPANY. The plaintiffs in the lawsuit sought damages for
personal injury and other damages alleged to have been caused by the release of
hazardous substances as a result of a fire at an office/warehouse facility
occupied by The Lynde Company, formerly a wholly owned subsidiary of the
Company. The Company entered into a Settlement Agreement with the plaintiffs.
Most, but not all, of the claimants have now been paid under the Settlement
Agreement.

     The Company's primary and umbrella insurers denied coverage and refused to
defend the lawsuit. During fiscal 1999, the Company prevailed in its claims
against its insurers and has been reimbursed $2,851,708 for substantially all of
its settlement and legal expenses. In addition, the Company anticipates that the
defense and payment of the remaining claims, of approximately 17 claimants, will
be covered by the umbrella insurer.

SPECIAL CHARGES
     The Company entered into termination agreements with three former employees
due to corporate organizational changes. During fiscal 1999, the Company
recorded Special Charges in the Statement of Income of $1,112,127.


6
<PAGE>

OTHER INCOME
     Interest income decreased 9.4% in fiscal 1999 as compared to the previous
year due to investing a larger amount of the cash available for investment in
tax-free municipal bonds, which generally have a lower rate of return, since
earnings from them are not taxable for Federal income tax purposes. Interest
income was up 7.3% in fiscal 1998 as compared to the previous year due to a
higher rate of return on the cash available for investments. Interest expense
decreased in fiscal 1999 and fiscal 1998 as compared to the previous year. Most
of the interest expense is the result of the Company issuing a note payable to
the seller in connection with the acquisition of the assets of Industrial
Chemical & Equipment Company in 1993. The gain on the sale of The Lynde Company
relates to the Company's sale of the subsidiary on May 29, 1997. Other
miscellaneous income increased in fiscal 1999 as compared to fiscal 1998 and
decreased in fiscal 1998 as compared to fiscal 1997 due to gains on the sale of
land in fiscal 1999 and fiscal 1997.

PROVISION FOR INCOME TAXES
     The effective income tax rate was 39.4% for the fiscal year ended October
3, 1999, 38.9% for the fiscal year ended September 27, 1998, and 38.8% for the
fiscal year ended September 28, 1997. The 1999 increase over 1998 was due to
incremental income taxed at a higher rate. The 1998 difference from 1997 was due
mainly to variations in tax-free income on investments in municipal bonds.

INFLATION
     Inflation has not had a significant impact on the Company during the past
three fiscal years, as selling prices have generally been adjusted as the cost
of materials and other expenses have changed. On occasion, however, slight
fluctuations in the cost of a single, large-volume product historically have not
been reflected in the selling price of that product.

FINANCIAL CONDITION

LIQUIDITY
     Cash provided by operations in fiscal 1999 was $13,847,248 compared with
$6,127,052 in fiscal 1998 and $5,675,264 in fiscal 1997. The increase in fiscal
1999 over 1998 was due primarily to a decrease in inventories caused by the
decrease in the cost of a major product line and recovery of the litigation
expenses. The increase in fiscal 1998 over 1997 was due primarily to the
increase in net income.

     Cash and investments available-for-sale increased by $4,461,930 to
$22,202,874 at the end of fiscal 1999. The Company is investing excess cash
primarily in conservative investments. Cash equivalents consist of bank
certificates of deposit having a maturity of three months or less. Investments
consist of investment contracts with high-rated, stable insurance companies and
marketable securities consisting of variable rate municipal bonds carried at
fair value which approximates cost. Cash equivalents and investments are highly
liquid and are available upon demand generally with only a minor penalty.

     In fiscal 1997, the Company sold the inventory and operations of The Lynde
Company, a wholly-owned subsidiary which specialized in swimming pool chemicals,
for approximately $2,590,000. The Company recorded a gain on the sale of
approximately $1.3 million. At closing, the Company received $500,000 cash and a
note receivable for the balance. The term of the note receivable is six years
and is due March 2003; it bears interest at 8%.

CAPITAL EXPENDITURES
     Capital expenditures in fiscal 1999, 1998 and 1997 were $2,449,894,
$5,051,641 and $4,017,543, respectively. Of the 1999 capital expenditures,
transportation equipment additions accounted for $0.9 million, building
improvements and additions amounted to $0.8 million, and warehouse, laboratory
and office machinery and equipment accounted for $0.7 million.


                                                                          7
<PAGE>

COMMON STOCK REPURCHASES
     During fiscal 1999, the Company acquired and retired 499,614 shares of
common stock for $4,888,288. During fiscal 1998, the Company acquired and
retired 153,000 shares of common stock for $1,568,296.

OUTLOOK
     Management does not anticipate the need for stock or debt issuances in the
short or long-term, as cash, investments and cash flows from operations have
been more than adequate to fund working capital, capital investments, dividend
needs and common stock repurchases. If the need for additional financing arises,
however, management will consider issuance of debt or equity if such financing
can be obtained on favorable terms. Although management continually looks for
companies to acquire and for ways to modernize its facilities and equipment, no
material commitments for acquisitions or capital expenditures currently exist,
except that approximately $4,000,000 has been committed for the construction of
a facility in St. Paul on the Mississippi River.

     Other than as discussed above, management is not aware of any matters or
trends that have materially affected the results of operations for fiscal 1999
that are not expected to have either short or long-term implications, nor is it
aware of any trends or other matters that have not materially affected results
in fiscal 1999 but are expected to have a material effect on future periods.

YEAR 2000 READINESS
     As generally known, the Year 2000 issue pertains to the inability of some
computer hardware and software and other electronic devices to operate properly
as January 1, 2000 approaches, and beyond. The Company has taken actions
intended to minimize the impact of the Year 2000 issue, although it is
impossible to eliminate these risks entirely.

     The Company's major information technology (IT) systems and infrastructure
have been upgraded or replaced in the ordinary course of business over the last
three years. Approximately $608,000 has been spent through October 3, 1999, to
upgrade the Company's primary IT systems, IT infrastructure and security
systems, and to replace the telephone, voicemail, and timekeeping systems to
Year 2000 compliant systems.

     The Company implemented a Year 2000 compliance testing program of its
hardware, software and equipment. Testing included, but was not limited to, IT
systems, IT infrastructure, security systems, telephone systems, manufacturing
and laboratory equipment, and timekeeping systems.

     The Company relies on computer processing for its business activities and
the Year 2000 issue creates risk for the Company from unforeseen problems in the
Company's systems and from third parties with whom the Company does business.
The failure of the Company's systems and/or third party systems could have a
material adverse effect on the Company's results of operations, liquidity, and
financial condition.

     Year 2000 readiness of third parties with whom the Company does business,
particularly suppliers of critical products and providers of utility and
communication services, could impair the Company's ability to deliver products
and services and could cause system failures or errors, business interruptions
and, in a worst case scenario, the inability to engage in normal business
practices for an unknown length of time. This worst case scenario, if it should
occur, could have a material adverse effect on the Company's operations,
liquidity or financial condition, particularly if the disruption continues for a
significant length of time.

8
<PAGE>

     While third party risk related to the Year 2000 issues is difficult to
quantify or control, the Company has taken steps to try to minimize the
potential adverse effect that could arise. The Company has sent Year 2000
surveys to its suppliers asking for the compliance status of suppliers' products
and internal operations. The responses received by the Company indicate that
most of its suppliers expect to be Year 2000 compliant. The Company developed
third party contingency plans as it identified partners evidencing inadequate
Year 2000 preparations. Contingency plans include plans to accumulate extra
inventory and/or establish alternative sources of supply and channels of
distribution. However, even with diligent planning, third party providers pose
an uncertain risk that cannot be entirely eliminated.

     Due to the general uncertainty inherent in the Year 2000 issue, resulting
in part from the uncertainty of the Year 2000 issue readiness of third-party
suppliers and customers, the Company is unable to determine at this time whether
the consequences of Year 2000 issue failures will have a material impact on the
Company's results of operations, liquidity, or financial condition.

MARKET RISK
     At the end of fiscal 1999, the Company had an investment portfolio of fixed
income securities of $2,304,188, excluding $21,847,878 of those classified as
cash and cash equivalents and variable rate securities. These securities, like
all fixed income instruments, are subject to interest rate risk and will decline
in value if market interest rates increase. However, the Company has the ability
to hold its fixed income investments until maturity and therefore the Company
would not expect to recognize an adverse impact in income or cash flows.

ACCOUNTING PRONOUNCEMENTS
     In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 requires companies
to record derivatives on the balance sheet as assets and liabilities, measured
at fair value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. In July 1999, FASB issued SFASNo. 137
delaying the effective date of SFAS No. 133 for one year to fiscal years
beginning after June 15, 2000, with earlier adoption encouraged. Management has
not yet determined the effects SFAS No. 133 will have on its financial position
or the results of its operations. The Company will be required to adopt SFAS No.
133 in fiscal 2001.


                                                                              9
<PAGE>

STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                                             For the Fiscal Years Ended
                                                             ------------------------------------------------------
                                                               October 3,        September 27,        September 28,
                                                                     1999                 1998                 1997
<S>                                                          <C>                 <C>                  <C>
Net sales .................................................  $ 95,459,661         $ 94,722,511         $ 87,745,980
Cost of sales .............................................   (71,515,491)         (72,380,576)         (66,413,954)
                                                             ------------------------------------------------------
Gross profit ..............................................    23,944,170           22,341,935           21,332,026
Selling, general and administrative expenses ..............   (11,066,346)         (10,170,255)          (9,499,558)
Litigation settlement proceeds ............................     2,851,708
Litigation and settlement costs relating to 1995 fire .....                                              (1,771,439)
Special charges ...........................................    (1,112,127)
                                                             ------------------------------------------------------
Income from operations ....................................    14,617,405           12,171,680           10,061,029
Other income (deductions):
   Interest income ........................................     1,121,939            1,237,789            1,153,322
   Interest expense .......................................       (36,867)             (43,516)             (47,439)
   Gain on sale of The Lynde Company ......................                                               1,324,827
   Miscellaneous ..........................................       303,095               83,084              234,518
                                                             ------------------------------------------------------
        Total other income, net ...........................     1,388,167            1,277,357            2,665,228
                                                             ------------------------------------------------------

INCOME BEFORE INCOME TAXES ................................    16,005,572           13,449,037           12,726,257
Provision for income taxes ................................    (6,306,930)          (5,235,168)          (4,935,770)
                                                             ------------------------------------------------------

NET INCOME ................................................  $  9,698,642         $  8,213,869         $  7,790,487
                                                             ------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING .............    11,130,970           11,594,752           11,603,895
                                                             ------------------------------------------------------

BASIC AND DILUTED EARNINGS PER SHARE ......................  $       0.87         $       0.71         $       0.67
                                                             ------------------------------------------------------
</TABLE>


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

10
<PAGE>

BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         October 3,      September 27,
                                                                                               1999               1998
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                     <C>              <C>
ASSETS
   CURRENT ASSETS:
      Cash and cash equivalents ....................................................    $ 4,778,174        $ 3,197,015
      Investments available-for-sale ...............................................     17,424,700         14,543,929
      Trade receivables - less allowance for doubtful
         accounts:  1999, $380,000; 1998, $378,726 .................................     11,329,211         11,436,690
      Notes receivable .............................................................        301,920            271,027
      Inventories ..................................................................      8,379,228         10,816,460
      Prepaid expenses and other ...................................................      2,536,448          1,848,662
                                                                                        -----------        -----------
           Total current assets ....................................................     44,749,681         42,113,783

   PROPERTY, PLANT AND EQUIPMENT:
      Land .........................................................................        631,662            645,194
      Buildings and improvements ...................................................     18,368,313         17,593,650
      Machinery and equipment ......................................................      7,674,678          7,302,134
      Transportation equipment .....................................................      5,693,192          5,211,745
      Office furniture and equipment ...............................................      2,100,029          1,978,677
                                                                                        -----------        -----------
                                                                                         34,467,874         32,731,400
      Less accumulated depreciation ................................................     15,802,875         14,307,911
                                                                                        -----------        -----------
           Net property, plant and equipment .......................................     18,664,999         18,423,489

   OTHER ASSETS:
      Intangible assets - less accumulated
         amortization:  1999, $456,113; 1998, $393,015 .............................        601,101            664,199
      Investments held-to-maturity .................................................      1,949,192          1,848,843
      Notes receivable - noncurrent ................................................      2,844,220          3,302,923
      Other ........................................................................        190,634            182,238
                                                                                        -----------        -----------
         Total other assets ........................................................      5,585,147          5,998,203
                                                                                        -----------        -----------
TOTAL ASSETS .......................................................................    $68,999,827        $66,535,475
                                                                                        -----------        -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
   CURRENT LIABILITIES:
      Accounts payable - trade .....................................................    $ 5,032,268        $ 4,970,341
      Current portion of long-term debt ............................................         95,362             89,123
      Dividends payable ............................................................      1,314,154          1,147,090
      Accrued payroll and employee benefits ........................................      2,106,213          3,245,815
      Container deposits ...........................................................      1,545,255          1,503,889
      Other accruals ...............................................................      1,187,167            664,347
                                                                                        -----------        -----------
           Total current liabilities ...............................................     11,280,419         11,620,605
   LONG-TERM DEBT ..................................................................        328,040            423,402
   OTHER LONG-TERM LIABILITIES .....................................................        786,202
   DEFERRED INCOME TAXES ...........................................................      1,029,950          1,011,500
   COMMITMENTS AND CONTINGENCIES (NOTES 4, 6 AND 9)
   SHAREHOLDERS' EQUITY:
      Common stock - authorized: 30,000,000 shares of $.05 par value; issued and
        outstanding:  1999 - 10,951,281 shares; 1998 - 11,450,895 shares ...........        547,564            572,545
      Additional paid-in capital ...................................................     40,129,749         41,960,535
      Retained earnings ............................................................     14,897,903         10,946,888
                                                                                        -----------        -----------
         Total shareholders' equity ................................................     55,575,216         53,479,968
                                                                                        -----------        -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .........................................    $68,999,827        $66,535,475
                                                                                        -----------        -----------
</TABLE>


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                                                                              11
<PAGE>

STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                      Common Stock                    Additional
                                              -------------------------------           Paid-in              Retained
                                                Shares               Amount             Capital              Earnings
-----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>                <C>                  <C>                  <C>
BALANCE AT SEPTEMBER 29, 1996 ..............  11,051,690         $    552,585         $ 38,679,630         $  3,782,917

   Stock dividend ..........................     552,205               27,610            3,837,825           (3,865,435)
   Cash dividend ...........................                                                                 (2,041,623)
   Income tax savings from
       dividends paid on ESOP shares .......                                                                    177,778
   Net income                                                                                                 7,790,487
                                              -------------------------------------------------------------------------
BALANCE AT SEPTEMBER 28, 1997 ..............  11,603,895              580,195           42,517,455            5,844,124

   Cash dividend ...........................                                                                 (2,307,479)
   Stock acquired and retired ..............    (153,000)              (7,650)            (556,920)          (1,003,726)
   Income tax savings from
       dividends paid on ESOP shares .......                                                                    200,100
   Net income ..............................                                                                  8,213,869
                                              -------------------------------------------------------------------------
BALANCE AT SEPTEMBER 27, 1998 ..............  11,450,895              572,545           41,960,535           10,946,888

   Cash dividend ...........................                                                                 (2,981,686)
   Stock acquired and retired ..............    (499,614)             (24,981)          (1,830,786)          (3,032,521)
   Income tax savings from
       dividends paid on ESOP shares .......                                                                    266,580
   Net income ..............................                                                                  9,698,642
                                              -------------------------------------------------------------------------

BALANCE AT OCTOBER 3, 1999 .................  10,951,281         $    547,564         $ 40,129,749         $ 14,897,903
                                              -------------------------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


12
<PAGE>

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                          For the Fiscal Years Ended
                                                                            ------------------------------------------------------
                                                                              October 3,        September 27,        September 28,
                                                                                    1999                 1998                 1997
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                 <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                               $  9,698,642         $  8,213,869         $  7,790,487
   Gain on sale of The Lynde Company .....................................                                              (1,324,827)
   Litigation and settlement costs relating to 1995 fire .................                         (1,083,866)           1,175,286
   Reconciliation to cash flows:
      Depreciation and amortization ......................................     2,099,491            1,993,112            1,686,622
      Deferred income taxes ..............................................      (970,950)             750,894             (307,800)
      Earnings on other assets ...........................................      (108,745)            (112,084)             (91,076)
      Loss (gain) from property disposals ................................      (256,808)              20,992             (110,807)
      Changes in operating accounts (requiring) providing cash:
           Trade receivables .............................................       107,479             (318,699)          (1,377,706)
           Inventories ...................................................     2,437,232           (2,235,755)          (1,221,750)
           Accounts payable ..............................................        61,927             (759,243)            (979,850)
           Accrued liabilities ...........................................       210,786              116,463              383,058
           Other .........................................................       568,194             (458,631)              53,627
                                                                            ------------------------------------------------------
   Net cash provided by operating activities .............................    13,847,248            6,127,052            5,675,264

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property, plant and equipment ............................    (2,449,894)          (5,051,641)          (4,017,543)
   Purchase of investments ...............................................    (4,766,585)          (2,563,852)          (1,475,475)
   Sale of investments ...................................................     1,885,814
   Proceeds from property disposals ......................................       428,799              164,691              191,946
   Cash received on sale of assets and business of The Lynde Company .....                                                 500,000
   Payments received on notes receivable .................................       427,810              288,708              196,120
                                                                            ------------------------------------------------------
   Net cash used in investing activities .................................    (4,474,056)          (7,162,094)          (4,604,952)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Debt repayment ........................................................       (89,123)             (59,928)             (56,008)
   Cash dividends paid ...................................................    (2,814,622)          (2,204,740)          (1,881,408)
   Acquisition and retirement of stock ...................................    (4,888,288)          (1,568,296)
                                                                            ------------------------------------------------------
   Net cash used in financing activities .................................    (7,792,033)          (3,832,964)          (1,937,416)
                                                                            ------------------------------------------------------
Net increase (decrease) in cash and cash equivalents .....................     1,581,159           (4,868,006)            (867,104)

Cash and cash equivalents at beginning of year ...........................     3,197,015            8,065,021            8,932,125
                                                                            ------------------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR .................................  $  4,778,174         $  3,197,015         $  8,065,021
                                                                            ------------------------------------------------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Note receivable on sale of The Lynde Company ..........................                                            $  2,090,083
                                                                            ------------------------------------------------------
   Cash paid during the year for:
      Interest ...........................................................  $     43,106         $     47,711         $     51,359
                                                                            ------------------------------------------------------
      Income taxes .......................................................  $  6,079,339         $  5,739,297         $  4,334,567
                                                                            ------------------------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                                                            13
<PAGE>

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS
AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS
Hawkins Chemical, Inc. (the Company) has two reportable segments: Industrial and
Water Treatment. The Industrial segment specializes in providing industrial
chemicals and services to the energy, electronics, and plating industries. In
addition, the Industrial segment provides products and services to food
manufacturers and processing plants and the pharmaceutical industry.The Water
Treatment segment specializes in providing water and waste-water treatment
equipment and chemicals and services relating to the testing of water samples.
Prior to December 30, 1998, the basis of the financial statements included the
accounts of Hawkins Chemical, Inc. and its' wholly-owned subsidiary, Hawkins
Water Treatment Group, Inc. All significant inter-company transactions and
balances have been eliminated. Effective December 30, 1998, the subsidiary was
merged into Hawkins Chemical, Inc.

FISCAL YEAR
The Company's fiscal year is a 52/53-week year ending on the Sunday closest to
September 30. The fiscal year ended October 3, 1999, was a fifty-three week year
and the fiscal years ended September 27, 1998 and September 28, 1997 were
fifty-two week years.

CASH EQUIVALENTS
Cash equivalents include all liquid debt instruments (primarily cash funds and
certificates of deposits) purchased with an original maturity of three months or
less. Cash equivalents are carried at cost, which approximates market value.

INVESTMENTS AVAILABLE-FOR-SALE
Investments classified as available-for-sale securities consist of insurance
contracts and variable rate marketable securities (primarily municipal bonds and
annuity contracts) that will be held for indefinite periods of time, including
securities that may be sold in response to changes in market interest or
prepayment rates, needs for liquidity or changes in the availability or yield of
alternative investments. These securities are carried at market value which
approximates cost.

INVENTORIES
Inventories, consisting primarily of finished goods, are primarily valued at the
lower of cost or net realizable value, with cost being determined using the
last-in, first-out (LIFO) method.

PROPERTY, PLANT AND EQUIPMENT
Property is stated at cost and depreciated over the lives of the assets using
both straight-line and declining-balance methods. Estimated lives are: 10 to 50
years for buildings and improvements; 3 to 15 years for machinery and equipment;
3 to 10 years for transportation equipment; and 3 to 10 years for office
furniture and equipment.

INTANGIBLES
The excess of the purchase price and related costs over the fair value of the
net assets acquired is being amortized over 15 or 40 years.

INVESTMENTS HELD-TO-MATURITY
Held-to-maturity securities consist of Minnesota municipal bonds which the
Company has the intent and ability to hold to maturity, and are valued at
amortized historical cost, increased for accretion of discounts and reduced by
amortization of premiums, computed by the constant-yield method.

RECOVERABILITY OF LONG-LIVED ASSETS
The Company reviews its long-lived assets whenever events or changes in
circumstances indicate the carrying amount of the assets may not be recoverable.
The Company determines potential impairment by comparing the carrying value of
the assets with expected net cash flows expected to be provided by operating
activities of the business or related products. Should the sum of the expected
future net cash flows be less than the carrying value, the Company would
determine whether an impairment loss should be recognized. An impairment loss
would be measured by comparing the amount by which the carrying value exceeds
the fair value of the asset based on market value that is based on the
discounted cash flows expected to be generated by the asset.

INCOME TAXES
The Company utilizes Statement of Financial Accounting Standard (SFAS) No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, the deferred tax assets and
liabilities are recognized based on differences between the financial statements
and the tax bases of assets and liabilities using presently enacted tax rates.

REVENUE RECOGNITION
The Company recognizes revenues upon shipment of the product.


14
<PAGE>

EARNINGS PER SHARE
Basic and diluted earnings per share are computed by dividing net income by the
weighted average number of common shares outstanding.

COMPREHENSIVE INCOME
On September 28, 1998, the Company retroactively adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. Comprehensive
income includes all changes in shareholders' equity except those resulting from
investments by and distributions to owners. SFAS No. 130 is not currently
applicable for the Company because the Company did not have any material items
of other comprehensive income in any of the periods presented.

CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to a concentration
of credit risk principally consist of cash, investments available-for-sale and
trade receivables. The Company sells its principal products to a large number of
customers in many different industries. To reduce credit risk, the Company
routinely assesses the financial strength of its customers. The Company invests
its excess cash balances in certificates of deposit at a single financial
institution. At October 3, 1999, the Company had certificates of deposits in
excess of federally insured limits of approximately $4,700,000.

At the end of fiscal 1999, the Company also had an investment portfolio of fixed
income securities, excluding $21,847,878 of those classified as cash and cash
equivalents and variable rate securities, of $2,304,188. These securities, like
all fixed income instruments, are subject to interest rate risk and will decline
in value if market interest rates increase. However, the Company has the ability
to hold its fixed income investments until maturity and therefore the Company
would not expect to recognize an adverse impact in income or cash flows.

ESTIMATES
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.


RISK AND UNCERTAINTIES
There are no concentrations of business transacted with a particular customer or
supplier nor concentrations of revenue from a particular service or geographic
area that would severely impact the Company in the near term.

ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 requires companies to record
derivatives on the balance sheet as assets and liabilities, measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. In July 1999, FASB issued SFAS No. 137 delaying
the effective date of SFAS No. 133 for one year to fiscal years beginning after
June 15, 2000, with earlier adoption encouraged. Management has not yet
determined the effects SFAS No. 133 will have on its financial position or the
results of its operations. The Company will be required to adopt SFASNo. 133 in
fiscal 2001.


2. INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
                                              October 3,      September 27,
                                                    1999               1998
---------------------------------------------------------------------------
<S>                                           <C>             <C>
Finished goods (FIFO basis).......            $8,949,497        $12,841,114
LIFO reserve......................              (570,269)        (2,024,654)
                                              -----------------------------
Net inventory.....................            $8,379,228        $10,816,460
                                              -----------------------------
</TABLE>

Inventories valued under the LIFO method for the fiscal years ended October 3,
1999 and September 27, 1998, were approximately $8,876,432 and $12,238,000,
respectively. The balance of the inventory was valued under the FIFO method.

In fiscal 1999, the LIFO reserve decreased by $1,454,385. As a result, the
ending LIFO cost was less than the ending cost determined using the first-in,
first-out (FIFO) method by $570,269. The decrease in the LIFO reserve was caused
by a significant decrease in the cost of a single, large-volume component of
inventory.

                                                                              15
<PAGE>


3. NOTES RECEIVABLE

At October 3, 1999 and September 27, 1998, the net balance outstanding on a note
receivable from the sale of Tessman Seed was $468,625 and $615,091,
respectively. The note receivable is due in equal installments of $146,466 with
interest at 8%.

The balance outstanding on a note receivable from the sale of a building was
$1,004,869 and $1,033,629 at October 3, 1999 and September 27, 1998,
respectively. The note receivable is secured by the building and is due in
monthly installments of $9,201 including interest at 8% through January 1, 2004,
when the remaining balance of $849,985 is due.

In fiscal 1997, the Company sold the inventory and operations of The Lynde
Company (Lynde), a wholly owned subsidiary which specialized in swimming pool
chemicals, for approximately $2,590,000. The Company recorded a gain on the sale
of $1,324,827. At closing, the Company received $500,000 cash and a note
receivable for the balance. The note receivable requires principal payments
through March 2003 plus interest at 8%. At October 3, 1999 and September 27,
1998, the balance outstanding on the note receivable was $1,672,646 and
$1,925,230, respectively. Revenues from Lynde for the fiscal year ended
September 28, 1997 were $725,500 and recorded a net loss in 1997 of $19,600
through the effective date of the sale.


4. LONG-TERM DEBT

Long-term debt at October 3, 1999 and September 27, 1998 is summarized as
follows:

<TABLE>
<CAPTION>
                                       1999            1998
-----------------------------------------------------------
<S>                                <C>             <C>
Note payable, due in annual
   installments to 2002 .........  $423,402        $512,525
Less current portion ............    95,362          89,123
                                   ------------------------
Total ...........................  $328,040        $423,402
-----------------------------------------------------------
</TABLE>

Long-term debt maturities for the five fiscal years subsequent to 1999 are: 2000
- $95,362, 2001 - $102,037, 2002 - $109,180 and 2003 - $116,823.

5. SHAREHOLDERS' EQUITY

The stock dividend in fiscal 1997 was accounted for by transferring the fair
value of the issued stock from retained earnings to the categories of permanent
capitalization as common stock (par value) and additional paid-in capital.
During fiscal 1999, the Company acquired and retired 499,614 shares of common
stock for $4,888,288. During fiscal 1998, the Company acquired and retired
153,000 shares of common stock for $1,568,296.

6. LEASES

The Company has various operating leases for land and buildings on which some of
its operations are located. Total rental expense for the years ended October 3,
1999, September 27, 1998 and September 28, 1997 was $53,843, $47,612, and
$46,003, respectively. Future minimum lease payments due under operating leases
with an initial term of one year or more at October 3, 1999 are $142,945 in
2000, $129,757 in 2001, $131,030 in 2002, $132,305 in 2003 and $98,238 in 2004.

7. PENSION AND EMPLOYEE STOCK OWNERSHIP PLANS

The Company has a defined contribution pension plan covering substantially all
of its non-union employees. Pension expense for the years ended October 3, 1999,
September 27, 1998 and September 28, 1997 was $578,975, $545,650 and $459,367,
respectively. The Company's cost for the pension plan is determined as 7% of
each employee's covered compensation. Amounts charged to pension expense and
contributed to union multi-employer pension plans (not included in the above
amounts) were not material. It is the Company's policy to fund all pension costs
accrued.

The Company has an employee stock ownership plan covering substantially all of
its non-union employees. Contributions are made at the discretion of the Board
of Directors subject to a maximum amount allowed under the Internal Revenue
Code. Contributions for the years ended October 3, 1999, September 27, 1998 and
September 28, 1997 were $1,049,779, $984,455 and $889,979, respectively. The
Company does not currently offer any post-retirement benefits, deferred stock or
stock-based compensation plans.


16
<PAGE>

8. SPECIAL CHARGES

The Company has entered into termination agreements with three former employees.
During fiscal 1999, the Company recorded Special Charges in the Statement of
Income of $1,112,127. At October 3, 1999, the Company is required to make future
payments to the individuals for periods of 15 months to 6 years. The present
value of the future payments to be paid in fiscal 2000 is included in Other
Accruals and the present value of the remaining payments is included in Other
Long-term Liabilities.

9. CONTINGENCIES

During 1995, there was a fire in the office/warehouse of The Lynde Company, a
former wholly-owned subsidiary of the Company. Charges of $1,771,439 in 1997 and
$750,000 in 1995 were recorded to cover legal fees and settlement costs in
connection with the Company's defense of a lawsuit filed against it as a result
of the fire. Other costs paid amounted to approximately $300,000. Most, but not
all, of the claimants have now been paid under a settlement agreement and the
Company anticipates that the remaining claims will be covered by the Company's
umbrella insurer as to the cost of defense and claims payment.

The Company's primary and umbrella insurers denied coverage and refused to
defend the lawsuit. During fiscal 1999, the Company prevailed in its claims
against its insurers and has been reimbursed for substantially all of its
settlement and legal expenses.

In addition, the Company is involved in various legal actions arising from the
normal course of business. Management is of the opinion that any judgement or
settlement resulting from pending or threatened litigation would not have a
material adverse effect on the financial position, results of operations or cash
flows of the Company.

10. INCOME TAXES

The provisions (benefits) for income taxes are as follows:

<TABLE>
<CAPTION>
                                1999         1998          1997
---------------------------------------------------------------
<S>                       <C>          <C>           <C>
Federal - current         $5,862,780   $3,316,868    $4,143,883
States - current           1,415,100    1,167,300     1,099,687
Deferred                    (970,950)     751,000      (307,800)
                          -----------  ----------    -----------
Total provision           $6,306,930   $5,235,168    $4,935,770
                          -----------  ----------    -----------
</TABLE>

A reconciliation of the provision for income taxes, based on income from
continuing operations, to the applicable federal statutory income tax rate of
35% is as follows:

<TABLE>
<CAPTION>
                                1999         1998          1997
---------------------------------------------------------------
<S>                       <C>          <C>           <C>
Statutory federal
   income tax             $5,601,950   $4,707,163    $4,454,190
State income taxes,
   net of federal
   deduction                 919,815      770,418       687,454
Tax-exempt income           (165,390)    (122,876)     (108,856)
Other, net                   (49,445)    (119,537)      (97,018)
                          -----------  ----------   ------------
     Total                $6,306,930   $5,235,168   $ 4,935,770
                          -----------  ----------   ------------
</TABLE>

The tax effects of items comprising the Company's net deferred tax asset
(liability) are as follows:

<TABLE>
<CAPTION>
                                          1999                1998
------------------------------------------------------------------
<S>                                <C>                 <C>
Current deferred taxes:
  Trade receivables .............  $   153,000         $   150,000
  Inventory .....................      965,000             411,000
  Accruals ......................      596,900             164,500
                                   --------------------------------
     Total* .....................  $ 1,714,900         $   725,500
                                   --------------------------------

Noncurrent deferred taxes:
  Gain on sale of
     The Lynde Company ..........  $  (336,850)        $  (399,500)
  Property basis difference .....     (693,100)           (612,000)
                                   --------------------------------
     Total ......................  $(1,029,950)        $(1,011,500)
                                   --------------------------------
</TABLE>

*Included in prepaid expenses and other on the balance sheet.


                                                                              17
<PAGE>


11.  SEGMENT INFORMATION

The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," in 1999, which changes the way the Company reports
information about its operating segments. The information for 1998 and 1997 has
been restated to conform to the 1999 presentation.

The Company has two reportable segments: Industrial and Water Treatment. The
Industrial segment specializes in providing industrial chemicals and services to
the energy, electronics, and plating industries. In addition, the Industrial
segment provides products and services to the food manufacturers and processing
plants and the pharmaceutical industry. The Water Treatment segment specializes
in providing water and waste-water treatment equipment and chemicals and in
services relating to the testing of water samples.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The cost for each segment is based
on product cost, and expenses are based on actual costs incurred along with cost
allocation of shared and centralized function. The Company evaluates performance
based on profit or loss from operations before income taxes not including
nonrecurring gains and losses.

Reportable segments are defined by product and type of customer. Segments are
responsible for the sales, marketing and development of their products and
services. The segments do not have separate accounting, administration, customer
service or purchasing functions.

<TABLE>
<CAPTION>
REPORTABLE SEGMENTS                                 INDUSTRIAL         WATER TREATMENT             TOTAL
<S>                                                <C>                 <C>                      <C>
1999
   Net sales ....................................  $ 66,683,006          $ 28,776,655           $ 95,459,661
   Cost of sales ................................    51,704,801            19,810,690             71,515,491
   Gross margin .................................    14,978,205             8,965,965             23,944,170
   Operating income .............................     6,599,410             5,166,287             11,765,697

   Identifiable assets ..........................  $ 36,763,233          $  5,357,446           $ 42,120,679
                                                   ---------------------------------------------------------

1998
   Net sales ....................................  $ 66,740,768          $ 27,981,743           $ 94,722,511
   Cost of sales ................................    52,066,529            20,314,047             72,380,576
   Gross margin .................................    14,674,239             7,667,696             22,341,935
   Operating income .............................     7,234,675             4,937,005             12,171,680

   Identifiable assets ..........................  $ 39,102,635          $  5,812,153           $ 44,914,788
                                                   ---------------------------------------------------------

1997
   Net sales ....................................  $ 61,458,974          $ 26,287,006           $ 87,745,980
   Cost of sales ................................    47,452,145            18,961,809             66,413,954
   Gross margin .................................    14,006,829             7,325,197             21,332,026
   Operating income .............................     6,996,615             4,835,853             11,832,468

   Identifiable assets ..........................  $ 33,815,085          $  5,961,111           $ 39,776,196
                                                   ---------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
PROFIT RECONCILIATION                                  1999                  1998                   1997
<S>                                                <C>                   <C>                    <C>
   Total income for reportable segments .........  $ 11,765,697          $ 12,171,680           $ 11,832,468
   Unallocated corporate income (expense) .......     2,851,708                                   (1,771,439)
                                                   ------------          ------------           ------------
   Total operating income .......................  $ 14,617,405          $ 12,171,680           $ 10,061,029
                                                   ---------------------------------------------------------
</TABLE>


18
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Shareholders of Hawkins Chemical, Inc.:

We have audited the accompanying balance sheets of Hawkins Chemical, Inc. (the
Company) as of October 3, 1999 and September 27, 1998, and the related
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended October 3, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements 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, such financial statements present fairly, in all material
respects, the financial position of Hawkins Chemical,Inc. at October 3, 1999 and
September 27, 1998, and the results of its operations and cash flows for each of
the three years in the period ended October 3, 1999 in conformity with generally
accepted accounting principles.


/s/ Deloitte & Touche LLP

DELOITTE & TOUCHE LLP
Minneapolis, Minnesota
December 3, 1999



QUARTERLY STOCK DATA
--------------------------------------------------------
<TABLE>
<CAPTION>
                                    High          Low
<S>                                <C>           <C>
Fiscal 1999
   4th Quarter                     $ 9           $ 7 1/2
   3rd Quarter                       9 3/4         8
   2nd Quarter                       10 1/2        9 3/4
   1st Quarter                       12            10

Fiscal 1998
   4th Quarter                       12 1/8        9 7/8
   3rd Quarter                       14            11 1/4
   2nd Quarter                       11 3/8        9 3/4
   1st Quarter                       12 3/4        9 1/2
</TABLE>


CASH DIVIDENDS
--------------------------------------------------------
<TABLE>
<CAPTION>
                                    Declared      Paid
<S>                                 <C>           <C>
Fiscal 2000
   1st Quarter                                    $.12

Fiscal 1999
   4th Quarter                      $.12
   3rd Quarter                                    $.15
   2nd Quarter                      $.15
   1st Quarter                                    $.10

Fiscal 1998
   4th Quarter                      $.10
   3rd Quarter                                    $.10
   2nd Quarter                      $.10
   1st Quarter                                    $.09
</TABLE>


The common stock of Hawkins Chemical, Inc. is as quoted on the NASDAQ National
Market System. The price information represents closing sale prices reported in
the NASDAQ/NMS Monthly Statistical Report. There were 777 common shareholder
accounts on October 3, 1999.


                                                                              19

<PAGE>

BOARD OF DIRECTORS AND CORPORATE OFFICERS
--------------------------------------------------------------------------------

BOARD OF DIRECTORS

<TABLE>
<S>                               <C>                               <C>
DEAN L. HAHN*                     JOHN R. HAWKINS***                JOHN S. MCKEON
  CHAIRMAN OF THE BOARD AND         PRESIDENT AND                     PRESIDENT,
  CHIEF EXECUTIVE OFFICER           CHIEF OPERATING OFFICER           GOLDEN VALLEY MICROWAVE
  DIRECTOR SINCE 1974               DIRECTOR SINCE 1989               FOODS, INC.
  EXECUTIVE COMMITTEE               EXECUTIVE COMMITTEE               DIRECTOR SINCE 1984
                                                                      AUDIT, COMPENSATION AND
G. ROBERT GEY                     DUANE M. JERGENSON                  EXECUTIVE COMMITTEES
  PRESIDENT,                        VICE PRESIDENT OF OPERATIONS,
  PENTAIR SERVICE EQUIPMENT         TAYLOR CORPORATION              DONALD L. SHIPP**
  BUSINESS                          DIRECTOR SINCE 1996               VICE CHAIRMAN OF THE BOARD
  DIRECTOR SINCE 1999               AUDIT AND COMPENSATION            DIRECTOR SINCE 1977
  AUDIT AND COMPENSATION            COMMITTEES                        EXECUTIVE COMMITTEE
  COMMITTEES

HOWARD M. HAWKINS
  PAST VICE PRESIDENT AND
  TREASURER OF HAWKINS
  DIRECTOR SINCE 1976
  EXECUTIVE COMMITTEE

OFFICERS

DEAN  L. HAHN*                    KURT R. NORMAN****                  *    DEAN L. HAHN WILL RETIRE AS CHAIRMAN
  CHAIRMAN OF THE BOARD AND         VICE PRESIDENT                         AND CEO EFFECTIVE FEBRUARY 16, 2000.
  CHIEF EXECUTIVE OFFICER                                                  HE WILL REMAIN A DIRECTOR.

DONALD L. SHIPP**                 MARVIN E. DEE                       **   DONALD L. SHIPP WILL RETIRE AS VICE
  VICE CHAIRMAN OF THE BOARD        VICE PRESIDENT, CHIEF FINANCIAL        CHAIRMAN EFFECTIVE SEPTEMBER 30, 2000.
                                    OFFICER, SECRETARY, TREASURER          HE WILL REMAIN A DIRECTOR.

JOHN R. HAWKINS***                                                    ***  JOHN R. HAWKINS WAS ELECTED CHAIRMAN
  PRESIDENT AND                                                            AND CEO EFFECTIVE FEBRUARY 16, 2000.
  CHIEF OPERATING OFFICER
                                                                      **** KURT R. NORMAN WAS ELECTED PRESIDENT
                                                                           AND CHIEF OPERATING OFFICER EFFECTIVE
                                                                           FEBRUARY 16, 2000.

</TABLE>

SUMMARY OF OPERATIONS BY QUARTER
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
UNAUDITED              First Quarter       Second Quarter      Third Quarter      Fourth Quarter        Total Year
--------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE DATA) 1999     1998        1999     1998       1999     1998      1999     1998       1999   1998
--------------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>        <C>      <C>        <C>       <C>      <C>      <C>       <C>      <C>
Net sales............$23,311   $22,667    $22,764  $22,316    $24,960   $25,720  $24,425  $24,020   $95,460  $94,723

Gross profit.........  5,187     5,116      5,242    4,890      6,606     6,182    6,909    6,154    23,944   22,342

Net income...........  3,426     1,898      1,789    1,717      2,441     2,229    2,043    2,370     9,699    8,214

Basic and diluted
earnings per share...    .30       .16        .16      .15        .22       .19      .19      .20       .87      .71
</TABLE>
*Includes special charges of $1,112 ($674 after tax or $.06 per share) which
should have been recorded in the first quarter of fiscal 1999 (See Note 8).

--------------------------------------------------------------------------------
20                                     Hawkins Chemical, Inc. 1999 Anuual Report