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SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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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, 2000

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

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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 ___

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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, 2000 and December 31, 1999                                        |  | 1       
|
|           | Condensed Consolidated Statements of Income for the
     Three-month and nine-month periods ended September 30, 2000 and 1999 |  | 2       
|
|           | Condensed Consolidated Statements of Cash Flow for the
     Nine-months ended September 30, 2000 and 1999                     |  | 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                                                                    |  | 12      
|
|PART II.   | OTHER INFORMATION                                                                                                            
|
|Item 1.    | Legal Proceedings                                                                                                             |  | 13      
|Item 2.    | Changes in Securities and Use of Proceeds                                                                                     |  | 13      
|Item 3.    | Defaults on Senior Securities                                                                                                 |  | 13      
|Item 4.    | Submission of Matters to a Vote of Security Holders                                                                           |  | 13      
|Item 5.    | Other Information                                                                                                             |  | 13      
|Item 6.    | Exhibits and Reports on Form 8-K                                                                                              |  | 13      
|Signatures |                                                                                                                               |  | 14      

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Unifrax Corporation
Condensed Consolidated Balance Sheets
(Unaudited - In Thousands, Except Share Data)

|                                                                                                                                                                                                                                                                  | December 311999 |  | September 302000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------- |  | ----------------
|ASSETS                                                                                                                                                                                                                                                           
|Current assets:                                                                                                                                                                                                                                                  
|Cash                                                                                                                                                                                                                                                              | $        0      |  | $    2,148      
|Accounts receivable, less allowances of $821
          and $904, respectively                                                                                                                                                                                     | 14,697          |  | 16,278          
|Inventories                                                                                                                                                                                                                                                       | 9,403           |  | 8,834           
|Deferred income taxes                                                                                                                                                                                                                                             | 2,705           |  | 2,705           
|Prepaid expenses and other current assets                                                                                                                                                                                                                         | 233             |  | 304             
|Total current assets                                                                                                                                                                                                                                              | 27,038          |  | 30,269          
|
|Property, plant and equipment, at cost                                                                                                                                                                                                                            | 76,455          |  | 78,302          
|Less accumulated depreciation and amortization                                                                                                                                                                                                                    | (40,854)        |  | (43,890)        
|                                                                                                                                                                                                                                                                  | 35,601          |  | 34,412          
|
|Deferred income taxes                                                                                                                                                                                                                                             | 19,334          |  | 16,059          
|Financing costs, net of accumulated amortization
     of $2,392 and $2,939, respectively                                                                                                                                                                          | 2,529           |  | 2,892           
|Other assets                                                                                                                                                                                                                                                      | 76              |  | 62              
|                                                                                                                                                                                                                                                                  | $   84,578      |  | $   83,694      
|
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                                                                                            
|Current liabilities:                                                                                                                                                                                                                                             
|Current portion of long term debt                                                                                                                                                                                                                                 | 6,250           |  | 0               
|Accounts payable                                                                                                                                                                                                                                                  | 3,642           |  | 2,598           
|Accrued expenses                                                                                                                                                                                                                                                  | 7,699           |  | 12,929          
|Total current liabilities                                                                                                                                                                                                                                         | 17,591          |  | 15,527          
|
|Long term debt                                                                                                                                                                                                                                                    | 100,900         |  | 96,000          
|Accrued postretirement benefit cost                                                                                                                                                                                                                               | 3,356           |  | 3,436           
|Other long-term obligations                                                                                                                                                                                                                                       | 162             |  | 164             
|Total liabilities                                                                                                                                                                                                                                                 | 122,009         |  | 115,127         
|
|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 $2,836 and $2,949, respectively,
     including dividends in arrears) | --              |  | --              
|Additional paid-in capital                                                                                                                                                                                                                                        | 42,520          |  | 42,520          
|Accumulated deficit                                                                                                                                                                                                                                               | (79,387)        |  | (73,254)        
|Accumulated other comprehensive income                                                                                                                                                                                                                            | (564)           |  | (699)           
|Total stockholders' deficit                                                                                                                                                                                                                                       | (37,431)        |  | (31,433)        
|                                                                                                                                                                                                                                                                  | $     84,578    |  | $     $83,694   
|See accompanying notes to condensed consolidated financial statements.                                                                                                                                                                                           

Unifrax Corporation

Condensed Consolidated Statements of Income
(Unaudited - In Thousands)

|                                                 | Three Months Ended September 30 |           | Nine Months Ended September 30
|------------------------------------------------ | ------------------------------- | --------- | ------------------------------
|                                                 | 1999                            | 2000      |                               
|
|Net Sales                                        | $  20,588                       | $  25,141 |                               
|
|Cost of good sold                                | 10,252                          | 12,157    |                               
|Gross margin                                     | 10,336                          | 12,984    |                               
|
|Selling, general and     administrative expenses | 5,643                           | 7,246     |                               
|Operating income                                 | 4,693                           | 5,738     |                               
|
|Other income (expense), net                      | 25                              | (18)      |                               
|Income before interest and income taxes          | 4,718                           | 5,720     |                               
|
|Interest expense                                 | (2,809)                         | (2,594)   |                               
|Income before income taxes                       | 1,909                           | 3,126     |                               
|
|Provision for income taxes                       | 713                             | 1,100     |                               
|Net Income                                       | $1,196                          | $2,026    |                               

See accompanying notes to condensed consolidated financial statements.

# Unifrax CorporationCondensed Consolidated Statements of Cash Flows

# (Unaudited - In Thousands)

`Nine Months Ended September 30
                                                                                      ------------------------------
                                                                                           1999                 2000
                                                                                           -----                ----
OPERATING ACTIVITIES
Net income                                                                               $ 2,854             $ 6,133
Depreciation and amortization                                                              4,099               3,884
Other adjustments and changes in operating assets and liabilities                          3,573               7,341
                                                                                          ------              ------
Cash provided by operating activities                                                     10,526              17,358

INVESTING ACTIVITIES
Capital expenditures                                                                     (2,434)             (3,153)
Other                                                                                         30               (907)
                                                                                         -------             -------
Cash used in investing activities                                                        (2,404)             (4,060)

FINANCING ACTIVITIES
Repurchase of Senior Notes                                                               (2,000)                   0
Borrowings under revolving loan                                                           19,050              14,350
Repayments of revolving loan                                                            (20,750)            (19,250)
Repayment of term loan                                                                   (1,500)             (6,250)
                                                                                         -------             -------
Cash used in financing activities                                                        (5,200)            (11,150)

Net change in cash                                                                         2,922               2,148
Cash--beginning of period                                                                     43                   0
                                                                                         -------              ------
Cash--end of period                                                                      $ 2,965              $2,148
                                                                                         =======              ======`

See accompanying notes to condensed consolidated financial statements.

# Unifrax Corporation

# Notes to Condensed Consolidated Financial Statements
September 30, 2000

## 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, 2000, are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and the notes
thereto for the year ended December 31, 1999, 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
                                                                       1999                          2000
                                                                -----------                  ------------
         Raw materials and supplies                                  $ 4,006                       $ 3,081
         Work in process                                               1,480                         1,489
         Finished products                                             3,459                         3,760
                                                                       -----                         -----
                                                                       8,945                         8,330
         Adjustment to LIFO Cost                                         458                           504
                                                                       -----                         -----

                                                                     $ 9,403                       $ 8,834
                                                                     =======                       =======`

## 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 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 it 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, the Company has entered into agreements with
distributors of its product whereby it 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), have 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
locations at which the Company may have 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 Company 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 clean-up 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 the Company 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 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.

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 site, chiefly by means of soil vapor extraction, 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 (29 CFR
1900.1001(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, 1999 and 2000 consisted of the following (in thousands):

`Three months ended September 30         Nine months ended September 30
                                       1999           2000                  1999               2000
                                       ----           ----                  ----               ----
Net income                           $ 1,196        $  2,026               $ 2,854           $ 6,133
Change in foreign currency
      translation adjustment             (19)            (64)                 (242)             (135)
                                  -----------    ------------            ----------         ---------
Comprehensive income                 $ 1,177        $  1,962               $ 2,612           $ 5,998`

## 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, 2000 was
6.7%.

## NOTE F - EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial Accounting Standards Board (FASB)
issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The intended use
of the derivative and its designation as either a fair value hedge, a cash flow
hedge, or a foreign currency hedge, will determine when the gains or losses on
the derivatives are to be reported in earnings and when they are to be reported
as a component of other comprehensive income. The new standard must be adopted
for year 2001 financial reporting. The Company has not yet adopted SFAS No. 133.
However, management does not believe that adopting SFAS No. 133 will have a
significant impact on the result of operations of the Company. Based upon its
initial analysis, management believes that the interest rate swap agreements
will be categorized as a cash flow hedge and, accordingly, any unrealized gains
or losses will be deferred.

## NOTE G - SUBSEQUENT EVENTS

On October 4, 2000, the Company acquired the capital stock of
certain affiliates of Societe Europeenne de Produits Refractaires, a French
corporation (SEPR) and unit of Compagnie de Saint-Gobain, and certain assets of certain other affiliates
of SEPR, comprising the Carborundum Insulation Technology ceramic fiber business (the
Business).

The aggregate purchase price was $58.5 million, consisting of
$28.5 million in cash and the balance in the form of promissory notes issued by
the Company and Holdings. The Company issued two subordinated promissory notes,
each dated as of October 4, 2000, in favor of SEPR in the amounts of $8,000,000
and $1,500,000, respectively. Holdings issued two limited recourse promissory
notes, each dated as of October 4, 2000, in favor of SEPR and an SEPR affiliate
in the aggregate amount of $20,500,000. Holdings pledged 20,500 shares of newly
issued Series A Preferred Stock of the Company to SEPR as security for these
promissory notes. The cash portion of the purchase price was funded primarily
with the proceeds of a $50 million term and revolving loan Credit Agreement
entered into among the Company and certain of its affiliates and a group of
lenders.

## 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.
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. Additional oral or written forward looking
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. 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.

On October 4, 2000, the Company completed the acquisition of the worldwide ceramic fibre
business of SEPR and certain of its affiliates. Reference is made to the
information contained in the Form 8-K Report of the Company filed on October 19,
2000, which is incorporated herein by reference.

## Three Months Ended September 30, 2000 Compared With Three Months
Ended September 30, 1999

Net sales for the third quarter of 2000 increased by $4.5 million or 22.1% from
$20.6 million in 1999 to $25.1 million in 2000, due to higher sales in some
traditional market applications, including petrochemical, metals and ceramics,
and in automotive catalytic converter support systems, offset by lower sales in
porosity-controlled products due to changes in automotive industry airbag system
designs.

Gross profit increased by $2.7 million or 25.6% from $10.3 million in 1999 to $13.0
million in 2000. Gross profit as a percentage of net sales increased from 50.2%
in 1999 to 51.6% in 2000, primarily as a result of the higher sales volume,
improved manufacturing efficiencies and lower overall production costs.

Selling, general and administrative expenses increased by $1.6 million, or 28.4% from
$5.6 million in 1999 to $7.2 million in 2000, primarily as a result of volume
related expenses and increased provisions for incentive compensation in 2000.
Selling, general and administrative expenses as a percentage of net sales
increased from 27.4% in 1999 to 28.8% in 2000.

Operating income increased by $1.0 million, or 22.3%, from $4.7
million in 1999 to $5.7 million in 2000. Operating income as a percentage of net
sales remained unchanged at 22.8% in both 1999 and 2000, as a result of the
factors previously indicated.

Interest expense decreased by $0.2 million or 7.6%
from $2.8 million in 1999 to $2.6 million in 2000 due to the lower level of long
term debt offset in part by higher interest rates on certain variable rate
borrowings. Interest expense as a percentage of net sales decreased from 13.6%
in 1999 to 10.3% in 2000.

Provision for income taxes increased by $0.4 million or 54.3%
from $0.7 million in 1999 to $1.1 million in 2000. The effective income tax rate
decreased from 37.3% in 1999 to 35.2% in 2000, primarily as a result of the
effective income tax rates of the Companys foreign subsidiaries.

Net income increased by $0.8 million or 69.4% from $1.2 million
in 1999 to $2.0 million in 2000, as a result of the factors previously
indicated. Net income as a percentage of net sales increased from 5.8% in 1999
to 8.1% in 2000.

## Nine Months Ended September 30, 2000 Compared With
Nine MonthsEnded September 30, 1999

Net sales for the first nine months of 2000 increased by $9.6
million or 15.5% from $62.3 million in 1999 to $71.9 million in 2000 due to
higher sales in some traditional markets, including petrochemical, metals and
ceramics, and in automotive catalytic converter support systems, offset by lower
sales in porosity controlled products due to changes in automotive industry
airbag system designs.

Gross profit increased by $7.4 million or 24.6% from $30.0
million in 1999 to $37.4 million in 2000. Gross profit as a percentage of net
sales increased from 48.3% in 1999 to 52.0% in 2000. The increase was due to the
higher sales volume, improved plant operating efficiencies and lower overall
production costs.

Selling, general and administrative expenses increased by $3.3
million or 19.8% from $16.7 million in 1999 to $20.0 million in 2000, primarily
as a result of increased provisions for incentive compensations in 2000, and
non-recurring reductions of liabilities associated with the product stewardship
program and retiree medical and insurance programs in 1999. Selling, general and
administrative expenses as a percentage of net sales increased from 26.8% in
1999 to 27.8% in 2000.

Operating income increased by $4.1 million, or 30.6% from $13.3
million in 1999 to $17.4 million in 2000. Operating income as a percentage of
net sales increased from 21.4% in 1999 to 24.2% in 2000, as a result of the
factors previously indicated.

Interest expense decreased by $0.7 million, or 7.7% from $8.6
million in 1999 to $7.9 million in 2000 due to the lower level of long term
debt, offset in part by higher interest rates on certain variable rate
borrowings. Interest expense decreased as a percentage of net sales from 13.8%
in 1999 to 11.0% in 2000.

Provision for income taxes increased by $1.5 million or 86.6%
from $1.8 million in 1999 to $3.3 million in 2000. The effective income tax rate
decreased from 38.3% in 1999 to 35.0% in 2000, primarily as a result of the
effective income tax rates of the companys foreign subsidiaries.

Net income increased by $3.3 million, or 114.9% from $2.8
million in 1999 to $6.1 million in 2000, as a result of factors previously
indicated. Net income as a percentage of net sales increased from 4.6% in 1999
to 8.5% in 2000.

## Liquidity and Capital Resources

During the nine-month period ended September 30, 2000, the
Companys cash flows from operating activities increased by $6.8 million or
64.9%, from $10.5 million in 1999 to $17.3 million in 2000. This increase was
primarily the result of the higher net income. Cash flows from operating
activities also includes the effect of increased accrued liabilities for
incentive compensation programs in 2000 for which the Company will have a cash
outflow in 2001.

Cash used by investing activities increased by $1.7 million, or
68.9%, from $2.4 million in 1999 to $4.1 million in 2000, due to higher capital
spending related principally to the Companys capacity expansion project at
its Tonawanda, New York facility, and costs related to the acquisition of
Carborundum Insulation Technology.

Cash used by financing activitiesincreased by $5.9
million from $5.2 million in 1999 to $11.1 million in 2000. During 2000 the
Company repaid $6.3 million of its term loan, and at quarter end the Company was
undrawn on its revolver.

Management believes that cash flows from operations and the
available credit facility will be sufficient to fund normal operating
requirements and planned capital expenditures over the next 12 months. See
Forward Looking Statements.

As of October 30, 1996, the Company entered into a tax sharing
agreement with the principal stockholder, Unifrax Holding Co.
(Holding). The results of its operations are now included in the
consolidated U.S. corporate income tax return of Holding. The Companys
provision for income taxes is computed as if the Company filed its annual tax
returns on a separate Company basis. The current portion of the income tax
provision will be satisfied by a payment to or from Holding.

At December 31, 1999, the Company had Federal and State net
operating loss carryforwards totaling approximately $15.5 million which will be
available to offset future taxable income. These net operating loss
carryforwards expire in 2011 through 2019.

## 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.

## Effect of New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (FASB)
issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The intended use
of the derivative and its designation as either a fair value hedge, a cash flow
hedge, or a foreign currency hedge, will determine when the gains or losses on
the derivatives are to be reported in earnings and when they are to be reported
as a component of other comprehensive income. The new standard must be adopted
for year 2001 financial reporting. The Company has not yet adopted SFAS No. 133.
However, management does not believe that adopting SFAS No. 133 will have a
significant impact on the result of operations of the Company. Based upon its
initial analysis, management believes that the interest rate swap agreements
will be categorized as a cash flow hedge and, accordingly, any unrealized gains
or losses will be deferred.

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

Not applicable.

## 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 and Use of Proceeds

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)     Reports on Form 8-K

On August 3, 2000, the company filed Form 8-K concerning the press release issued
July 31, 2000, relating to the definitive agreement to acquire Carborundum
Insulation Technologies which is hereby incorporated herein by reference.

## 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 13, 2000 | By:/s/          William P. Kelly
William P. Kelly, President andChief Executive Officer
|Date:November 13, 2000 | By:/s/         Mark D. Roos
Mark D. Roos, Vice Presidentand Chief Financial Officer