SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   ----------

                                    FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the quarterly period ended September 30, 1999

                        Commission File Number: 333-10611

                               UNIFRAX CORPORATION
             (Exact name of registrant as specified in its charter)

                                    Delaware
                 (State or other jurisdiction of incorporation)

                                   34-1535916
                      (I.R.S. Employer Identification No.)

               2351 Whirlpool Street, Niagara Falls, NY 14305-2413
               (Address of principal executive offices) (Zip Code)
       Registrant's telephone number, including area code: (716) 278-3800

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


     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 _____


<PAGE>
                               UNIFRAX CORPORATION
                                    FORM 10-Q
                                      INDEX

                                                                        PAGE NO.
                                                                        --------

PART I.    FINANCIAL INFORMATION

Item 1.    Condensed Consolidated Financial Statements (Unaudited)

           Condensed Consolidated Balance Sheets at
                September 30, 1999 and December 31, 1998.......................1

           Condensed Consolidated Statements of Income for the
                Three-month and nine-month periods ended
                September 30, 1999 and 1998....................................2

           Condensed Consolidated Statements of Cash Flow for the
                Nine-months ended September 30, 1999 and 1998..................3

         Notes to Condensed Consolidated Financial Statements..................4

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations.......................9

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.........13

PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings..................................................14
Item 2.    Changes in Securities..............................................14
Item 3.    Defaults on Senior Securities......................................14
Item 4.    Submission of Matters to a Vote of Security Holders ...............14
Item 5.    Other Information..................................................14
Item 6.    Exhibits and Report on Form 8-K....................................14

Signatures....................................................................15

<PAGE>

PART I.   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                                            UNIFRAX CORPORATION
                                   CONDENSED CONSOLIDATED BALANCE SHEETS
                                (UNAUDITED - IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>


                                                                                            DECEMBER 31       SEPTEMBER 30
                                                                                               1998              1999
                                                                                               ----               ---
<S>                                                                                         <C>             <C>
ASSETS
Current assets:

     Cash                                                                                   $       43      $     2,965
     Accounts receivable, less allowances of $708
         and $829, respectively                                                                 12,953           14,247
     Inventories                                                                                10,343            8,972
     Deferred income taxes                                                                       2,494            2,494
     PREPAID EXPENSES AND OTHER CURRENT ASSETS                                                     220              237
                                                                                              --------         --------
Total current assets                                                                            26,053           28,915

Property, plant and equipment, at cost                                                          74,363           75,199
     LESS ACCUMULATED DEPRECIATION AND AMORTIZATION                                            (37,656)         (40,164)
                                                                                              --------         --------
                                                                                                36,707           35,035

Deferred income taxes                                                                           22,402           20,567
Organization costs, net of accumulated amortization
     of $1,642 and $2,204, respectively                                                          3,279            2,717
OTHER ASSETS                                                                                       213              165
                                                                                              $ 88,654         $ 87,399
                                                                                              ========         ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:

     Note payable -- affiliate                                                            $     7,000       $     7,000
     Current portion of long term debt                                                          3,750             8,500
     Accounts payable                                                                           3,306             1,660
     ACCRUED EXPENSES                                                                           7,139            10,246
                                                                                              -------          --------
Total current liabilities                                                                      21,195            27,406

Long term debt                                                                                105,950            96,000
Accrued postretirement benefit cost                                                             3,472             3,344
OTHER LONG-TERM OBLIGATIONS                                                                       161               161
                                                                                              --------         --------
Total liabilities                                                                             130,778           126,911

STOCKHOLDERS' DEFICIT

Common stock--$.01 par value; shares authorized--40,000;
     shares issued and outstanding--20,000                                                         --                --
Redeemable convertible cumulative preferred stock--voting $.01 par value;
     shares authorized--10,000, shares issued and outstanding--1,666.67
     (aggregate liquidation preference of $2,686 and $2,799, respectively,
     including dividends in arrears)                                                               --                --
Additional paid-in capital                                                                     42,520            42,520
Accumulated deficit                                                                           (84,361)          (81,507)
Accumulated other comprehensive loss--cumulative foreign currency
<PAGE>

     TRANSLATION ADJUSTMENTS                                                                     (283)             (525)
                                                                                              -------          ---------
TOTAL STOCKHOLDERS' DEFICIT                                                                   (42,124)          (39,512)

                                                                                          $    88,654       $    87,399
                                                                                              =======          ========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                                              UNIFRAX CORPORATION
                                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                          (UNAUDITED - IN THOUSANDS)


<TABLE>
<CAPTION>

                                                  THREE MONTHS ENDED SEPTEMBER 30        NINE MONTHS ENDED SEPTEMBER 30

                                                        1998           1999                    1998           1999
                                                        ----           ----                    ----           ----
<S>                                                <C>             <C>                    <C>              <C>
Net Sales                                          $   20,767      $  20,588              $   64,524       $ 62,281

COST OF GOODS SOLD                                     10,396         10,252                  32,375         32,230
                                                       ------         ------                  ------         ------
Gross margin                                           10,371         10,336                  32,149         30,051

Selling, general and

     ADMINISTRATION EXPENSES                            6,110          5,643                  17,958         16,719
                                                       ------         ------                  ------         ------
Operating income                                        4,261          4,693                  14,191         13,332

OTHER INCOME (EXPENSE), NET                               123             25                     226           (110)
                                                       ------        -------                  ------         ------
Income before interest and income taxes                 4,384          4,718                  14,417         13,222

INTEREST EXPENSE                                       (3,066)        (2,809)                 (9,108)        (8,598)
                                                       ------        -------                 -------         ------
Income before income taxes                              1,318          1,909                   5,309          4,624

PROVISION FOR INCOME TAXES                                389            713                   1,509          1,770
                                                       ------        -------                 -------         ------
NET INCOME                                       $        929    $     1,196               $   3,800      $   2,854
                                                       ======        =======                 =======         ======


</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                               UNIFRAX CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (UNAUDITED - IN THOUSANDS)

<TABLE>
<CAPTION>


                                                                                    NINE MONTHS ENDED SEPTEMBER 30

                                                                                         1998               1999
                                                                                         ----               ----
<S>                                                                                  <C>                  <C>
OPERATING ACTIVITIES
Net income                                                                            $ 3,800             $ 2,854
Depreciation and amortization                                                           4,248               4,099
Other adjustments and changes in operating assets and liabilities                       1,201               3,573
                                                                                      -------             -------
Cash provided by operating activities                                                   9,249              10,526

INVESTING ACTIVITIES
Capital expenditures                                                                   (1,772)             (2,434)
Proceeds from sales of property, plant and equipment                                       45                  30
                                                                                      -------             -------
Cash used in investing activities                                                      (1,727)             (2,404)

FINANCING ACTIVITIES
Repurchase of Senior Notes                                                             (2,000)             (2,000)
Borrowings under revolving loan                                                        17,450              19,050
Repayments of revolving loan                                                          (19,550)            (20,750)
REPAYMENT OF TERM LOAN                                                                 (3,000)             (1,500)
                                                                                      -------             -------
Cash used in financing activities                                                      (7,100)             (5,200)

Net increase/decrease in cash                                                             422               2,922
CASH--BEGINNING OF PERIOD                                                                 359                  43
                                                                                      -------             -------
CASH--END OF PERIOD                                                                 $     781         $     2,965
                                                                                      =======             =======

</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>


                               UNIFRAX CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1999

NOTE A - BASIS OF PRESENTATION

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
Unifrax   Corporation  (the  "Company"  or  "Unifrax")  have  been  prepared  in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X.  Accordingly,  they do not include  all of the  information  and  footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.  In the opinion of management,  all adjustments  (consisting only of
normal recurring  accruals)  considered  necessary for a fair  presentation have
been  included.  Results  for the  period  ended  September  30,  1999,  are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 1999. For further information,  refer to the consolidated financial
statements and the notes thereto for the year ended December 31, 1998,  included
in the  Company's  annual  report on Form 10-K  filed  with the  Securities  and
Exchange  Commission.  All  capitalized  terms used in these notes to  condensed
consolidated  financial statements that are not defined herein have the meanings
given  to  them  in  such  consolidated   financial   statements  and  notes  to
consolidated financial statements.

NOTE B - INVENTORIES

The components of inventory consist of the following (in thousands):

                                December 31         September 30
                                    1998               1999
                                    ----               ----

Raw materials and supplies        $3,459              $3,264
Work in process                    2,008               1,511
FINISHED PRODUCTS                  4,341               3,753
                                  -------             -------
                                   9,808               8,528
ADJUSTMENT TO LIFO COST              535                 444
                                  ------              ------
                                 $10,343              $8,972
                                  ======               =====



<PAGE>

NOTE C - CONTINGENCIES

CERAMIC FIBERS

Regulatory agencies and others,  including the Company, are currently conducting
scientific  research to determine the potential health impact resulting from the
inhalation  of  airborne  ceramic  fibers.  To date,  studies  of  workers  with
occupational  exposure  to  airborne  ceramic  fiber  have  found no  clinically
significant  relationship between prior or current exposure to ceramic fiber and
disease in humans;  however,  independent  animal  studies have  indicated  that
ceramic fiber inhaled by test animals at elevated doses can produce  respiratory
disease,  including cancer.  The results of this research have been inconclusive
as to whether or not ceramic fiber  exposure  presents an  unreasonable  risk to
humans.

From  time  to  time   Carborundum,   as  predecessor  to  Unifrax,   and  other
manufacturers  of ceramic  fibers  have been  named as  defendants  in  lawsuits
alleging death or personal injury as a result of exposure in the manufacture and
handling of ceramic fiber and other  products.  The amount of any liability that
might  ultimately  exist with  respect to these  claims or any other  unasserted
claims is presently not determinable.  The Company believes the lawsuits brought
against The  Carborundum  Company  have been  without  merit and the  litigation
currently  pending,  or to its  knowledge  threatened,  will not have a material
adverse  effect on the  financial  condition  or  results of  operations  of the
Company. The Company's belief is based on the fact that, although animal studies
have  indicated that ceramic fiber inhaled by test animals at elevated doses can
cause  disease,  there is no evidence that exposure to refractory  ceramic fiber
has resulted in disease in humans.

Consistent  with  customary  practice  among   manufacturers  of  ceramic  fiber
products,  Carborundum  entered into agreements with distributors of its product
whereby  Carborundum  agreed  to  indemnify  the  distributors   against  losses
resulting from ceramic fiber claims and the costs to defend against such claims.
To the best of the Company's knowledge,  there have been no historical,  nor are
there  any  current,   ceramic   fiber   exposure   claims  made  against  these
indemnification agreements. Consequently, the amount of any liability that might
ultimately   exist  with  respect  to  these   indemnities   is  presently   not
determinable.

Pursuant to the Recapitalization  Agreement,  BP America Inc. and certain of its
affiliates  (collectively  "BP  America"),  has agreed to indemnify  the Company
against  liabilities  for personal  injury and wrongful  death  attributable  to
exposure  which  occurred  prior to the  Closing to  refractory  ceramic  fibers
manufactured  by the  Company.  BP America has agreed to  indemnify  the Company
against all liabilities  arising from exposure claims pending at the time of the
Closing.  For all other claims arising from alleged  exposure  occurring  solely
prior to Closing,  BP America has agreed to indemnify the Company against 80% of
all losses,  until the total loss which the Company incurs reaches $3.0 million,
after which time BP America has agreed to indemnify the Company  against 100% of
such losses. BP America has agreed to indemnify the Company against all punitive
damages  attributable  to the  conduct of the Company  prior to  Closing.  Where
losses arise from alleged  exposure  both before and after  Closing,  the losses
will be  allocated  between BP America and the Company,  pro rata,  based on the
length of exposure or pursuant to  arbitration  if initiated by the Company.  To
date the Company has incurred no claims  losses  applicable  to the $3.0 million
total mentioned above.

The Company cannot avail itself of this indemnity for losses attributable to the
Company's failure to maintain a Product  Stewardship Program consistent with the
program  maintained  by  the  Company  prior  to  Closing,   as  modified  in  a
commercially   reasonable   manner  in  accordance  with  changing   regulatory,
scientific  and  technical  factors.  BP shall not  indemnify  the Company  with
respect to any  liabilities  for wrongful death or personal injury to the extent
caused by the failure of the Company to maintain a Product  Stewardship  Program
consistent  with that  maintained  by the Company  prior to the Closing.  In the
Company's  opinion,  the Product  Stewardship  Program has been  maintained in a
manner  consistent  with these  requirements.  Unifrax intends to defend ceramic
fiber claims vigorously.
<PAGE>

ENVIRONMENTAL MATTERS

The Company is subject to loss contingencies  pursuant to various federal, state
and local environmental laws and regulations. These include possible obligations
to remove or mitigate the effects on the environment of the placement,  storage,
disposal or release of certain  chemical or petroleum  substances by the Company
or by other parties.

The Company may be named as a potentially  responsible party ("PRP") pursuant to
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended  ("CERCLA" or "Superfund") or comparable state law in connection with
off-site  disposal of hazardous  substances at three sites,  and The Carborundum
Company has entered into a Consent Decree with the New York State  Department of
Environmental Conservation to remediate contamination at the facility located in
Sanborn,  New York. While the Company's ultimate clean-up liability at the sites
at which the  Company is a  potential  PRP is not  presently  determinable,  the
Company does not expect to incur any material  liability  with respect to any of
these sites,  individually or in the aggregate, as a result of its activities at
these sites.  Furthermore,  BP America has agreed to  indemnify  the Company for
certain  environmental  liabilities,  which might  ultimately  exist,  under the
Recapitalization  Agreement.  In addition,  BP America has assumed liability for
other potential off-site clean-up obligations  associated with Carborundum.  The
locations at which the Company has maintained  potential  off-site liability and
the Carborundum Sanborn, New York facility are described below.

KLINE TRAIL SITE. In 1984, the Company  voluntarily advised the State of Indiana
of potential unauthorized disposal of waste at an Indiana site by a transporter.
No response from the state has been received,  and no further  information about
the  potential  for  remediation  costs at the site  has  been  received  by the
Company. It is expected that little or no liability will be associated with this
site.

PCB INC.,  SITE.  The New  Carlisle,  Indiana  facility  received a request  for
information from the EPA in 1994 concerning potential responsibility for cleanup
of the PCB  Treatment  site  located in Kansas  City,  Kansas  and Kansas  City,
Missouri.  Records  indicate that a number of  capacitors  from the New Carlisle
facility of The Carborundum Company,  now Unifrax Corporation,  were sent to the
PCB  Treatment  site. A response  documenting  the timely  destruction  of those
materials  was  submitted  to the EPA. In  September  1997 the EPA  contacted BP
America via letter to verify  that a total of 10,900  pounds of  capacitors  and
transformers had been sent to the site by BP America/Carborundum.  No additional
information  on  cleanup  timing or cost has since been  received.  Based on the
total  pounds  delivered  by all  parties to the site,  the  liability,  if any,
ultimately  attributable  to BP America or Carborundum is not expected to have a
material adverse effect on the Company's financial position.

OSAGE METALS SITE.  Osage Metals Co., Inc. was a scrap metal  business in Kansas
City, Kansas,  that reclaimed metals from various sources,  including metal from
used  transformers  and capacitors.  Osage  purchased  transformer and capacitor
scrap metal from PCB Treatment Co., Inc.  ("PCB Inc." above) and others.  An EPA
sampling  of soil at the  Osage  site  indicated  the  presence  of PCB and lead
contamination.  In early 1998 BP  America  was  notified  by the EPA that it was
potentially  liable under CERCLA for response  costs at the Osage site. In 1999,
BP  America  made  a  de  minimus  payment  which   substantially   settled  its
environmental  obligations for this site.  Consequently,  the liability, if any,
ultimately  attributable  to BP America or Carborundum is not expected to have a
material adverse effect on the Company's financial position.

SHULMAN SITE.  The Company has potential  liability  with respect to the Shulman
Site in St. Joseph  County,  Indiana.  The site is a landfill  which the Company
believes  to have been  contaminated  by  chemicals  migrating  from an adjacent
facility.  Plant trash from the New Carlisle facility was hauled to the site. An
agreement has been reached pursuant to which the Company,  as part of a response
group,  agreed to assume  approximately 5% of certain  response costs,  which to
date include $1.7 million for  installation of a water line. The Company's share
of that  cost is less than  $100,000.  The owner of the  adjacent  facility  has
assumed the bulk of site remediation  costs to date. It is anticipated that site
remediation  will  ultimately  involve  installing a clay cap over the site, the
cost of which is not yet known.
<PAGE>

SANBORN SITE. Under the terms of an agreement with BP America,  Unifrax leases a
portion of the present  manufacturing  facilities on this site. The  Carborundum
Company's  Sanborn,  New York,  site was used by a number of former  Carborundum
operations. Testing in the area has found that contamination by volatile organic
compounds  is  present in the soil and  groundwater.  Neither  past nor  current
operations of Unifrax are believed to have contributed to, or to be contributing
to, the existence of this  contamination.  While The Carborundum Company entered
into a Consent  Decree  with the State of New York under which it was to conduct
remedial  activities  at the site,  BP America  has taken  title to and  assumed
liability for the  remediation of this property as of October 30, 1996.  Efforts
to  remediate  the  groundwater  at this site are  expected to continue for some
time.

Under the terms of the Recapitalization Agreement, BP America assumed liability,
and the rights to recovery from third parties, for environmental remediation and
other similar required actions with respect to certain environmental obligations
of Unifrax, including the above, which existed as of the Closing Date.

The Company may, in the future, be involved in further environmental assessments
or clean-ups.  While the ultimate requirement for any such remediation,  and its
cost, is presently not known,  and while the amount of any future costs could be
material  to the  results  of  operations  in  the  period  in  which  they  are
recognized,  the Company does not expect these costs, based upon currently known
information and existing requirements,  to have a material adverse effect on its
financial position.

LEGAL PROCEEDINGS

In addition to the ceramic  fiber and  environmental  matters  discussed  above,
BP/Carborundum and Unifrax are involved in litigation relating to various claims
arising out of their  operations  in the normal  course of  business,  including
product  liability  claims.  While  the  outcomes  of this  litigation  could be
material to the results of  operations  in the period  recognized,  based on the
current claims asserted the management of the Company believes that the ultimate
liability,  if any, resulting from such matters will not have a material adverse
effect on the Company's financial position.

The  Carborundum  Company  has been  named in  numerous  legal  claims  alleging
pre-Closing  asbestos exposure.  None of the current or past products of Unifrax
are asbestos-containing  materials, as defined by OSHA (29CFR1900.1001(b)).  For
these claims related to pre-Closing  Carborundum Company matters, BP America has
responsibility under the  Recapitalization  Agreement and is managing the claims
directly.

NOTE D - COMPREHENSIVE INCOME

Comprehensive  income for the three-month and nine-month periods ended September
30, 1998 and 1999 consisted of the following (in thousands):


<TABLE>
<CAPTION>

                                Three months ended September 30         Nine months ended September 30
                                       1998           1999                  1998               1999
                                       ----           ----                  ----               ----
<S>                                 <C>            <C>                   <C>                <C>
Net income                          $  929         $ 1,196               $ 3,800            $ 2,854
Change in foreign currency
      translation adjustment            39             (19)                    5               (242)
                                       ---           -----                 -----              -----
Comprehensive income                $  968         $ 1,177               $ 3,805            $ 2,612
                                       ===           =====                 =====              =====

</TABLE>
<PAGE>

NOTE E - INTEREST RATE SWAP AGREEMENT

Effective  October  1,  1999,  the  company  entered  into  interest  rate  swap
agreements to  effectively  convert  fixed-rate  debt with a notional  principal
amount of $25,000,000 to  variable-rate  debt.  Under the agreements the Company
receives  from,  or pays to,  the banks an  amount  computed  as the  difference
between  interest based upon a fixed rate of 6.2% per annum,  and interest based
upon the established LIBOR rate, which at September 30, 1999 was 5.4%.

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

          FORWARD LOOKING STATEMENTS

          Statements  included in this  Management  Discussion  and  Analysis of
          Financial  Condition and Results of  Operations  and elsewhere in this
          document  that do not relate to present or historical  conditions  are
          "forward  looking  statements"  within  the  meaning  of that  term in
          Section 27A of the Securities Act of 1933, as amended,  and of Section
          21F of the  Securities  Exchange Act of 1934,  as amended.  Additional
          oral or written  statements  may be made by the  Company  from time to
          time, and such  statements may be included in documents filed with the
          Securities and Exchange  Commission.  Such forward looking  statements
          involve risks and uncertainties  which could cause results or outcomes
          to differ  materially  from those  expressed in such  forward  looking
          statements.  Forward looking statements  include,  without limitation,
          any  statement  that may predict,  forecast,  indicate or imply future
          results,  performance  or  achievements,  and may  contain  the  words
          "believe",   "anticipate",   "expect",  "estimate",  "project",  "will
          continue",  "will  result",  or words or phrases  of similar  meaning.
          Among the  important  factors on which such  statements  are based are
          assumptions  concerning the  continuing  strength of the ceramic fiber
          market on which  the  Company  is  substantially  dependent,  changing
          prices for ceramic fiber  products,  acceptance  of new products,  the
          status of  health  and  safety  issues  affecting  the  ceramic  fiber
          industry  in general  and the  Company in  particular,  the  Company's
          continuing  ability to operate under the  restrictions  imposed by the
          substantial  indebtedness which it is subject to, the risks associated
          with international operations, the impact of environmental regulations
          on the  Company's  operations  and property  and related  governmental
          regulations, and the continuing availability of certain raw materials,
          including vermiculite which is purchased from an overseas source.

          THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTHS ENDED
          SEPTEMBER 30, 1998

          Net sales for the third  quarter of 1999  decreased by $0.2 million or
          0.9% from $20.8 million in 1998 to $20.6 million in 1999, due to lower
          sales in some traditional  markets including  petrochemical and steel,
          and  in  porosity   controlled  products  resulting  from  changes  in
          automotive industry airbag system designs.

          Gross  profit  remained  unchanged  at $10.3  million in both 1998 and
          1999.  Gross profit as a percentage of net sales  increased from 49.9%
          in  1998  to  50.2%  in  1999,  primarily  as  a  result  of  improved
          manufacturing efficiencies.

          Selling,   general  and  administrative  expenses  decreased  by  $0.5
          million,  or 7.6% from $6.1  million in 1998 to $5.6  million in 1999,
          primarily  as a result of lower  spending in sales and  marketing as a
          consequence  of lower sales volume,  and lower  administrative  costs.
          Selling,  general and  administrative  expenses as a percentage of net
          sales decreased from 29.4% in 1998 to 27.4% in 1999.

          Operating  income  increased  by $0.4  million,  or  10.1%,  from $4.3
          million  in  1998 to $4.7  million  in  1999.  Operating  income  as a
          percentage of net sales increased from 20.5% in 1998 to 22.8% in 1999,
          as a result of the factors previously indicated.
<PAGE>

          Interest expense decreased by $0.3 million,  or 8.4% from $3.1 million
          in 1998 to $2.8  million in 1999 due  primarily  to the lower level of
          debt in 1999.  Interest expense decreased as a percentage of net sales
          from 14.8% in 1998 to 13.6% in 1999.

          Provision for income taxes  increased by $0.3  million,  or 83.3% from
          $0.4 million in 1998 to $0.7 million in 1999. The effective income tax
          rate  increased  from 29.5% in 1998 to 37.3% in 1999,  primarily  as a
          result of  recognizing,  during  1998,  certain  deferred tax benefits
          resulting  from the  Recapitalization  and due to losses  in  overseas
          subsidiaries for which no income tax benefit has been recognized.

          Net income  increased  by $0.3  million or 28.7% from $0.9  million in
          1998 to $1.2  million in 1999,  as a result of the factors  previously
          indicated. Net income as a percentage of net sales increased from 4.5%
          in 1998 to 5.8% in 1999.

          NINE MONTHS ENDED SEPTEMBER  30, 1999 COMPARED WITH NINE MONTHS
          ENDED SEPTEMBER 30, 1998

          Net sales for the first nine months of 1999  decreased by $2.2 million
          or 3.5% from  $64.5  million  in 1998 to $62.3  million in 1999 due to
          lower sales in some traditional markets,  including  petrochemical and
          steel,  and  in  porosity   controlled  products  due  to  changes  in
          automotive industry airbag system designs.

          Gross profit  decreased by $2.1 million or 6.5% from $32.1  million in
          1998 to $30.0  million in 1999.  Gross profit as a  percentage  of net
          sales  decreased from 49.8% in 1998 to 48.3% in 1999. The decrease was
          due to the lower  sales  volume and  downward  price  pressure  in the
          automotive market, and in some traditional markets.

          Selling, general and administrative expenses decreased by $1.3 million
          or 6.9% from $18.0 million in 1998 to $16.7 million in 1999, primarily
          as a  result  of  lower  spending  in  sales  and  administration  and
          non-recurring  reductions of liabilities  associated  with the product
          stewardship  program  and  retiree  medical  and  insurance  programs.
          Selling,  general and  administrative  expenses as a percentage of net
          sales decreased from 27.8% in 1998 to 26.8% in 1999.

          Operating income decreased by $0.9 million, or 6.1% from $14.2 million
          in 1998 to $13.3 million in 1999.  Operating income as a percentage of
          net sales  decreased  from 22.0% in 1998 to 21.4% in 1999, as a result
          of the factors previously indicated.

          Interest  expense  decreased by $0.5 million or 5.6% from $9.1 million
          in 1998 to $8.6  million in 1999  primarily  due to the lower level of
          debt in 1999.  Interest expense as a percentage of net sales decreased
          from 14.1% in 1998 to 13.8% in 1999.

          Provision for income taxes increased $0.3 million, or 17.3%, from $1.5
          million in 1998 to $1.8 million in 1999. The effective income tax rate
          increased  from 28.4% in 1998 to 38.3% in 1999,  primarily as a result
          of recognizing  during 1998,  certain deferred tax benefits  resulting
          from the Recapitalization  and due to losses in overseas  subsidiaries
          for which no income tax benefit has been recognized.

          Net income  decreased by $0.9  million,  or 24.9% from $3.8 million in
          1998 to $2.9  million  in 1999,  as a  result  of  factors  previously
          indicated. Net income as a percentage of net sales decreased from 5.9%
          in 1998 to 4.6% in 1999.

          LIQUIDITY AND CAPITAL RESOURCES

          During the nine-month  period ended  September 30, 1999, the Company's
          cash  provided by  operating  activities  increased by $1.3 million or
          13.8%,  from $9.2 million in 1998 to $10.5 million in 1999. The higher
          operating  cash flow was  primarily  the result of a reduction  in the
          level of inventories.
<PAGE>
          Cash used for  investing  activities  increased  $0.7 million or 39.2%
          from $1.7 million in 1998 to $2.4 million in 1999.  This  increase was
          due to higher capital spending.

          Cash used for financing activities decreased by $1.9 million from $7.1
          million in 1998 to $5.2 million in 1999.  During 1999 the Company made
          repayments of $1.5 million on its Term Loan, repurchased $2 million of
          Senior  Notes  and  repaid  $1.7  million,  net,  of its  $20  million
          revolving credit facility.

          The Company  expects that cash on hand,  cash flow from operations and
          borrowings  under the  available  credit  facility will be adequate to
          meet  its  anticipated  operating  requirements  and  planned  capital
          expenditures  over the next 12 months.  See Item 2,  "Forward  Looking
          Statements".

          LEGAL PROCEEDINGS

          Reference is made  to  the  information  included  in  Note  C to  the
          consolidated financial statements of the Company included under Item 1
          in this Form 10-Q, which is hereby incorporated herein by reference.

          IMPACT OF YEAR 2000

          Some of the Company's  older computer  programs were written using two
          digits  rather than four to define the  applicable  year. As a result,
          those computer  programs would recognize a date using "00" as the year
          1900  rather  than the year  2000.  This  could  have  caused a system
          failure or  miscalculation  resulting in  disruptions  of  operations,
          including,  among  other  things,  a  temporary  inability  to process
          transactions,  send  invoices,  or engage in similar  normal  business
          activities.

          The Company has completed an assessment of its Year 2000 readiness and
          believes  it has  identified  all  significant  areas  with  potential
          date-related  problems.  The  Company  has  determined  which of those
          identified areas are critical to the normal operation of the business.
          As of September  30, 1999,  the Company  believes it has completed and
          put into  production  corrections or upgrades to all critical  systems
          thereby making them ready for the date change to the year 2000.

          In  addition  to the  critical  systems  identified,  there  are other
          systems  or  pieces  of  equipment  which  assist  in  the  day to day
          operation of the Company, but are not vital to business operations. An
          action  plan is in place to  provide  for the Year 2000  readiness  of
          these other items either  through  upgrade,  repair,  date rollback or
          replacement.  This is a continuous  process which is underway now, and
          will be  continuing  through 1999.  Although the Company  expects that
          these  other  items  will be Year 2000  compliant  by late  1999,  the
          Company does not believe these other items will seriously  disrupt the
          orderly  conduct of its  business  even if not  corrected  or replaced
          within the time frame.

          It is the  Company's  current  policy to keep much of its  operational
          software, both critical and noncritical on maintenance contracts which
          provide the most  current  versions  of the  software as a part of the
          contracts.  Most vendors have supplied Year 2000 compliant software as
          a part of their normal product  enhancement  and evolution,  and these
          upgrades  have  been  or  are  being  applied  to  achieve  Year  2000
          readiness.  The Company  understands  from these software vendors that
          they have performed  substantial  product quality assurance testing of
          their  products  prior  to  general  release,  contributing  to  their
          assurance of their  products' Year 2000  readiness.  In addition,  the
          Company, as part of its implementation  process,  performed additional
          testing and  verification  of  substantially  all software,  including
          software not under  maintenance  contracts.  Although the software has
          been tested to the best of the supplier's  and the Company's  ability,
          there is no absolute assurance that these various software systems are
          indeed Year 2000 compliant.
<PAGE>

          The  total  Year  2000  project  cost is  estimated  at  approximately
          $250,000 which includes  $125,000 for the purchase of new software and
          equipment that will be capitalized, and $125,000 that will be expensed
          as   incurred.   To  date  the  Company  has   incurred  and  expensed
          approximately  $100,000. All funds used for Year 2000 remediation have
          been  treated  as a part of normal  operating  expenses  and  on-going
          capital budgeting.

          The costs of the  project  and the  completion  date of the  remaining
          items are based on  management's  best  estimates  which were  derived
          using numerous  assumptions of future events,  including the continued
          availability of certain resources and other factors. However there can
          be no  assurance  that these  estimates  will be  achieved  and actual
          results  could  differ  materially  from those  anticipated.  Specific
          factors that might cause  material  differences  include,  but are not
          limited to, the  availability  and cost of  personnel  trained in this
          area,  the ability to locate and correct all relevant  computer  codes
          and similar  uncertainties.  The Company's review of the status of key
          supplier's Year 2000 readiness  leads  management to expect that there
          will be no  material  adverse  impact  in key  suppliers'  ability  to
          provide the Company  with the  products  and  services  needed for the
          orderly conduct of business in the year 2000 and beyond.  In addition,
          the  Company  has not been  able to  identify  any  probable  indirect
          material  adverse  impact on its  operations  or  financial  condition
          likely to result  from the  effects of the Year 2000  problems  on its
          vendors, customers, agents, or other third parties, but the ability to
          assess  such  effects is  extremely  limited  and the failure of third
          parties  to  appropriately  address  Year  2000  problems  could  have
          material adverse effects on the Company.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          At September 30, 1999,  the Company has  approximately  $16 million of
          variable rate long-term debt. In addition,  effective October 1, 1999,
          the Company  entered into interest rate swap agreements to effectively
          convert  fixed-rate  debt  with a  notional  principal  amount  of $25
          million to  variable-rate  debt. Under these  agreements,  the Company
          makes or receives  payments equal to the difference  between fixed and
          variable   interest  rate  payments  on  the  notional  amount.  A  1%
          fluctuation  in interest  rates would change  future  annual  interest
          expense by approximately $405,000.
<PAGE>

PART II.   OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

          Reference  is  made  to  the  information  included  in  Note C to the
          consolidated  financial statements of the Company and included in this
          Form 10-Q, which is hereby incorporated herein by reference.

ITEM 2.   CHANGES IN SECURITIES

          None.

ITEM 3.   DEFAULTS ON SENIOR SECURITIES

          None.

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

          None.

ITEM 5.   OTHER INFORMATION

          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

               27.1        Financial Data Schedule

          (b)  No reports on Form 8-K have been filed during the period covered
               by this report.
<PAGE>

                                   SIGNATURES

     PURSUANT TO THE  REQUIREMENTS  OF THE SECURITIES  EXCHANGE ACT OF 1934, THE
REGISTRANT  HAS DULY  CAUSED  THIS  REPORT  TO BE  SIGNED  ON ITS  BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

                                      UNIFRAX CORPORATION

DATE: November  12, 1999              BY: /S/    WILLIAM P. KELLY
      ------------------              -------------------------------
                                      William P. Kelly, President and
                                      Chief Executive Officer

DATE: November 12, 1999               BY: /S/    MARK D. ROOS
      -----------------               -------------------------------
                                      Mark D. Roos, Vice President
                                      and Chief Financial Officer