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 June 30, 1999


                        Commission File Number: 333-10611

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


           Delaware                                      34-1535916
(State or other jurisdiction               (I.R.S. Employer Identification No.)
     of incorporation)

               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 Financial Statements (Unaudited)

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

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

         Condensed Consolidated Statements of Cash Flows for the
           Six-months ended June 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 and Use of Proceeds........................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           June 30
                                                                                              1998                 1999
                                                                                              ----                 ----
<S>                                                                                 <C>                  <C>
ASSETS
Current assets:
     Cash                                                                            $           43      $          463
     Accounts receivable, less allowances of $708
         and $725, respectively                                                              12,953              13,177
     Inventories                                                                             10,343               9,377
     Deferred income taxes                                                                    2,494               2,494
     Prepaid expenses and other current assets                                                  220                 331
                                                                                     --------------       -------------
Total current assets                                                                         26,053              25,842

Property, plant and equipment, at cost                                                       74,363              75,257
     Less accumulated depreciation and amortization                                         (37,656)            (39,709)
                                                                                     --------------       -------------
                                                                                             36,707              35,548

Deferred income taxes                                                                        22,402              21,280
Organization costs, net of accumulated amortization
     of $1,642 and $2,017, respectively                                                       3,279               2,904
Other assets                                                                                    213                 206
                                                                                     --------------       -------------
                                                                                     $       88,654       $      85,780
                                                                                     ==============       =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Note payable -- affiliate                                                          $     7,000         $     7,000
     Current portion of long term debt                                                        3,750               7,250
     Accounts payable                                                                         3,306               1,767
     Accrued expenses                                                                         7,139               7,240
                                                                                     --------------       -------------
Total current liabilities                                                                    21,195              23,257

Long term debt                                                                              105,950              99,750
Accrued postretirement benefit cost                                                           3,472               3,301
Other long-term obligations                                                                     161                 161
                                                                                     --------------      --------------
Total liabilities                                                                           130,778             126,469

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 $2,724, respectively,
     including dividends in arrears)                                                             --                  --
Additional paid-in capital                                                                   42,520              42,520
Accumulated deficit                                                                         (84,361)            (82,703)
Accumulated other comprehensive loss                                                           (283)               (506)
                                                                                     ---------------     ---------------
Total stockholders' deficit                                                                 (42,124)            (40,689)
                                                                                     ---------------     ---------------
                                                                                     $       88,654      $       85,780
                                                                                     ===============     ===============
</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 June 30             Six Months Ended June 30
                                                     --------------------------             ------------------------
                                                        1998           1999                     1998           1999
                                                        ----           ----                     ----           ----
<S>                                                 <C>             <C>                     <C>            <C>
Net Sales                                           $   22,023      $  20,520               $   43,757     $  41,693

Cost of goods sold                                      11,067         10,755                   21,979        21,978
                                                   ------------    -----------             ------------   ----------
Gross margin                                            10,956          9,765                   21,778        19,715

Selling, general and
Administration expenses                                  5,982          5,299                   11,848        11,076
                                                   ------------    -----------             ------------   ----------
Operating income                                         4,974          4,466                    9,930         8,639

Other income (expense), net                                 24            (53)                     103          (135)
                                                   ------------    -----------             -----------    -----------
Income before interest and income taxes                  4,998          4,413                   10,033         8,504

Interest expense                                        (3,011)        (2,858)                  (6,042)       (5,789)
                                                   ------------    -----------             ------------   -----------
Income before income taxes                               1,987          1,555                    3,991         2,715

Provision for income taxes                                 609            558                    1,120         1,057
                                                   -----------    ------------             -----------    ----------
Net Income                                         $     1,378    $       997              $     2,871    $    1,658
                                                   ===========    ============             ===========    ==========
</TABLE>

See accompanying notes to condensed consolidated financial statements.


<PAGE>

                               Unifrax Corporation
                 Condensed Consolidated Statements of Cash Flows
                           (Unaudited - In Thousands)

                                                      Six Months Ended June 30
                                                        1998            1999
                                                        ----            ----
OPERATING ACTIVITIES
Net income                                         $    2,871       $   1,658
Depreciation and amortization                           2,841           2,762
Other adjustments and changes in operating
  assets and liabilities                               (1,911)            578
                                                   -----------      ----------
Cash provided by operating activities                   3,801           4,998

INVESTING ACTIVITIES
Capital expenditures                                     (976)         (1,899)
Proceeds from sales of property, plant
  and equipment                                            28              21
                                                   -----------     -----------
Cash used in investing activities                        (948)         (1,878)

FINANCING ACTIVITIES
Repurchase of Senior Notes                                 --          (2,000)
Borrowings under revolving loan                        16,150          18,850
Repayments of revolving loan                          (18,050)        (18,550)
Repayments of term loan                                (1,000)         (1,000)
                                                  ------------    ------------
Cash used in financing activities                      (2,900)         (2,700)

Net increase(decrease) in cash                            (47)            420
Cash--beginning of period                                 359              43
                                                  ------------    ------------
Cash--end of period                               $        312    $       463
                                                  ============    ============

See accompanying notes to condensed consolidated financial statements.

<PAGE>

                               Unifrax Corporation
              Notes to Condensed Consolidated Financial Statements
                                 June 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 June 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                  June 30
                                             1998                        1999
                                          -----------                  --------

       Raw materials and supplies         $     3,459               $     4,049
       Work in process                          2,008                     1,495
       Finished products                        4,341                     3,389
                                          -----------               -----------
                                                9,808                     8,933

       Adjustment to LIFO Cost                    535                       444
                                          -----------               -----------
                                          $    10,343               $     9,377
                                          ===========               ===========

<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.

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
sites 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.  Through
April 1997 the EPA had incurred  $1.2 million of the  estimated  $1.8 million in
cleanup  costs  related to the Osage site and was seeking  recovery of the costs
from  potentially  responsible  parties.  Based on documents BP America received
from the EPA showing volumetric rankings, BP  America/Carborundum  accounted for
approximately one tenth of one percent of the total weight of capacitors sent to
PCB Treatment, Inc. 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 includes $1.7 million for installation of a water line. The Company's share
of that cost is under $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.

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. 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 six-month  periods ended June 30,
1998 and 1999 consisted of the following (in thousands):

                           Three months ended June 30   Six months ended June 30
                              1998         1999            1998          1999
                              ----         ----            ----          ----
Net income                  $ 1,378      $  997         $ 2,871       $  1,658
Change in foreign currency
translation adjustment            2         (34)            (33)          (223)
                            -------      -------        --------      ---------
Comprehensive income        $ 1,380      $  963         $ 2,838       $  1,435
                            =======      =======        ========      =========

Accumulated  other  comprehensive  loss is  comprised  of the  foreign  currency
translation adjustments.

                                                             8

<PAGE>



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 June 30, 1999 Compared With Three Months Ended June 30, 1998

Net sales for the second  quarter of 1999 decreased by $1.5 million or 6.8% from
$22.0  million  in 1998 to $20.5  million  in 1999,  due to lower  sales in some
traditional  market  applications,  including  petrochemicals  and  steel and in
porosity-controlled products due to changes in automotive industry airbag system
designs.

Gross profit decreased by $1.2 million,  or 10.9%, from $11.0 million in 1998 to
$9.8 million in 1999.  Gross profit as a percentage of net sales  decreased from
49.7% in 1998 to 47.6% in 1999.  The gross profit  decrease was primarily due to
the  lower  sales  and  lower  selling  prices  as a result  of  competition  in
automotive products, and in some traditional markets.

Selling,  general and  administration  expenses  decreased by $0.7  million,  or
11.4%, from $6.0 million in 1998 to $5.3 million in 1999,  primarily as a result
of   nonrecurring   reductions  of  liabilities   associated  with  the  product
stewardship  programs  and retiree  medical  and  insurance  programs.  Selling,
general and  administration  expense as a percentage of net sales decreased from
27.2% in 1998 to 25.8% in 1999.

Operating income decreased by $0.5 million,  or 10.2%, from $5.0 million in 1998
to $4.5 million in 1999. Operating income as a percentage of net sales decreased
from  22.6%  in 1998 to 21.8% in 1999,  as a result  of the  factors  previously
indicated.

Interest expense decreased by $0.1 million, or 5.1% from $3.0 million in 1998 to
$2.9 million in 1999 due to the lower level of long term debt.  Interest expense
increased as a percentage of net sales from 13.7% in 1998 to 13.9% in 1999.

Provision  for income taxes  remained at $0.6 million for the three months ended
June 30, 1998 and 1999.  The effective  income tax rate  increased from 30.6% in
1998 to 35.9% 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 $0.4 million or 27.6% from $1.4 million in 1998 to $1.0
million in 1999, as a result of the factors previously indicated.  Net income as
a percentage of net sales decreased from 6.3% in 1998 to 4.9% in 1999.

Six Months Ended June 30, 1999 Compared With Six Months Ended June 30, 1998

Net sales for the first six  months of 1999  decreased  by $2.1  million or 4.7%
from $43.8  million in 1998 to $41.7  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 9.5% from $21.8 million in 1998 to
$19.7 million in 1999.  Gross profit as a percentage of net sales decreased from
49.8% in 1998 to 47.3% in 1999.  The gross profit  decrease was due to the lower
sales volume and downward price pressure in the automotive  market,  and in some
traditional markets.

Selling,  general and administration  expenses decreased by $0.8 million or 6.5%
from $11.9 million in 1998 to $11.1 million in 1999,  decreasing as a percentage
of net  sales  from  27.1% in 1998 to 26.6% in 1999,  primarily  as a result  of
nonrecurring  reductions of liabilities  associated with the product stewardship
programs and retiree medical and insurance programs.

Operating income  decreased by $1.3 million,  or 13.0% from $9.9 million in 1998
to $8.6 million in 1999. Operating income as a percentage of net sales decreased
from  22.7%  in 1998 to 20.7% in 1998,  as a result  of the  factors  previously
indicated.

Interest expense  decreased by $0.2 million or 4.2% from $6.0 million in 1998 to
$5.8 million in 1999 due to the lower level of long term debt.  Interest expense
as a percentage of net sales increased from 13.8% in 1998 to 13.9% in 1999.

Provision  for income  taxes  remained at $1.1  million for the six months ended
June 30, 1998 and 1999.  The effective  income tax rate  increased from 28.1% in
1998 to 38.9% 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 $1.2 million, or 42.2% from $2.9 million in 1998 to $1.7
million in 1999, as a result of factors  previously  indicated.  Net income as a
percentage of net sales decreased from 6.6% in 1998 to 4.0% in 1999.

Liquidity and Capital Resources

During the six-month  period ended June 30, 1999, the Company's cash provided by
operating  activities  increased by $1.2 million or 31.5%,  from $3.8 million in
1998 to $5.0  million in 1999.  This  increase was  principally  the result of a
reduction  in the level of  inventories,  offset  in part by lower  net  income,
depreciation and amortization.

Cash used in  investing  activities  increased  $0.9  million or 98.1% from $1.0
million in 1998 to $1.9 million in 1999. This increase was due to higher capital
spending.

Cash used in  financing  activities  decreased by $0.2 million or 6.9% from $2.9
million  in 1998 to $2.7  million  in  1999.  During  1999  the  Company  made a
prepayment  of $1.0 million on its Term Loan and  purchased  $2.0 million of its
Senior Notes.

Management  believes that cash flows from  operations  and the available  credit
facility will be sufficient to fund operating and capital expenditure needs over
the next 12 months.


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,  and has  developed a  remediation  plan for
non-compliant,  critical areas. Of those non-compliant,  critical systems, as of
June 30, 1999, the Company had completed and put into production  corrections or
upgrades to all but one identified  system.  The completed  systems  include all
line of business software,  support software and networks, with the exception of
payroll.  Payroll is the final critical  system,  and is being  addressed by the
outsourcing  vendor.  Subsequent to June 30, 1999, the vendor completed testing,
and the payroll system,  to the best of the Company's  knowledge and belief,  is
now fully compliant.

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 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.

The total Year 2000 project cost is estimated at  approximately  $250,000  which
includes  $100,000 for the purchase of new software and  equipment  that will be
capitalized, and $150,000 that will be expensed as incurred. To date the Company
has incurred and expensed  approximately  $125,000  primarily for the assessment
effort and remediation of the line of business software. 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

Not applicable.

<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:        August 12, 1999              By: /s/    William P. Kelly
             ---------------                  -----------------------
                                          William P. Kelly, President
                                          and Chief Executive Officer


Date:        August 12, 1999              By: /s/    Mark D. Roos
             ---------------                  -----------------------
                                          Mark D. Roos, Vice President
                                          and Chief Financial Officer