As filed with the Securities and Exchange Commission on July 25, 2003

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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 20-F/A

|o                                                               | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|--------------------------------------------------------------- | ----------------------------------------------------------------------------------------------
|OR                                                             
|ý                                                               | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934          
|For the fiscal year ended December 31, 2002                    
|OR                                                             
|o                                                               | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934      
|For the transition period
from                               to
|Commission file number: 1-14838                                

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RHODIA(Exact name of Registrant as specified in its charter)

|Not applicable(Translation of Registrant's name into English)                                              |  | Republic of France(Jurisdiction of incorporation or organization)
|---------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------
|26, quai Alphonse Le Gallo 92512
Boulogne-Billancourt Cedex
France(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:

|Title of each class:                                                                        |  | Name of each exchange on which registered
|------------------------------------------------------------------------------------------- |  | -----------------------------------------
|American Depositary Shares,
each representing one Ordinary Share
nominal value €1 per share |  | New York Stock Exchange                  
|Ordinary Shares, nominal value €1 per share*                                                |  | New York Stock Exchange                  

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Securities
registered or to be registered pursuant to Section 12(g) of the Act: None

Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary
Shares: 179,309,188

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 ý    No o

Indicate
by check mark which financial statement Item the registrant has elected to follow.

Item
17 o          Item 18 ý

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TABLE OF CONTENTS

|EXPLANATORY NOTE |          | ii
|---------------- | -------- | --
|PART I           |          | 1 
|                 | Item 3.  |   
|                 | Item 5.  |   
|PART III         |          | 51
|                 | Item 18. |   
|                 | Item 19. |   

i

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EXPLANATORY NOTE

This Annual Report on Form 20-F/A (the "Form 20-F/A") amends Items 3, 5 and 18 of the Annual Report on Form 20-F filed by Rhodia on June 26, 2003 (the "Form
20-F") to reflect the restatement of U.S. GAAP financial information for the years ended and at December 31, 2001 and 2002 as presented in Note 29 (Reconciliation to U.S. GAAP and New U.S. Accounting
Standards) to the consolidated financial statements included in the Form 20-F.

The
restatement relates to the treatment under U.S. GAAP of indemnification obligations of Aventis pursuant to the Environmental Indemnification Agreement, dated May 26, 1998, which
entitled Rhodia to indemnification from Aventis in case of unexpected environmental liabilities. Under U.S. GAAP, indemnification payments from Aventis are accounted for as additional contributed
capital when paid. Under French GAAP, Aventis's obligation to make an indemnification payment is recorded as a reduction in the related environmental expense when the expense is recorded. Previously,
Rhodia accounted for the indemnification obligation under U.S. GAAP using the same method as under French GAAP. The effect of the restatement on Rhodia's U.S. GAAP financial information is to increase
operating expenses and thus decrease operating income, income from continuing operations and net income. The decrease in net income reduces stockholders' equity, while indemnification payments
increase stockholders' equity. The restatement reduced operating income as reported under U.S. GAAP by €35 million in 2001 and €7 million in 2002 and reduced net income
as reported under U.S. GAAP by €24 million in 2001 and €5 million in 2002. Stockholders' equity as reported under U.S. GAAP was reduced by €24 million
at December 31, 2001 and €9 million at December 31, 2002.

These
changes had no effect on Rhodia's primary financial statements and related notes prepared in accordance with French GAAP.

The
terms of Rhodia's environmental indemnity arrangements with Aventis are described in Rhodia's Annual Report on Form 20-F for the year ended December 31, 2002, filed on June 26, 2002,
under the sections "Item 3. Key InformationRisk FactorsRisks Relating to Our Business" and "Item 7. Major Stockholders and Related Party TransactionsAgreements
with Aventis", and in the Form 20-F/A under the section "Item 5. Operating and Financial Review and ProspectsCritical Accounting EstimatesEnvironmental liabilities" and
"Environmental matters." Rhodia filed an unofficial English translation of the
Environmental Indemnification Agreement as an exhibit to Amendment No. 2 to its Registration Statement on Form F-1 (Reg. No. 333-8850) filed on June 8, 1998.

The
Form 20-F/A makes the following amendments:



Other
than the foregoing items and conforming changes related thereto, this Form 20-F/A does not amend, update or restate any other Items or sections of the Form 20-F. This Form 20-F/A
does not reflect events occurring after the filing of the Form 20-F on June 26, 2003. The filing of this Form 20-F/A should not be understood to mean that any other statements contained therein
are true or complete as of any date subsequent to June 26, 2003. Investors should not rely upon this amendment as a reaffirmation or reiteration of forward-looking statements that were made in the
original filing and are reprinted in this amendment.

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PART I

Item 3. Key Information

Selected Financial Data

The tables below set forth selected consolidated financial data for Rhodia for each of the five years during the period ended December 31, 2002. These
financial data are derived from the Consolidated Financial Statements of Rhodia, which have been prepared in accordance with French GAAP and audited by PricewaterhouseCoopers, independent auditors.
The selected consolidated financial data for the fiscal years 2002, 2001 and 2000 should be read in conjunction with the Consolidated Financial Statements. French GAAP differs in significant respects
from U.S. GAAP. For a discussion of the principal differences as they relate to Rhodia, and a reconciliation to U.S. GAAP of net income and total stockholders' equity for the three years ended
December 31, 2002, see Note 29 to the Consolidated Financial Statements.

|                                        |                                                                | Year Ended and as of December 31,     |        
|--------------------------------------- | -------------------------------------------------------------- | ------------------------------------- | -------
|
|
|
|Amounts in accordance with French GAAP: |                                                                |                                       |        
|Income Statement Data:                  |                                                                |                                       |        
|                                        | Net sales                                                      |                                       | 5,537  
|                                        |                                                                | Production costs and expenses         |        
|                                        |                                                                | Administrative and selling expenses   |        
|                                        |                                                                | Research and development expenses     |        
|                                        |                                                                | Depreciation and amortization         |        
|                                        |                                                                | Restructuring and environmental costs |        
|                                        | Operating expenses                                             |                                       | (5,191 
|                                        |                                                                |                                       |        
|                                        | Operating income                                               |                                       | 346    
|                                        | Financial expensenet                                          |                                       | (113   
|                                        | Other income/(expense)net(3)                                  |                                       | (38    
|                                        |                                                                |                                       |        
|                                        | Income/(loss) of consolidated subsidiaries before income taxes |                                       | 195    
|                                        | Income taxes                                                   |                                       | (51    
|                                        | Income/(loss) of consolidated subsidiaries                     |                                       | 144    
|                                        | Equity in earnings/(losses) of affiliated companies            |                                       | (21    
|                                        | Amortization of goodwill                                       |                                       | (12    
|                                        | Income/(loss) before minority interests                        |                                       | 111    
|                                        | Minority interests                                             |                                       | 5      
|                                        |                                                                |                                       |        
|                                        | Net income/(loss)                                              |                                       | 116    
|                                        | Earnings/(loss) per share(4)                                   |                                       | 0.67   
|                                        | Dividend per share(5)                                          |                                       | 0.20   
|                                        | Average number of ordinary shares outstanding (in thousands)   |                                       | 174,146
|                                        |                                                                |                                       |        

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|Balance Sheet Data:                   |                                                          |  |        |   |        |   |        |   |       |   |      
|------------------------------------- | -------------------------------------------------------- |  | ------ | - | ------ | - | ------ | - | ----- | - | -----
|                                      | Working capital(6)                                       |  | (250   | ) | 359    |   | (261   | ) | (428  | ) | (335 
|                                      | Tangible assets (net book value)                         |  | 2,624  |   | 2,946  |   | 3,759  |   | 3,561 |   | 2,743
|                                      | Total assets                                             |  | 7,810  |   | 7,015  |   | 9,566  |   | 9,013 |   | 7,687
|                                      | Long-term debt(7)                                        |  | 465    |   | 1,145  |   | 2,077  |   | 1,949 |   | 1,739
|                                      | Other long-term liabilities                              |  | 1,008  |   | 1,000  |   | 1,206  |   | 1,388 |   | 1,374
|                                      | Total debt(8)                                            |  | 2,766  |   | 1,830  |   | 3,325  |   | 2,985 |   | 2,384
|                                      | Cash, cash equivalents and marketable securities         |  | 1,630  |   | 277    |   | 259    |   | 413   |   | 251  
|                                      | Net debt(9)                                              |  | 1,136  |   | 1,553  |   | 3,066  |   | 2,572 |   | 2,133
|                                      | Minority interests                                       |  | 65     |   | 69     |   | 87     |   | 84    |   | 23   
|                                      | Total stockholders' equity                               |  | 2,130  |   | 2,390  |   | 2,593  |   | 2,267 |   | 1,835
|                                      | Common stock and additional paid-in capital              |  | 2,667  |   | 2,624  |   | 2,693  |   | 2,693 |   | 2,693
|Cash Flow Statement Data:             |                                                          |  |        |   |        |   |        |   |       |   |      
|                                      | Capital expenditures                                     |  | 336    |   | 372    |   | 503    |   | 483   |   | 374  
|Amounts in accordance with U.S. GAAP: |                                                          |  |        |   |        |   |        |   |       |   |      
|Income Statement Data:                |                                                          |  |        |   |        |   |        |   |       |   |      
|                                      | Net sales                                                |  | 4,582  |   | 4,713  |   | 6,647  |   | 6,554 |   | 6,061
|                                      | Operating expenses(10)(12)                               |  | (4,404 | ) | (4,379 | ) | (6,243 | ) | 6,761 |   | 5,807
|                                      | Operating income/(loss)(10)(12)                          |  | 178    |   | 334    |   | 404    |   | (207  | ) | 254  
|                                      | Income/(loss) from continuing operations(12)             |  | 105    |   | 254    |   | 222    |   | (256  | ) | 62   
|                                      | Income/(loss) from discontinued operations               |  | 1      |   | (27    | ) | (6     | ) | 19    |   | (24  
|                                      | Net income/(loss)(12)                                    |  | 106    |   | 227    |   | 216    |   | (237  | ) | 38   
|                                      | Earnings/(loss) per share from continuing operations(12) |  | 0.60   |   | 1.46   |   | 1.26   |   | (1.43 | ) | 0.34 
|                                      | Earnings/(loss) per share from discontinued operations   |  | 0.01   |   | (0.16  | ) | (0.03  | ) | 0.11  |   | (0.13
|                                      | Earnings/(loss) per share:(4)(12)                        |  | 0.61   |   | 1.30   |   | 1.23   |   | (1.32 | ) | 0.21 
|Balance Sheet Data:                   |                                                          |  |        |   |        |   |        |   |       |   |      
|                                      | Working capital(6)                                       |  | (297   | ) | 359    |   | (261   | ) | (487  | ) | (385 
|                                      | Total property, plant and equipment                      |  | 2,517  |   | 2,946  |   | 3,759  |   | 3,561 |   | 2,743
|                                      | Total stockholders' equity(11)                           |  | 1,973  |   | 2,213  |   | 2,409  |   | 1,990 |   | 1,437

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Exchange Rate Information

Under the provisions of the Treaty on European Monetary Union negotiated at Maastricht in 1991 and signed by the then 12 member states of the European Union in
early 1992, a European Monetary Union, known as EMU, was implemented on January 1, 1999, and a single European currency, known as the euro, was introduced. The following 12 member states
participate in EMU and have adopted the euro as their national currency: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. The
legal rate of conversion between French francs and the euro was fixed on December 31, 1998 at €1.00 = FRF 6.55957.

Fluctuations
in the exchange rate between the euro and the U.S. dollar will affect the U.S. dollar price of Rhodia's ADSs on the New York Stock Exchange and the U.S. dollar value of any
dividends Rhodia may declare.

Since
the euro did not exist prior to January 1, 1999, Rhodia cannot present exchange rates between the euro and the U.S. dollar for periods prior to that date. Rhodia's reporting
currency during those periods was the French franc. In order that you may ascertain how the trends in Rhodia's financial results might have appeared had they been expressed in U.S. dollars, the table
below sets forth the French franc/U.S. dollar exchange rate for 1998 based on the Noon Buying Rate expressed in French francs per $1.00 and the euro/U.S. dollar exchange rate for 1999, 2000, 2001 and
2002 based on the Noon Buying Rate expressed in euro per U.S. dollars.

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|Month                       |  | Period-end rate |  | Average rate(1) |  | High    |  | Low    
|--------------------------- |  | --------------- |  | --------------- |  | ------- |  | -------
|Euro/Dollar(2)              |  |                 |  |                 |  |         |  |        
|June 25, 2003               |  | 0.86            |  |                |  |        |  |       
|June 2003 (through June 25) |  | 0.86            |  | 0.85            |  | 0.87    |  | 0.84   
|May 2003                    |  | 0.85            |  | 0.83            |  | 0.89    |  | 0.84   
|April 2003                  |  | 0.89            |  | 0.92            |  | 0.94    |  | 0.89   
|March 2003                  |  | 0.92            |  | 0.88            |  | 0.95    |  | 0.90   
|February 2003               |  | 0.93            |  | 0.93            |  | 0.93    |  | 0.92   
|January 2003                |  | 0.95            |  | 0.94            |  | 0.97    |  | 0.92   
|December 2002               |  | 0.95            |  | 0.98            |  | 1.01    |  | 0.95   
|Year                        |  |                 |  |                 |  |         |  |        
|Euro/Dollar(2)              |  |                 |  |                 |  |         |  |        
|2002                        |  | €0.95           |  | €1.05           |  | €1.16   |  | €0.95  
|2001                        |  | 1.12            |  | 1.12            |  | 1.19    |  | 1.05   
|2000                        |  | 1.07            |  | 1.09            |  | 1.21    |  | 0.97   
|1999                        |  | 0.99            |  | 0.94            |  | 1.00    |  | 0.85   
|French Franc/Dollar         |  |                 |  |                 |  |         |  |        
|1998                        |  | FRF5.59         |  | FRF5.90         |  | FRF6.21 |  | FRF5.39

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Risk Factors

In addition to other information contained in this annual report on Form 20-F, you should consider carefully the risks
described below. These risks are not the only ones we face. Additional risks not currently known to us or that we currently deem immaterial may also impair our business operations. Our business,
financial condition or results of operations could be materially adversely affected by any of these risks.

This annual report on Form 20-F also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ
materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as describe below and elsewhere in this annual report on
Form 20-F. See "Cautionary Statement Regarding Forward-looking Statements".

Risks Related to our Indebtedness

Our substantial level of indebtedness could materially adversely affect our ability to react to changes in our business and our ability to incur
additional debt to fund future needs

We have a substantial amount of debt. As of December 31, 2002, we had gross financial debt (long-term debt plus short-term borrowings and current portion
of long-term debt) of €2,384 million and stockholders' equity (excluding minority interests) of €1,835 million. In addition, we have granted guarantees in
respect of indebtedness of our joint ventures and other non-consolidated companies in the amount of €197 million as of December 31, 2002.

Our
substantial debt could have important consequences for investors. For example, it could:



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Our ability to refinance maturing debt as well as to finance our working capital and capital expenditures needs depends on our ability to renegotiate
our existing credit facilities and to maintain our existing sources of liquidity

A significant portion of our gross financial debt matures over the next four years. Our ability to refinance these debts as they come due depends in part on our
ability to renegotiate our committed credit facilities. As of December 31, 2002, €645 million of debt was maturing in 2003, €404 million in 2004,
€537 million in 2005 and €488 million in 2006. These amounts relate principally to the maturities of debt securities issued under our Euro
medium-term note program (with €500 million maturing in 2005 and €300 million maturing in 2006), and amounts drawn under our committed credit
facility agreements.

As
of December 31, 2002, we had €2,116 million of committed credit facilities. €565 million of these facilities expire in 2003,
€1,065 million in 2004, €220 million in 2005 and €177 million in 2006. The amounts expiring in 2004 include our syndicated credit
facility of €600 million. Since December 31, 2002, we have negotiated new committed credit facilities and certain facilities have expired. As a result, the total amount
of our committed credit facilities as of March 31, 2003 was €2,094 million. In order to refinance our indebtedness as it matures, as well as to finance our working
capital and capital expenditure needs we must renegotiate these facilities as they
expire, enter into new facilities or obtain capital from other sources. We may not succeed in renewing these credit facilities or raising capital from other sources. Moreover, any agreement reached
with our lenders could result in new terms that are less favorable than current terms under our existing credit facility agreements and could involve a reduction in availability of funds, an increase
in interest rates and shorter maturities, among other things. If we are not able to renegotiate our existing credit facilities on terms acceptable to us, this could have a material adverse effect on
our liquidity and financial condition.

Short-term
borrowings are also an important source of financing for us, and as of December 31, 2002 our short-term borrowings included
€175 million of commercial paper and €269 million of other short-term financings. Our commercial paper program consists principally of sales
of Frenchbillets de trésorerie. Our access to the French commercial paper market depends in part on the assessment of our financial
condition by investors, as well as on the continued functioning of the markets. The unavailability of the commercial paper market would require us to obtain capital from other sources, and we cannot
be sure that the terms of such financing would be as favorable as those of the commercial paper market. Our other short-term borrowings of €269 million are generally
financings granted to Rhodia and to various subsidiaries and are generally without a specific maturity date, and because they are generally uncommitted, would not be available to us as sources of
liquidity if the lender elects not to renew them.

Another
important source of our financial liquidity is the monthly or quarterly sale of some of our uncollected trade receivables. As of December 31, 2002, trade receivables
outstanding of €627 million had been sold, with respect to which we received cash payments of €531 million. The balance is paid to us after the collection
of the trade receivables is made, ordinarily within three months of the sale. Trade receivables are among our most liquid assets, and selling them reduces the availability of such assets to our
creditors. In addition, a portion of our sales of receivables are financed through sales of commercial paper by third-party financing vehicles. Although these financing vehicles have entered into

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back-up
credit facilities to provide liquidity in the event of, among other things, short-term disruption of the commercial paper market, if the commercial paper market became
unavailable to these vehicles for the longer term, or if these backup facilities were cancelled or not renewed, our ability to sell trade receivables would be impacted. Similarly, we cannot guarantee
that we will be able to continue to access the securitization market on terms comparable to those we have enjoyed in the past.

Our existing credit facilities and indentures contain financial covenants which we could fail to meet

We have issued notes and entered into various revolving credit facilities that require us to maintain compliance with certain financial covenants regarding a
maximum level of net debt to EBITDA, a minimum level of EBITDA to net interest expense, a minimum level of stockholders' equity and/or a
maximum level of net debt to capitalization. Financial covenant calculations are based on French GAAP financial information. As of December 31, 2002, we satisfied all of our financial
covenants.

Most
of our committed credit facility agreements and the agreement governing the U.S. private placement notes contain a covenant requiring us to maintain a ratio of net debt to EBITDA of
less than 3.5 and a ratio of EBITDA to net financial expense of greater than 5.0. In facilities for which the ratio of EBITDA to net financial expense is tested after December 31, 2004, such
ratio will be 4.5 or less for such testing dates. Net debt, EBITDA and net financial expense are defined in the agreements and differ from similar measures used elsewhere in this annual report on
Form 20-F. At December 31, 2002 our ratio of net debt to EBITDA amounted to 3.3 and our ratio of EBITDA to net financial expense amounted to 6.8. These covenants are tested
annually, and under some agreements, semi-annually. Our ability to comply with these covenants will depend on our operating performance and level of indebtedness. Depending on our operating
performance, we could be required to take other measures to reduce our indebtedness in order to comply with these covenants, including asset disposals. We might not be successful in completing such
disposals.

Five
of our committed credit facility agreements (with combined commitments of €672 million) contain a covenant, to be tested on December 31, 2003 and 2004, as
applicable, requiring us to maintain a minimum stockholders' equity of €1,829 million. €410 million of these facilities expire in 2004 and
€96 million expire in 2005. After the completion of the private placement of senior notes and senior subordinated notes that we issued on May 28, 2003, one of these
facilities was amended to, among other things, remove the stockholders' equity covenant and reduce the ratio of EBITDA to net financial expense to 4.0. As of December 31, 2002 our total
stockholders' equity amounted to €1,835 million and as of March 31, 2003, it amounted to €1,700 million. In addition, the agreement governing our $290
million U.S. private placement notes contains a covenant requiring us to maintain a minimum stockholders' equity of €1,600 million on an ongoing basis. Stockholders' equity as of
December 31, 2002 was negatively affected, without any cash impact, by a €397 million loss resulting from the translation of financial statements of foreign operations
(due principally to the severe decline in the value of the Brazilian real and to a lesser extent the U.S. dollar). In addition to translation adjustments, stockholders' equity is adjusted by net
income or loss, which in turn is affected by our operating performance, including goodwill and other intangible asset amortization or impairment.

Our
ability to comply with these covenants in the future will be affected by our operating performance and level of indebtedness, as well as by events beyond our control such as changes
in exchange rates. In the event of a default under any of these agreements, the lenders could elect to declare all amounts outstanding under the agreements to be immediately due and payable. Although
we would expect to negotiate with our lenders to seek a waiver of such default or an amendment to the relevant agreement, such negotiations might not be successful. If the debt under these agreements
were to be accelerated, we cannot assure you that our assets would be sufficient to repay such debt in full. We are currently in discussions with the lenders under several of our credit facilities to
renegotiate or extend these facilities and modify the terms of these financial covenants. Such discussions may not be successful.

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Restrictions imposed by the indentures governing the senior notes and the senior subordinated notes that we issued on May 28, 2003 through a
private placement, our credit facilities and our other outstanding indebtedness may limit our ability to operate our business and to finance our future operations or capital needs or to engage in
other business activities

Our credit facilities, other outstanding indebtedness and the indentures governing the senior notes and the senior subordinated notes that we issued on
May 28, 2003 through a private placement contain various covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to:



Changes in respect of our public debt ratings may materially and adversely affect the availability, the cost and the terms and conditions of our debt
and asset-based financings

Certain of our outstanding debt instruments are publicly rated by Moody's Investor Service and Standard & Poor's, independent rating agencies. These public
debt ratings affect our ability to raise debt, our access to the commercial paper market, and our ability to engage in asset-based financing. These public debt ratings also affect the cost to us and
terms and conditions of debt and asset-based financings. In February 2003, Moody's Investor Service lowered our credit rating to Ba2, which is below investment grade. This downgrading caused a
125 basis point increase in the interest rate applicable to the $290 million of U.S. private placement notes we issued in July 2002, resulting in $3.6 million of additional annual
interest expense. In March 2003, Standard & Poor's lowered our credit rating to BB+, which is also below investment grade. The downgradings by Moody's and Standard & Poor's have not
affected the cost or terms and conditions of our other existing financings. However, the downgradings are likely to affect the cost of future financing. Additionally, negative developments regarding
our cash flow, and/or our incurring significant levels of debt or secured debt, or our failure to meet certain covenants under our credit agreements and other indebtedness, could require us to grant
security, lose access to, and/or cause a default under, certain of our credit facilities and other indebtedness and adversely affect further the cost and terms and conditions of our debt and
asset-based financings.

We
cannot guarantee that we will be successful in carrying out measures that strengthen or maintain our credit profile, nor can we guarantee that the rating agencies will regard the
measures we do carry out as sufficient. In addition, factors that are not within our control, including factors relating to our industry or specific countries or regions in which we operate, may
affect the rating agencies' assessment of our credit profile. As a result, we cannot guarantee that the assessment of our credit profile will not be further downgraded by the rating agencies.

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Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate the cash required to service our debt

Our ability to make payments on and refinance our indebtedness and to fund our operations will depend on our ability to generate cash in the future. Our
historical financial results have been, and our future financial results are expected to be, subject to substantial fluctuations, and will depend upon general economic conditions and financial,
competitive, legislative, regulatory and other factors that are beyond our control. If we are unable to meet our debt service obligations or fund our other liquidity needs, we may need to refinance
all or a portion of our debt before maturity, seek additional equity capital or sell assets. We cannot assure you that we will be able to pay our debt or refinance it on commercially reasonable terms,
or at all, or to fund our liquidity needs.

If
for any reason we are unable to meet our debt service obligations, we would be in default under the terms of our agreements governing our outstanding debt. If such a default were to
occur, the lenders could elect to declare all amounts outstanding under such facilities immediately due and payable, and the lenders would not be obligated to continue to advance funds under our
revolving credit facilities. Although we would expect to negotiate with our lenders to seek a waiver of such default or an amendment to the relevant agreement, such negotiations might not be
successful. If the amounts outstanding under these agreements are accelerated, we cannot assure you that our assets will be sufficient to repay in full the money owed to the banks or to our debt
holders.

Risks Related to our Business

Currency and interest rate fluctuations may have a material impact on our financial results

A considerable portion of our assets, liabilities, sales, revenues, expenses and earnings is denominated in currencies other than the euro, principally in U.S.
dollars, Brazilian reals and, to a lesser extent, British pounds. Fluctuations in the values of these currencies with respect to the euro have had and may continue to have a significant impact on our
financial condition and operating results. In 2002, variations in currencies, particularly the decline in the value of the dollar and the Brazilian real relative to the euro, decreased our
consolidated net sales by approximately 3.9%. Currency fluctuations can also have a significant impact on our balance sheet, particularly stockholders' equity, when we translate the financial
statements of our subsidiaries located outside of the euro-zone into euros. For example, in 2002 our stockholders' equity was reduced by €397 million due to the
translation of the financial statements of our foreign subsidiaries and related notably to the decline of the U.S. dollar and the severe depreciation of the Brazilian real relative to the euro.

An
appreciation of the euro compared to the dollar would lessen the euro-value of sales generated in dollar-zone countries and could lower the competitiveness of
the products we produce in Europe against products produced in, or exported from, the United States and other dollar zones. We expect that this effect would be partially offset by the decreased cost
in euro of a significant portion of our raw material and energy purchasing requirements.

Our
policy with respect to limiting our exposure to short-term fluctuations in exchange rates is to calculate on a daily basis our net foreign currency exposure based on our
transactions, including both sale and purchase transactions, and to use financial instruments to reduce such exposure against rate changes with respect to the euro. The main instruments we currently
use are over-the-counter forward exchange contracts with maturities of generally less than six months. Nonetheless, we may not be able to protect ourselves from sustained movements in the value of the
euro against other currencies.

We
are also exposed to interest rate risk. As of December 31, 2002, our gross financial debt amounted to €2,384 million, of which long-term debt
amounted to €1,739 million. Fluctuations in interest rates may affect our interest expense on existing debt and the cost of new financing. We use

8

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swaps
to manage this risk, but our financial condition and results of operations may nevertheless be materially adversely affected by sustained increases in interest rates.

For
further discussion of these matters and the measures we have taken to seek to protect our business against these risks, see "Item 11. Quantitative and Qualitative Disclosure
About Market Risk".

Environmental and health and safety laws and regulations expose us to the risk of costs, liabilities and claims that could have a material adverse
effect on our business, financial condition and results of operations

Environmental and health and safety laws and regulations expose us to the risk of substantial costs and liabilities, including costs and liabilities associated
with assets that have been sold and activities that have been discontinued. In most jurisdictions in which we operate, industrial activities are subject to obtaining permits, licenses and other
authorizations, or to prior notification. In addition, local or regional regulatory bodies may impose restrictions on the use of certain of our products. In addition, we have been and may be subject
to liabilities and claims relating to personal injury (including exposure to hazardous substances used, produced, disposed of by us or located in our facilities), property damage or damage to natural
resources. We are subject to a broad range of extensive and evolving environmental and health and safety laws and regulations in each of the jurisdictions in which we operate, which impose
increasingly stringent standards on us. They relate to, among other things, air emissions, waste water discharges, the use and handling of hazardous materials, waste disposal practices, and
clean-up of environmental contamination.

Compliance
with environmental laws and regulations has resulted in significant ongoing costs for us, and could restrict our ability to modify or expand our facilities or continue
production, or require us to install costly pollution control equipment or incur significant expenses, including remediation costs. A failure to comply with any such law or regulation could result in
the issuance of fines and penalties or the imposition of other sanctions. We could also incur significant expenses in the event that new laws, regulations or governmental policies were to require that
hazardous wastes, including radioactive wastes, currently stored on-site, be disposed of at off-site locations. Currently, we are involved in a number of compliance and
remediation efforts and legal proceedings concerning environmental health and safety matters. Based on information presently available, we have budgeted capital expenditures for environmental
improvement projects and have established reserves for known environmental remediation liabilities that are probable and reasonably capable of estimation. However, environmental matters cannot be
predicted with certainty, and these amounts may not be adequate for all purposes. In addition, the development or discovery of new facts, events, circumstances or conditions, and other developments
such as changes in the law or the interpretation or enforcement thereof, could result in increased costs and liabilities.

Many
of our current, former and discontinued manufacturing sites have an extended history of industrial use. As is typical for such sites, soil and groundwater contamination has occurred
in the past at some sites and might occur or be discovered at other sites in the future. We are continuing to investigate, remediate and monitor soil and groundwater contamination at or from certain
of these sites. In addition, we have been and may in the future be liable under various laws, including the U.S. Comprehensive Environmental Response, Compensation and Liability Act (commonly known as
"Superfund"), to contribute to the costs to clean up third-party facilities to which we have sent waste for disposal. Under these laws, the owner or operator of contaminated properties and the
generator of wastes sent to a contaminated disposal facility may be held jointly and severally liable for the remediation of such properties, regardless of fault.

As
of December 31, 2002, our accrued reserve for probable future remediation expenses amounted to €146 million. Based on current information, provisions
established for environmental matters and amounts we expect to receive pursuant to the environmental indemnification arrangements with Aventis described in "Item 7. Major Stockholders and
Related Party TransactionsAgreements with Aventis",

9

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we
do not believe that environmental compliance and remediation requirements will have a material adverse effect on our business, financial condition or results of operations. Future events, such as
changes in laws and technology, the promulgation of new laws or the development or discovery of new facts or conditions, however, could cause us to incur significant additional costs and liabilities
that could have a material adverse effect on our business, financial condition and results of operations.

Sustained high raw materials prices may increase our production costs and expenses of goods sold, and ultimately adversely affect our profitability

A significant portion of our raw materials costs is linked, directly or indirectly, to the price of crude oil. We are therefore exposed to any volatility in the
price of oil that may result from any instability in oil-producing regions (including civil unrest in Venezuela, war in Iraq or broader disruption in the Middle East). Significant
variations in the costs of fuel, natural gas and other raw materials can affect our financial condition and results of operations. Increases in overall levels of raw materials prices may not
necessarily be passed on through an increase in sales prices, and may, in certain cases, create negative pressure on margins. Decreases in the average prices of raw materials may, as a result of
competitive pressures, also cause prices to decline, and may, in certain cases, limit the potential gain on margins. See "Item 5. Operating and Financial Review and
ProspectsCertain Factors Affecting Rhodia's Financial Condition and Results of OperationsCost of Raw Materials" and "Item 4. Information About RhodiaRaw
Materials."

We are subject to intense competition

We face significant competition in each of our markets. In the specialty chemicals industry, competition is based upon a number of considerations, principally
product differentiation and innovation, product quality and quality of logistics, including distribution capability. In addition, in some market segments, our products are subject to intense price
competition due to factors such as overcapacity, competition from low-cost producers and consolidation among our customers and competitors. New products or technologies developed by
competitors also may have a material adverse impact on our competitive position.

We are dependent on new products and processes

Our operating results depend to a significant extent on our ability to continue to introduce new products and applications and to continue to develop our
production processes to be a competitive producer. We believe that many of our businesses are technological leaders in their principal markets. We are committed to remaining a technological leader and
a competitive producer and believe that our portfolio of new products and improved products under development is strong. However, we may not be able to develop new products and applications
successfully or bring them to market in a timely manner.

Sales of our products and services to the pharmaceutical industry may depend on our clients' ability to obtain and maintain regulatory approval for
particular pharmaceutical products

We sell certain of our products and services to the pharmaceutical industry, which must comply with a broad range of regulatory controls on the development,
testing, approval, manufacturing and marketing of pharmaceutical products, including notably the U.S. Food and Drug Administration (the "FDA") in the United States and the European Medicines
Evaluation Agency (the "EMEA") in the European Union. Although we do not ourselves apply for product authorizations from these regulatory authorities, the sale of some of our products and services may
depend on our clients' ability to obtain and maintain authorization to market or manufacture a particular pharmaceutical product. In our principal markets (the European Union and the United States),
the process of obtaining authorization is lengthy and expensive, and there are a variety of factors that could adversely affect our clients' ability

10

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to
obtain marketing authorization for a product or to successfully market or continue to market a product once approved. In recent years, the authorization process before the FDA has been subject to
delay. FDA approval for certain planned product launches by customers of our Pharma Solutions business has been delayed in recent months, which will cause sales by the business to be lower than our
initial expectations. In addition, delays in FDA approval are affecting the pharmaceutical ingredients market as a whole, contributing to overcapacity in the industry. Our clients' failure to obtain
or maintain authorization for a product could adversely affect the sales of our products and services to the pharmaceutical industry.

We have unfunded liabilities with respect to our pension plans and other post-retirement benefits

We have obligations to our employees relating to retirement and other end of contract indemnities in the majority of the countries where we operate.

In
France, retirement indemnities arise pursuant to labor agreements, internal conventions and applicable local legal requirements. Retirement indemnities in France are funded from
current cash flows, and there is no legal requirement to maintain assets to fund these liabilities. As of December 31, 2002, we had projected benefit obligations of
€674 million with respect to our French retirement indemnities.

In
the United States and the United Kingdom, liabilities arise pursuant to labor agreements, pension schemes and plans and other employee benefit plans, some of which are required to
maintain assets to fund their liabilities. As a result of stock market declines in 2002, the market value of the assets in our funded pension plans, including our nonqualified and foreign plans, has
declined. In 2002, the pension plan assets for certain of our foreign pension plans fell below required levels with respect to their
related accumulated benefit obligation. Applicable laws and regulations would have allowed us to spread contributions to cover the shortfall over 3 to 5 years. However, we chose to cover most of the
shortfall by making an exceptional cash contribution of €145 million to U.S. and U.K. pension plans in 2002. We cannot assure you that we will not be required to make similar
cash contributions in the future. Any such payments could have an adverse effect on our financial condition and liquidity. With respect to our foreign plans, as of December 31, 2002, we had
projected benefit obligations of €1,382 million and plan assets of €1,122 million.

Our
projected benefit obligations are based on certain actuarial assumptions that vary from country to country, including discount rates, long-term rates of return on invested plan
assets and rates of increase in compensation levels. If actual results, especially discount rates and/or rates of return on plan assets, were to differ from these assumptions, our pension, retirement
and other post-employment costs would be higher or lower, and its cash flows would be unfavorably or favorably impacted from the funding of these obligations.

Our business is subject to many operational risks for which we may not be adequately insured

We cannot assure you that we will not incur losses beyond the limits of, or outside the coverage of, our insurance policies. From time to time, various types of
insurance for companies in the chemical industry have not been available on commercially acceptable terms or, in some cases, have been unavailable. We cannot assure you that in the future we will be
able to maintain existing coverage or that premiums will not increase substantially.

We will be obligated to adopt new accounting standards in 2005 that will impact our financial reporting

We currently prepare our financial statements in accordance with French GAAP, and prepare a reconciliation to U.S. GAAP of stockholders' equity and net income.
See Note 29 to the Consolidated Financial Statements. In June 2002, the Council of Ministers of the European Union approved a new regulation proposed by the European Commission requiring
all EU-listed companies, including Rhodia,

11

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to
apply International Financial Reporting Standards ("IFRS") in preparing their financial statements no later than 2005. Because IFRS emphasizes the measure of the fair value of a company's assets
and liabilities, applying these standards to our financial statements may have a considerable impact on a number of important areas, including, among others, accounting for share-based compensation,
goodwill and intangibles, asset depreciation, employee benefit plans, marketable securities and derivative financial instruments and financing arrangements such as asset securitizations. Although we
have not yet determined the full effect of the application of IFRS to our financial statements, we disclose our on- and off-balance sheet obligations, including our trade
receivables, securitization, operating and capital leases and pension obligations, in our financial statements. Nevertheless, because our financial statements prepared in accordance with IFRS would
differ from our financial statements prepared in accordance with French GAAP, the methods used by the financial community to assess our financial performance and value our publicly-traded securities,
such as price-to-earnings ratios and debt-to-equity ratios, could be affected.

Risks Related to our Shares and to our ADSs

The price of our ADSs and the U.S. dollar value of any dividends will be affected by fluctuations in the U.S. dollar/euro exchange rate

The ADSs trade in U.S. dollars. As the principal trading market for the shares underlying the ADSs is thePremier
Marchéof Euronext Paris, where the shares trade in euro, the value of the ADSs will likely fluctuate as the U.S. dollar/euro exchange rate fluctuates. If the
value of the euro decreases against the U.S. dollar, the price at which our ADSs trade will decrease. In addition, since any dividends that we may declare will be denominated in euro, exchange rate
fluctuations will affect the U.S. dollar equivalent of dividends received by holders of ADSs. See "Exchange Rate Information," above. If the value of the euro decreases against the U.S.
dollar, the value of the U.S. dollar equivalent of any dividend will decrease comparatively.

You may not be able to exercise pre-emptive rights for shares underlying your ADSs

Under French law, stockholders have pre-emptive rights("droits préférentiels de
souscription")to subscribe for cash for issuances of new shares or other securities giving rights, directly or indirectly, to acquire additional shares on a pro rata basis.
Stockholders may waive their pre-emptive rights specifically in respect of any offering, either individually or collectively, at an extraordinary general meeting. Pre-emptive
rights, if not previously waived, are transferable during the subscription period relating to a particular offering of shares and may be quoted on thePremier
Marché.U.S. holders of ADSs may not be able to exercise pre-emptive rights for the shares underlying their ADSs unless a registration statement
under the U.S. Securities Act of 1933, as amended, is effective with respect to such rights or an exemption from the registration requirements thereunder is available. We intend to evaluate at the
time of any rights offering the costs and potential liabilities associated with any such registration statement, as well as the indirect benefits of enabling the exercise by the holders of ADSs of the
pre-emptive rights associated with the shares underlying their ADSs, and any other factors we consider appropriate at the time, and then to make a decision as to whether to file such a
registration statement. We cannot guarantee that any registration statement would be filed, or, if filed, that it would be declared effective. If pre-emptive rights cannot be exercised by
an ADS holder, Citibank N.A., as depositary, will, if possible, sell such holder's pre-emptive rights and distribute the net proceeds of the sale to the holder. If the depositary
determines, in its discretion, that such rights cannot be sold, the depositary may allow such rights to lapse. In either case, ADS holders' interest in us will be diluted and, if the depositary allows
rights to lapse, holders of ADSs will not realize any value from the granting of pre-emptive rights.

12

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Holders of ADSs may be subject to additional risks related to holding ADSs rather than shares

Because holders of ADSs do not hold their shares directly, they are subject to the following additional risks:



Cautionary Statement Regarding Forward-looking Statements

Certain of the statements contained in this annual report that are not historical facts, including, without limitation, certain statements made in the subsections
entitled "Outlook" for each of Rhodia's Divisions and discussed in "Item 4. Information About Rhodia," and in "Item 5. Operating and Financial Review and ProspectsOutlook," are statements
of future expectations and other forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "is expected
to," "will," "will continue," "should," "would be," "seeks" or "anticipates" or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of
strategy, plans or intentions. These statements are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those anticipated by such statements. Factors that could cause such differences in actual results include: (i) changes in the competitive and
regulatory framework in which the Company operates, in particular increased competition in the specialty chemicals industry; (ii) changes in raw material prices, in particular the price of oil;
(iii) the Company's ability to introduce new products and to continue to develop its production process; (iv) changes in interest rates and currency exchange rates, including
particularly the exchange rate of the euro to the U.S. dollar and U.S. dollar-influenced currencies; (v) changes in economic or technological trends; (vi) customers and market
concentration; (vii) risks and uncertainties attendant to doing business in numerous countries that may be exposed to, or may have recently experienced, economic or governmental instability;
and (viii) general competitive and market factors on a global, regional and/or national basis. For a description of other factors that might affect Rhodia's results, please see
"Risk Factors".

13

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Item 5. Operating and Financial Review and Prospects

The following discussion and analysis should be read in conjunction with "Selected Financial Data" and Rhodia's Consolidated Financial
Statements and the notes to those statements beginning on page F-1 of this annual report on Form 20-F. The discussion of Rhodia's results of operations includes certain information
on a comparable basis, to eliminate the impact of changes in the scope of consolidation and the translation effect of exchange rate fluctuations. See "Presentation of Financial and Other Information"
for an explanation of the calculation of this information, as well as an explanation of how we calculate the effect of changes in volume and price on our operating results. This discussion contains
forward-looking statements that reflect Rhodia's plans, estimates and beliefs. Rhodia's results could materially differ from those discussed in these forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report on Form 20-F, including in "Item 3. Key
InformationRisk Factors".

Overview of 2002

In 2002, Rhodia fulfilled the key commitments made at the end of 2001: an improvement in operating income, the generation of positive cash from operations and the
successful completion of a significant asset divestiture program. In the absence of an economic recovery, consolidated net sales declined by 9.1% due principally to disposals of non-strategic assets
made during the year. On a comparable basis, consolidated net sales declined by 1.5%.

Operating
income rose to €351 million in 2002 from €91 million in 2001. This change in operating income was due principally to changes in
restructuring and environmental costs and restructuring-related depreciation and amortization, which amounted to €163 million and €65 million, respectively, in
2001. In 2002, restructuring and environmental costs amounted to €25 million, and restructuring-related depreciation and amortization amounted to €5 million. The
improvement in 2002 operating income was also due to lower raw materials costs, which benefited all Divisions. The restructuring program launched in late 2001 was deployed on 19 sites in 2002. Rhodia
estimates that the restructuring plans launched in 2000 and 2001, together with early results from its 2002 plan, contributed to reducing production costs and expenses in 2002 by approximately
€70 million. However, start-up problems at a Fine Organics plant (which reduced operating income by an estimated €37 million) and sharply
higher pension and insurance costs partially offset these improvements.

Following
the restructuring and in line with its commitments, Rhodia cut capital expenditures by €109 million in 2002, primarily by applying stricter selection
criteria. Tight control was also maintained over operating working capital (defined as accounts receivable, before the impact of sales of receivables as of year end under its securitization program,
plus net inventory, less accounts payable).

However,
free cash flow (defined as net cash provided by operating activities minus additions to property, plant and equipment) contracted to €132 million in 2002
from €193 million in 2001, due principally to a €145 million exceptional contribution to UK and U.S. pension funds paid in 2002, and the lower volume of
receivables sold under the securitization program.

Rhodia
sold a large number of non-strategic assets during the year, including:



Cash
proceeds from these disposals (which were used to reduce financial debt), together with the deconsolidation of indebtedness of the divested companies, amounted to
€516 million. The negative

14

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impact
of these disposals on operating income and net income for the year was €47 million and €24 million, respectively. The difference between the book
value on Rhodia's balance sheet of these disposed assets and the total proceeds of the disposals was €38 million. This amount reflects the €109 million
loss on the sale of Rhodiaster, due principally to the generally depressed state of the polyester market and the fact that the company operated in Brazil, which is perceived as a high-risk
country.

Certain Factors Affecting Rhodia's Financial Condition and Results of Operations

Certain factors affecting Rhodia's financial condition and results of operations are described below. For further discussion of these and certain other factors,
see "Results of Operations".

Exchange Rate Fluctuations

Rhodia publishes its Consolidated Financial Statements in euro. Because a substantial portion of its assets, liabilities, sales and earnings are denominated in
currencies other than the euro, Rhodia is exposed to fluctuations in the values of these currencies against the euro. These currency fluctuations, especially the fluctuation of the value of the
Brazilian real and the U.S. dollar against the euro, have had and may continue to have a material impact on Rhodia's financial condition and results of operations.

In
2002, variations in currencies, particularly the decline in the value of the U.S. dollar and the Brazilian real relative to the euro, decreased Rhodia's consolidated net sales
by approximately 3.9%. Currency fluctuations can also have a significant impact on Rhodia's balance sheet, particularly stockholders' equity, when translating the financial statements of subsidiaries
located outside of the euro zone into euros. For example, in 2002 stockholders' equity was reduced by €397 million due to the translation of the financial statements of foreign
subsidiaries, related notably to the decline of the U.S. dollar and the severe depreciation of the Brazilian real relative to the euro.

An
appreciation of the euro compared to the dollar would lessen the euro-value of sales generated in dollar-zone countries, and could lower the competitiveness of
products
manufactured by Rhodia in Europe against products produced in, or exported from, the United States and other dollar zones. Rhodia expects that this effect would be partially offset by the decreased
cost in euro of a significant portion of the Group's raw material and energy purchasing requirements.

The
table below sets forth average exchange rates of the euro with respect to key currencies in 2000, 2001 and 2002.

|                    |  | Average exchange rates and changes(1)
|------------------- |  | -------------------------------------
|
|U.S. dollar/euro    |  | 0.92                                 
|Pound sterling/euro |  | 0.61                                 
|Brazilian real/euro |  | 1.69                                 

---

Rhodia's
policy with respect to limiting its exposure to short-term fluctuations in exchange rates is described under "Quantitative and Qualitative Disclosure
about Market Risk." See also Notes 1(b), 1(m), 21 and 23 to the Consolidated Financial Statements.

Cost of Raw Materials

Rhodia tracks the cost of certain of its key raw materials on a central basis. In 2002, Rhodia's expenses for purchases of these key raw materials were
approximately €1.4 billion. Rhodia also had approximately €400 million of costs for energy purchases. Significant variations in the costs of raw materials
can affect Rhodia's financial results.

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Rhodia
continually tracks the prices of key raw materials through a raw materials index encompassing Rhodia's top 100 strategic raw materials. The strategic raw materials index compares
the purchase price of the basket of 100 strategic raw materials for each quarter of 2002 with the average quarterly purchase prices for 2001 (set as a base value of 100) at constant volume and
exchange rates. The strategic raw materials index decreased seven points from an average of 100 points for fiscal year 2001 to an average of 93 points for fiscal year 2002. This decrease in raw
materials index corresponds principally to decreases in the prices of raw materials linked to crude oil prices. The main raw materials that affected the price index in 2002 were cyclohexane,
butadiene, ammonia, caustic soda, caprolactam and natural gas.

The
principal raw materials shown below together represented approximately €950 million in costs.

|Acetic acid    |  | Nitric acid |  | Phosphoric acid MGA |  | Phosphoric acid PWA  
|-------------- |  | ----------- |  | ------------------- |  | ---------------------
|Ammonia        |  | Benzene     |  | Butadiene           |  | Caprolactam          
|Cumene         |  | Cyclohexane |  | Glass fiber         |  | Gas (as raw material)
|Ethylene oxide |  | Wood pulp   |  | Rock phosphate      |  | Phenol               
|Phosphorus     |  | Propylene   |  | Styrene             |  | Caustic soda         
|Sulfur         |  |             |  |                     |  |                      

The
graphic below sets forth changes in the Rhodia price index with respect to the average price in fiscal year 2001 for the top 100 raw materials for each quarter in fiscal year 2002. GRAPH

The
index fell to a low in the first quarter and, although it rose in the following periods, it remained below the 2001 average throughout the year. Partly caused by lower oil prices and
weak demand, the favorable year-on-year change also reflects the benefits of measures taken by the Group to cut purchasing costs.

After
maintaining an average price above U.S.$21 a barrel during the first quarter of 2002, the average Brent reference price increased to U.S.$27 in the third and fourth quarters of
2002.

Because
of the length of manufacturing cycles, the impact of changes in raw material prices normally affects Rhodia's financial statements after a delay of two to three months.

Increases
in overall levels of raw materials prices may not necessarily be passed on through an increase in sales prices, and may, in certain cases, create negative pressure on margins.
Decreases in the average prices for raw materials may, as a result of competitive pressures, cause prices also to decline, and may, in certain cases, limit the potential gain in margins. In order to
reduce the impact of change in raw materials prices, Rhodia's major requirements for key raw materials are typically satisfied pursuant to medium- or long-term contracts. See
"Item 4. Information About RhodiaRaw Materials."

16

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Scope of Activities Included in the Consolidated Financial Statements

During the period covered by the discussion below, Rhodia has pursued a program of focusing on the specialty chemicals business and reducing its activities in
commodity chemicals. The principal acquisitions, divestitures and other changes in the scope of activities included in Rhodia's financial statements during the three years ended December 31,
2002, are set forth below.



In line with Rhodia's objective to divest non-strategic businesses, the following businesses were divested in 2002:



Net
sales of these businesses were €772 million in 2000 and €725 million in 2001. In 2002 net sales of these businesses (taken from
January 1, 2002 through their respective dates of sale) were €556 million.



17

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Change in Accounting Presentation

In accordance with Rule No. 99-02, issued by the French accounting authorities (Comité de la
Réglementation Comptable), Rhodia has modified its accounting classification under French GAAP with respect to the classification of amortization of goodwill and
the classification of income tax provision for affiliated companies. Certain items on Rhodia's consolidated financial statements for the years ended December 31, 2000 and 2001 have therefore
been restated to account for the new policy.

Goodwill.Under the new policy, Rhodia has reclassified its accounting for the amortization of
goodwill. In previous periods amortization of goodwill was included as an operating expense in the item Depreciation and amortization. Under the new policy amortization of goodwill has been
reclassified below Operating income in accordance with Rule No. 99-02. Accordingly, the Operating income for 2001 and 2000 reflects a reclassification of
€75 million and €32 million, respectively.

Goodwill
and Other intangible assets are now shown separately on Rhodia's balance sheet. Certain intangible assets that were previously recorded as Deferred charges and other assets have
been reclassified to Other intangible assets. The amounts reclassified were for an amount of €52 million and €54 million at December 31, 2001 and
2000, respectively.

Income tax provision for affiliated companies.Under the new policy, Rhodia has also reclassified its
accounting for income tax provisions for affiliated companies. In previous periods, income tax provision for affiliated companies was classified under Income taxes. Under the new accounting policy the
income tax provisions for affiliated companies is classified under Equity in earnings/(losses) of affiliated companies. Accordingly, Income taxes and Equity in earnings/(losses) of affiliated
companies for 2001 and 2000 reflect a reclassification of €(8) million and €9 million, respectively.

As
a result, the negative equity of affiliated companies previously recorded as a reduction under Investments accounted for by the equity method on the Balance sheet has been
reclassified to Other long-term liabilities. The amounts reclassified were for €54 million and €53 million at December 31, 2001 and
2000, respectively.

Restructuring charges and related amortization charges

Restructuring charges amounted to €30 million in 2002, consisting principally of €25 million of restructuring and
environmental costs concerning the Fine Organics Division (with respect to pharmaceutical activities in the United Kingdom) and the Services and Specialties Division (with respect to Eco Services in
Europe), as well as productivity plans at various headquarters sites. The additional €5 million relates to amortization charges linked to restructuring measures.

Restructuring
charges and related goodwill amortization charges amounted to €253 million in 2001. These charges include restructuring and environmental costs
(€163 million in 2001) and the exceptional write-down of assets linked to restructuring measures, which amounted to €90 million (including
€25 million for the accelerated amortization of goodwill).

Cash
payments related to Rhodia's restructuring plans amounted to €84 million in 2000. Cash payments related to Rhodia's restructuring plans amounted to
€113 million in 2001, of which €25 million was specifically related to the Company's 2001 plan. Cash payments related to Rhodia's 2001 and 2002
restructuring plans totaled €152 million in 2002.

Rhodia
achieved an aggregate 16.7% reduction in personnel from December 31, 2000 through December 31, 2002. Rhodia estimates that approximately 12.8% of this reduction was
due to these restructuring measures.

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The
table below sets forth the restructuring and environmental costs recorded in fiscal year 2001 by Division as well as related depreciation and amortization and accelerated goodwill
amortization.

|                         |  | Restructuring and
environmental costs |   | Restructuring-
related depreciation
and amortization |   | Restructuring-
related accelerated
goodwill amortization |  
|------------------------ |  | ------------------------------------- | - | ---------------------------------------------------- | - | -------------------------------------------------------- | -
|
|Consumer Specialties     |  | (19                                   | ) | (16                                                  | ) |                                                         |  
|Polyamide                |  | (36                                   | ) | (10                                                  | ) |                                                         |  
|Fine Organics            |  | (49                                   | ) | (24                                                  | ) | (20                                                      | )
|Industrial Specialties   |  | (12                                   | ) | (2                                                   | ) |                                                         |  
|Services and Specialties |  | (20                                   | ) | (12                                                  | ) | (5                                                       | )
|Other                    |  | (27                                   | ) | (1                                                   | ) |                                                         |  
|                         |  |                                       |   |                                                      |   |                                                          |  
|Total                    |  | (163                                  | ) | (65                                                  | ) | (25                                                      | )
|                         |  |                                       |   |                                                      |   |                                                          |  

In
2000, restructuring charges amounted to €20 million, consisting of €14 million of provisions for restructuring and environmental costs
that included mainly costs for the Polyamide and Fine Organics Divisions' European production units, as well as €6 million in exceptional write downs of assets linked to
restructuring efforts.

For
further details on Rhodia's restructuring plans, see Note 17(d) to the Consolidated Financial Statements.

Critical Accounting Estimates

Rhodia's management continually reviews the accounting estimates used in the preparation of the consolidated financial statements in order to ensure that they are
reasonable. Changes in these estimates could require Rhodia to record higher or lower costs, or could favorably or unfavorably impact Rhodia's financial condition and cash flows.

Rhodia's
consolidated financial statements are prepared in accordance with Rule no 99-02 issued by the Comité de la Réglementation Comptablerelating to the consolidated
financial statements of commercial societies and public
companies. Since Rhodia is also listed in the United States, a reconciliation between accounting principles generally accepted in France ("French GAAP") and accounting principles generally accepted in
the United States ("U.S. GAAP") is prepared and can be found in Note 29 to the Consolidated Financial Statements.

The
preparation of the consolidated financial statements requires management to make estimates that may affect the reported amount of assets, liabilities, revenues, expenses and the
disclosures of contingent assets and liabilities. Management believes that its estimates are reasonable; however, actual amounts could differ from these estimates since even the best estimates
routinely require adjustment.

The
following paragraphs review the critical accounting estimates that management considers most important for the understanding of Rhodia's financial condition, results of operations
and cash flows. An accounting estimate is considered a critical accounting estimate if it meets the following criteria:



19

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Management has reviewed the following critical accounting estimates with its Accounts Committee, and the Accounts Committee has reviewed Rhodia's disclosures relating to critical
accounting estimates in this section.

Goodwill impairment tests

For each reporting unit, Rhodia annually compares the net book value of the assets and liabilities that are associated with the reporting unit with the fair value
of the reporting unit. The methodology used for the determination of the reporting unit's fair value consists of the development of discounted cash flows, using the following principal assumptions:



The
fair value determined as of December 31, 2002 for the Rhodia ChiRex reporting unit confirms that the goodwill is recoverable. However, this reporting unit, which experienced
operating losses in 2001 and 2002, is still in a development phase. Therefore, its forecasts are characterized by a level of uncertainty that will necessitate regular assessments that the assumptions
made in the fourth quarter of 2002, which are summarized below, are realized:



Considering
all these above assumptions, the terminal value represents essentially the total fair value of the Rhodia ChiRex reporting unit. If the fair value of the reporting unit as
determined above were not to support the net book value of the reporting unit, an impairment of goodwill would be recorded. See Note 4 to the Consolidated Financial Statements.

Other long-lived assets

Rhodia reviews the book values of other long-lived assets whenever events or circumstances indicate that the future cash flows of these assets may not
support their carrying values. Rhodia compares the net book values of these assets with the undiscounted future cash flows. When this comparison indicates that adjustments to the carrying values of
these assets are required then accelerated depreciation of these assets is recorded, and the amount recorded is the difference between the net book value and the discounted future cash flows.

20

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Assumptions
made by Rhodia relating to the future cash flows of these assets are subject to change, which may require adjustments of the carrying values of these assets in future
periods.

Deferred tax assets

During the process of preparing its consolidated financial statements, Rhodia is required to estimate income taxes in each of its operations. This process
involves estimating the actual current tax expense together with assessing timing differences resulting from differing treatment of items for tax and accounting purposes. These differences result in
deferred tax assets and liabilities, which are included within the consolidated balance sheet. The likelihood that the deferred tax assets will be recovered from future taxable income is then assessed
and, to the extent that recovery is not likely, a valuation allowance is established. If a valuation allowance is established or increased in a period, it must be included as an expense within the
income tax provision in the statement of operations.

Significant
management judgment is required in determining the valuation allowance. Rhodia has recorded a valuation allowance, and there are uncertainties regarding the ability to
utilize some of these deferred tax assets before they expire. The principal uncertainty relates to the likelihood of future taxable income from the entity which generated the deferred tax asset. The
valuation allowance is based on Rhodia's estimates of future taxable income by jurisdiction in which it operates and the period over which the deferred tax assets will be recoverable. In the event
that actual results differ from these estimates or these estimates are adjusted in future periods, the valuation allowance may need to be adjusted, which could materially impact Rhodia's consolidated
financial position and results of operations. As of December 31, 2002, Rhodia recorded deferred tax assets of €347 million (net of €167 million of
valuation allowances).

Pensions, retirement and other post-employment obligations

Rhodia accounts for commitments with respect to pensions, retirement and other post-employment obligations based on projected
end-of-career salaries using a number of actuarial assumptions that vary from country to country, including:



If
actual results, especially discount rates and/or rates of return on plan assets, were to differ from these assumptions, Rhodia's pension, retirement and other
post-employment costs would be higher or lower, and its cash flows would be unfavorably or favorably impacted from the funding of these obligations.

Environmental liabilities

Rhodia recognizes losses and accrues liabilities relating to environmental matters on a case-by-case basis when information indicates that the event of loss is
probable and can reasonably be estimated. Management estimates are based on an assessment of many factors, including the amount of remediation costs, the timing and extent of remediation actions
required by the applicable governmental authorities, and the amount of Rhodia's liability after considering the liability and financial resources of other potentially responsible parties.

As
of December 31, 2002, Rhodia's accrued reserve for probable future remediation expenses amounted to €146 million. Based on current information,
provisions established for environmental matters and amounts Rhodia expects to receive under the environmental indemnity with Aventis,

21

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described
in "Item 7. Major Stockholders and Related Party TransactionsAgreements with Aventis", Rhodia does not believe that environmental compliance and remediation requirements will
have a material adverse effect on its business, financial condition or results of operations. Future events, such as changes in existing laws and technology, the promulgation of new laws or the
development or discovery of new facts or conditions, however, could cause Rhodia to incur significant additional costs and liabilities that could have a material adverse effect on its business,
financial condition and results of operations.

Rhodia's
management believes that environmental matters are difficult to assess for numerous reasons, including the discovery of new contamination, discovery of new information and
scarcity of reliable information pertaining to certain sites, improvements in technology, changes in the scope, enforcement or interpretation of environmental laws and regulations, numerous possible
remedial techniques and solutions, difficulty in assessing the involvement of and the financial capability of other potentially responsible parties and the extended time periods over which remediation
occurs. Changes in estimates on which these accruals are based may result in higher or lower costs to Rhodia.

Recent Developments

Consolidated Operating Results for the first quarter of 2003 compared to the first quarter of 2002

Overview

Rhodia's operating results for the first quarter of 2003 were negatively impacted by the high price of raw materials, particularly petrochemicals, a weakening in
demand and the negative impact of the rise in the value of the euro, particularly relative to the U.S. dollar.

The
table below sets forth net sales, depreciation and amortization and operating income for the quarters ended March 31, 2002 and March 31, 2003.

|                              |  | Quarter ended March 31, |  
|----------------------------- |  | ----------------------- | -
|
|
|Net sales                     |  | 1,711                   |  
|Depreciation and amortization |  | (119                    | )
|Operating income              |  | 79                      |  

Rhodia
reported operating income of €9 million in the first quarter of 2003 compared to €79 million in the first quarter of 2002, impacted
by high raw materials prices, restructuring provisions and an extraordinary expense related to difficulties in re-starting a production unit.

Net Sales

Net sales declined by 16.5% to €1,428 million in the first quarter of 2003 from €1,711 million in the first quarter of 2002.
Changes in the scope of consolidation had a 9.8% negative impact on net sales, while changes in exchange rates had a 10.2% negative impact.

On
a comparable basis (i.e., excluding changes resulting from the scope of consolidation and changes in exchange rates), net sales increased by 4.4% due to a 3.0% increase in sales
volumes and a 1.4% increase in average selling prices. All Divisions contributed to the increase in net sales, with the exception of the Pharmaceuticals and Agrochemicals Division.

The
table below sets forth management's estimates of the effect of changes in the scope of consolidation, exchange rates, price and volume on Rhodia's consolidated net sales between the
first

22

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quarter
of 2002 and the first quarter of 2003. The method of calculating these estimates is described under "Presentation of Financial and Other Information."

|          |  |       |  |      |    |       |    |       |  | On a Comparable Basis |   |    
|--------- |  | ----- |  | ---- | -- | ----- | -- | ----- |  | --------------------- | - | ---
|
|
|
|Net sales |  | 1,711 |  | (9.8 | )% | (10.2 | )% | 1,368 |  | 3.0                   | % | 1.4

Operating income

Operating income decreased to €9 million in the first quarter of 2003 from €79 million for the same period in 2002.
Operating income in the Consumer Care and Food Division and the Industrial Care and Services Division decreased in the first quarter of 2003 compared to the first quarter of 2002. Operating losses in
the Pharmaceuticals and Agrochemicals Division and in the Other Businesses Division increased in the first quarter of 2003 compared to the first quarter of 2002. Operating income in the Automotive,
Electronics and Fibers Division, however, increased in the first quarter of 2003 compared to the first quarter of 2002. Operating income in the first quarter of 2003 was negatively impacted by
increases in prices of raw materials, restructuring costs and expenses of €8 million related to difficulties in restarting a production unit of the Intermediates business of the
Pharmaceuticals and Agrochemicals Division partially offset by a reduction in fixed costs. The strategic raw materials index, discussed above under "Cost of Raw Materials", increased to an average of
102 for the first quarter of 2003 compared to 87 for the first quarter of 2002.

Financial expenseNet

Financial expensenet declined to €27 million in the first quarter of 2003 from €38 million in the same
period for 2002, reflecting a decline in Rhodia's net debt.

Other income/(expense)Net

Other income/(expense)net represented a net expense of €(8) million in the first quarter of 2003 compared to
€(16) million for the same period in 2002.

Income taxes

In the first quarter of 2003, Rhodia recorded a tax charge of €16 million compared to a charge of €8 million for the
same period in 2002.

Equity in earnings/(losses) of affiliated companies

Equity in earnings/(losses) of affiliated companies made a negative contribution of €9 million in the first quarter of 2003 compared with a
negative contribution of €8 million for the same period in 2002. Losses attributable to Nylstar amounted to €7 million and
€2 million of such losses were attributable to Butachimie.

Amortization of goodwill

Amortization of goodwill decreased 15.4% to €11 million in the first quarter of 2003 compared to €13 million for the
same period in 2002.

23

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Minority interests

Minority interests amounted to €(1) million in the first quarter of 2003 compared to €(2) million for the same period in 2002.

Net loss

Rhodia had a net loss of €63 million, or €0.35 per share, in the first quarter of 2003 compared to a loss of
€6 million, or €0.03 per share, for the same period in 2002. The average number of shares used to calculate loss per share was 179,309,188 in the first quarter
of 2003 and 179,092,589 in the first quarter of 2002.

Consolidated Balance Sheet

Operating Working capital

Rhodia's operating working capital was €903 million at March 31, 2003 compared to €892 at December 31, 2002. As of
March 31, 2003, Rhodia's gross working capital requirement (defined as inventories plus accounts receivable plus other current assets minus accounts payable and other current liabilities) was
€572 million.

Consolidated Net debt

Consolidated net debt (defined as long-term debt, plus short-term borrowings and current portion of long-term debt, minus cash
and cash equivalents and marketable securities) increased €167 million to €2,300 million at March 31, 2003 from
€2,133 million at year-end 2002. The increase is mainly attributable to increased working capital requirements partially offset by positive operating cash flow. Cash
originating from the securitization program was €481 million as of March 31, 2003 compared to €531 million as of December 31, 2002,
contributing to a €50 million increase in working capital requirements.

Other long-term liabilities

Long-term contingency reserves amounted to €1,225 million at March 31, 2003 compared to
€1,233 million at December 31, 2002. Reserves at March 31, 2003 consisted mainly of reserves for pension and retirement costs of €805 million and
deferred income taxes of €210 million. Other long-term liabilities amounted to €210 million.

Stockholders' equity and minority interests

Stockholders' equity including minority interests was €1,724 million at March 31, 2003, a decrease of
€134 million compared to €1,858 million at December 31, 2002. The decline primarily corresponds to recognition of the net loss for the first
quarter of 2003 of €63 million and negative translations adjustments of €72 million (due principally to the devaluation of the U.S. dollar).

Private Placement of High Yield Notes

On May 28, 2003, Rhodia issued the equivalent of €1,000,000,000 in notes through a private placement. The issuance consisted of
$200,000,000 aggregate principal amount of 7.625% senior notes due 2010, €200,000,000 aggregate principal amount of 8.000% senior notes due 2010, $385,000,000 aggregate principal
amount of 8.875% senior subordinated notes due 2011 and €300,000,000 aggregate principal amount of 9.250% senior subordinated notes due 2011. For additional information on the risks
relating to the issuance of high yield notes see "Item 3. Key InformationRisk Factors."

24

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Divestiture of Polyurethane Flame Retardants Business

On June 17, 2003, Rhodia announced that it had signed a binding agreement with Albemarle Corporation pursuant to which Albemarle Corporation will acquire
Rhodia's phosphorus-based polyurethane flame retardants business. As part of the transaction, Albemarle is acquiring Rhodia's associated production site in Avonmouth in the United Kingdom. The
transaction is subject to regulatory approvals.

Nylstar Restructuring Plan

Faced with on-going difficulties in the worldwide textile market, Nylstar, Rhodia's 50/50 joint venture with SNIA, shall be implementing a restructuring plan for
2003 aimed at reducing its manufacturing and production capacity at its plants located in Germany and Italy.

Butachimie

In connection with DuPont's announcement that it intends to spin off its polyamides business, Rhodia and DuPont have commenced discussions on the future status of
their partnership in the Butachimie 50/50 joint venture.

Results of Operations

Consolidated Operating Results for 2000, 2001 and 2002

The table below sets forth an analysis of operating income for the fiscal years ended December 31, 2000, 2001 and 2002.

|                                              |  | Year ended December 31, |  
|--------------------------------------------- |  | ----------------------- | -
|
|
|Net sales                                     |  | 7,419                   |  
|Production costs and expenses                 |  | (5,053                  | )
|Administrative and selling expenses           |  | (1,138                  | )
|Research and development expenses             |  | (194                    | )
|Restructuring and environmental costs         |  | (14                     | )
|Depreciation of property, plant and equipment |  | (450                    | )
|Amortization of intangible assets             |  | (42                     | )
|                                              |  |                         |  
|Operating income                              |  | 528                     |  
|                                              |  |                         |  

---

25

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Consolidated Operating Results for 2001 and 2002

Net Sales

The table below sets forth management's estimates of the effect of changes in the scope of consolidation, exchange rates, price and volume on Rhodia's
consolidated net sales by Division between 2001 and 2002. The method of calculating these estimates is described under "Presentation of Financial and Other Information."

|                            |  |       |  |      |    |      |    |       |  | On a comparable basis |    |     
|--------------------------- |  | ----- |  | ---- | -- | ---- | -- | ----- |  | --------------------- | -- | ----
|
|
|
|Consumer Specialties(1)     |  | 2,163 |  | (5.6 | )% | (3.5 | )% | 1,965 |  | (3.0                  | )% | (1.4
|Polyamide(1)                |  | 1,444 |  | (0.4 | )  | (3.7 | )  | 1,385 |  | 1.7                   |    | (3.9
|Fine Organics(1)            |  | 1,219 |  | 0.5  |    | (4.7 | )  | 1,168 |  | 3.7                   |    | 0.2 
|Industrial Specialties(1)   |  | 1,220 |  | (4.9 | )  | (4.8 | )  | 1,101 |  | 2.1                   |    | 0.4 
|Services and Specialties(1) |  | 1,013 |  | (1.2 | )  | (3.6 | )  | 964   |  | 2.3                   |    | (3.4
|Other(2)                    |  | 220   |  |     |    |     |    |      |  |                      |    |    
|                            |  |       |  |      |    |      |    |       |  |                       |    |     
|Net sales                   |  | 7,279 |  | (3.8 | )% | (3.9 | )% | 6,718 |  | 0.9                   | %  | (2.4
|                            |  |       |  |      |    |      |    |       |  |                       |    |     

---

26

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The
tables below set forth the consolidated net sales and contribution by Division and contribution to net sales by geographic region for the fiscal years ended December 31, 2001
and 2002.

|                          |  | Year ended December 31, |  
|------------------------- |  | ----------------------- | -
|
|
|
|Net sales                 |  | 7,279                   |  
|Contribution by Division: |  |                         |  
|Consumer Specialties      |  | 30                      | %
|Polyamide                 |  | 19                      |  
|Fine Organics             |  | 15                      |  
|Industrial Specialties    |  | 16                      |  
|Services and Specialties  |  | 14                      |  
|Other(1)                  |  | 6                       |  
|                          |  |                         |  
|Total                     |  | 100                     | %
|                          |  |                         |  

---

|                    |  | Year ended December 31, |  
|------------------- |  | ----------------------- | -
|
|
|Europe              |  | 49                      | %
|North America       |  | 22                      |  
|Latin America       |  | 16                      |  
|Asia/Pacific/Africa |  | 13                      |  
|                    |  |                         |  
|Total               |  | 100                     | %
|                    |  |                         |  

---

Net
sales declined by 9.1% to €6,617 million in 2002 from €7,279 million the previous year. Changes in the scope of consolidation and
changes in exchange rates accounted for the bulk of the decline. Changes in the scope of consolidation, corresponding essentially to the divestment of non-strategic assets in 2001 and
2002, had a 3.8% negative impact on sales. The main changes, in declining order of importance, were:



Changes
in exchange rates had a net negative impact of 3.9% on consolidated net sales, including 1.6% related to the U.S. dollar and 1.9% related to the Brazilian real.

On
a comparable basis (i.e. excluding changes resulting from the scope of consolidation and changes in exchange rates), net sales declined 1.5% for the year. Lower average selling prices
had a 2.4% negative impact. Polyamide prices were weakened by the continued depressed state of the textile market. In Services and Specialties, Eco Services prices in the United States are linked to
gas prices, which declined in 2002. Volume growth boosted net sales by 0.9%. All Divisions reported higher

27

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volumes,
with the exception of Consumer Specialties, which focused on building sales of higher margin products.

Consumer Specialties

Consumer Specialties net sales decreased by 13.2% to €1,878 million in 2002 from €2,163 million in 2001. Changes in
the scope of consolidation, including principally the divestment in 2001 of Albright & Wilson European surfactants business and the Empicryl lubricant additives businesses and the consolidation
in 2002 of new businesses in China, had a 5.6% negative
impact. Changes in exchange rates had a negative impact of 3.5%. All of the Division's businesses were adversely affected by the weaker U.S. dollar, which reduced their net sales in the same
proportions.

On
a comparable basis, net sales declined 4.4%, including 3.0% attributable to lower volumes and 1.4% due to lower average prices. Phosphorus Derivatives volumes rose sharply during the
year, especially in Asia. Volumes declined, however, across all other Consumer Specialties businesses, due principally to their increased focus on selling higher margin products. This was the case, in
particular, for the Cosmetics & Detergents business.

Polyamide

Polyamide net sales declined by 6.3% to €1,353 million in 2002 from €1,444 million in 2001. Changes in exchange
rates (mainly the decrease in the value of the Brazilian real) accounted for 3.7% of the decline, while changes in scope of consolidation (corresponding to the August 2002 divestiture of
Kermel) had a 0.4% negative impact.

On
a comparable basis, net sales decreased by 2.2%, reflecting a 1.7% positive impact of higher volumes and a 3.9% negative impact of lower average prices, due principally to increased
competitive pressure in a depressed market. The Division's net sales started to improve in the second quarter, led by the action plans launched in late 2001. Sales and marketing initiatives
contributed to an increase in volumes, especially for engineering plastics and polyamide intermediates, despite a persistently difficult business environment. In particular, the absence of any
improvement in the textile market weakened intermediates sales by the Division's Brazilian subsidiary. However, higher volumes in other end markets permitted the Division to use the additional
capacity of the recent extension of Butachimie's production facility.

Fine Organics

Fine Organics net sales remained relatively stable at €1,213 million in 2002, compared to €1,219 million in 2001.
The consolidation of Ruohai in China had a 0.5% positive impact while changes in exchange rates had a negative impact of 4.7%. All businesses were affected by unfavorable exchange rates to varying
degrees, depending on their relative exposure to the U.S. dollar (Rhodia ChiRex, Pharmaceutical Ingredients, Perfumes & Specialties) or the U.S. dollar and the Brazilian real (Intermediates).
For the Life Sciences business, the effect of the weaker U.S. dollar was offset by a favorable currency effect on transactions in pound sterling.

On
a comparable basis, net sales increased 3.9%, including 3.7% attributable to higher volumes and 0.2% attributable to higher prices. Pharmaceutical Ingredients and Perfumes &
Specialties experienced a fall-off in volumes caused by increased competition, especially in the United States. By contrast, Rhodia ChiRex, Life Sciences and Intermediates all enjoyed higher volumes
for the year. Average Fine Organics prices declined slightly, but prices trended upwards in Intermediates and Perfumes & Specialties. In the case of phenol-based intermediates, the increase had
no impact on margins because prices are indexed to phenol prices.

28

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Industrial Specialties

Industrial Specialties net sales declined by 7.5% to €1,129 million in 2002 from €1,220 million in 2001. Changes in
exchange rates had a 4.8% negative impact, due principally to the weaker Brazilian real and U.S. dollar, while changes in scope of consolidationcorresponding to the 2001 divestment of the
Metal Organics business and the 2002 divestment of the Commodity Latex businesshad a negative impact of 4.9%.

On
a comparable basis, net sales increased 2.5%, including a 2.1% increase attributable to higher volumes and a 0.4% rise attributable to higher average prices. With the exception of
Silicones, all of the Division's businesses increased their sales volumes. Average prices rose in the Silicones and Silicas businesses, but were slightly down in the Paint, Paper & Building
Materials business.

Services and Specialties

Services and Specialties net sales declined by 5.8% to €954 million from €1,013 million in 2001. Changes in exchange
ratesprincipally the U.S. dollar and the Brazilian realhad a 3.6% negative impact. Higher volumes had a 2.3% positive impact, and lower average prices had a negative impact
of 3.4%. Changes in scope of consolidation mainly concerned the Eco Services business. All of the Division's businesses were affected by the unfavorable currency effect in roughly the same
proportions.

Acetow
sales declined to €447 million from €455 million in 2001. Sales increased 2.6% on a comparable basis, due principally to growth in
Russia, China and Brazil.

Eco
Services sales decreased by 9.6% to €358 million from €396 million in 2001. The 3.9% decline on a comparable basis mainly concerned the
sulfuric acid regeneration business in the United States and was due to the fact that under the terms of this business's long-term contracts, reductions in raw material costs are
automatically passed on to customers. A restructuring plan was launched at the end of 2002 to restore the competitiveness of European operations.

After
a difficult year in 2001, Electronics & Catalysis continued to suffer the effects of severely depressed demand in the electronics market. Sales declined by 8.0% to
€149 million from €162 million in 2001. On a comparable basis, the decline was 4.3%.

Other

"Other" includes sales by Rhodia's other businesses, including principally Rhodiaster, commercial resales made on behalf of non-Group companies and
elimination of interdivision revenues. Net sales by Rhodia's other businesses decreased 34.4% to €284 million in 2002 from €433 million in 2001. For the nine months
ended September 30, 2002, Rhodiaster recorded sales of €227 million. Rhodiaster was deconsolidated as of October 1, 2002.

Operating expenses

The table below sets forth management's estimates of the effect of changes in the scope of consolidation and exchange rates on Rhodia's production costs,
administrative and selling expenses and

29

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research
and development expenses between 2001 and 2002. The method of calculating these estimates is described under "Presentation of Financial and Other Information".

|                                    |  | 2001 Historical
Expenses |  | Scope of
Consolidation |    | Exchange Rates |    | 2001
Comparable Basis |  | 2002 Historical
Expenses
|----------------------------------- |  | ------------------------ |  | ---------------------- | -- | -------------- | -- | --------------------- |  | ------------------------
|
|Production costs and expenses       |  | 5,166                    |  | (4.0                   | )% | (3.9           | )% | 4,757                 |  | 4,489                   
|Administrative and selling expenses |  | 1,120                    |  | (2.1                   | )% | (3.0           | )% | 1,062                 |  | 1,104                   
|Research and development expenses   |  | 197                      |  | (1.0                   | )% | (2.0           | )% | 191                   |  | 201                     

The
table below sets forth financial data relating to Rhodia's operating expenses for fiscal years ended December 31, 2001 and 2002.

|                                      |  | Year ended December 31,
|------------------------------------- |  | -----------------------
|
|
|Production costs and expenses         |  | 5,166                  
|Administrative and selling expenses   |  | 1,120                  
|Research and development expenses     |  | 197                    
|Depreciation and amortization         |  | 542                    
|Restructuring and environmental costs |  | 163                    
|                                      |  |                        
|Operating expenses                    |  | 7,188                  
|                                      |  |                        

Production costs and expenses

Production costs declined 13.1% to €4,489 million in 2002, compared with €5,166 million in 2001. On a comparable
basis, production costs declined by 5.8%. The decline in raw material costs was responsible for an estimated €166 million of this reduction, and the restructuring programs
described above also had a significant impact. This decline was partially offset by an estimated €37 million increase in production costs relating to the start-up of
a new installation in the Fine Organics Division.

Administrative and selling expenses

Administrative and selling expenses declined slightly by 1.4%, from €1,120 million in 2001 to €1,104 million in
2002. On a comparable basis, administrative and selling expenses increased by 4.0%. Estimated savings generated by the Jump program for reducing fixed costs and the World Class Manufacturing program
(the "WCM program") for optimizing production capacity
both of which were launched in 1998 were offset by inflation and costs incurred by the Commercial Excellence and e-Business programs.

Research and development expenses

Research and development expenses remained relatively stable at €218 million (3.3% of net sales in 2002), compared with
€215 million in 2001 (3.0% of net sales). Excluding amortization, research and development expenses increased 2.0% from €197 million in 2001 to
€201 million in 2002. On a comparable basis, research and development expenses increased by 5.2%.

30

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Depreciation and amortization

Depreciation and amortization decreased by 17.5% to €447 million in 2002 from €542 million in 2001. This decline was
due in part to the decline in depreciation and amortization relating to restructuring, which declined from €65 million in 2001 to €5 million in 2002.

Restructuring and environmental costs

Restructuring and environmental costs decreased from €163 million in 2001 to €25 million in 2002, principally due to
the effect of Rhodia's restructuring program begun in late 2001. The €25 million in restructuring and environmental costs for 2002 principally concerned the Fine Organics
Division (with respect to restructuring Rhodia Chirex's pharmaceutical activities in the United Kingdom) and the Services and Specialties Division (with respect to Eco Services in Europe).

Operating income

Operating income rose to €351 million in 2002 from €91 million in 2001. 2001 operating income was reduced by
€163 million of restructuring and environmental costs and €65 million of restructuring-related depreciation and amortization. All Divisions contributed to
the improvement of operating income, including lower costs
recorded in "Other". Polyamide, Consumer Specialties and Fine Organics were the biggest contributors to the improvement. In addition, each Division also benefited from lower restructuring-related
depreciation and amortization.

Consumer Specialties

Consumer Specialties operating income increased 93.8% to €126 million in 2002 from €65 million in 2001. Operating
margin (operating income as a percentage of sales) increased from 3.0% in 2001 to 6.7% in 2002. In 2001, the Division's operating income was reduced by €19 million of
restructuring and environmental costs and €15 million of restructuring-related depreciation and amortization. The increase primarily reflected the benefits of the restructuring
launched at the end of 2001 in the Specialty Phosphates business, as well as the good manufacturing and sales performance of the Phosphorus Derivatives business. Cosmetics & Detergents
operating income remained stable due to innovation-driven improvements in product offerings. The Food business experienced start-up problems at a new plant in Europe and tougher
competition in the United States.

Polyamide

Polyamide operating income increased steadily from one quarter to the next, reaching €123 million in 2002 versus
€32 million in 2001. Operating margin increased from 2.2% in 2001 to 9.1% in 2002. In 2001, the Division's operating income was reduced by €36 million of
restructuring and environmental costs and €10 million of restructuring-related depreciation and amortization and approximately €26 million in exceptional
costs related to the extension of Butachimie's production capacity. The increase of operating income also resulted from the success of indexed contracts on raw materials and cost-cutting
initiatives. The restructuring programs launched at the end of 2001, involving the closure of five plants or production shops, resulted in a reduction in fixed costs in 2002, in line with
expectations.

Fine Organics

Fine Organics operating income increased to €36 million in 2002 from a loss of €34 million in 2001. Operating margin
increased from (2.8)% in 2001 to 3.0% in 2002. In 2001, the Division's operating income was reduced by €49 million of restructuring and environmental costs and
€24 million of restructuring-related depreciation and amortization. The increase reflected higher volumes at Rhodia ChiRex, as well as in Life Sciences and Intermediates,
coupled with lower raw materials costs. A restructuring plan was undertaken at Rhodia ChiRex UK in the fourth quarter, ahead of the market

31

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slowdown
expected in 2003. The profitability of the Pharmaceutical Ingredients and Perfumes & Specialties businesses improved following the restructuring carried out in 2001 in France and the
United States. The benefits of these measures were partly offset, however, by the effects of volume erosion experienced in increasingly competitive markets.

Since
early 2002, Intermediates operating income was weakened by the €37 million in additional costs generated by start-up problems at a plant operated
on behalf of another company. Several adjustments were made to the plant in the first half of 2002, while in the second half of 2002 more far-reaching process changes were made. The plant
was closed in November and December 2002 to allow the adjustment work to be carried out, paving the way for production to reach expected levels in the first half of 2003.

Industrial Specialties

Industrial Specialties operating income rose 29.3% to €75 million in 2002 from €58 million in 2001. Operating margin
increased from 4.8% in 2001 to 6.6% in 2002. In 2001, the Division's operating income was reduced by €12 million of restructuring and environmental costs and
€2 million of restructuring-related depreciation and amortization. Paint, Paper & Construction Materials operating income was lifted by increased sales in its core paint
and coating markets. Profitability of the Silicas business improved, thanks to higher sales volumes in the strategic tire and nutraceuticals markets. The Silicones business was weak in the second
half, while its profitability was also adversely affected by the closure of one of the main plants for debottlenecking.

Services and Specialties

Operating income for the Services and Specialties Division increased 14.5% to €95 million in 2002, compared with
€83 million in 2001. Operating
margin increased from 8.2% in 2001 to 10.0% in 2002. Restructuring charges amounted to €9 million in 2002 versus €20 million in 2001, including a
€12 million charge for depreciation and amortization. Acetow's good performance offset the impact of the difficulties faced by the other businesses.

Other

Operating loss of Rhodia's other businesses improved from a loss of €113 million in 2001 to a loss of €104 million
in 2002. Rhodiaster was sold in the latter part of 2002 and therefore contributed to consolidated earnings only for the first nine months of the year. Rhodiaster's contribution to operating income for
the period amounted to €19 million, representing 8.2% of Rhodiaster's sales for the period compared with 16.0% for the full twelve months of 2001. The lower margin reflects the
gradual deterioration of the South American polyester market during the course of the year. The costs of corporate functions continued to decline in 2002, and ended the year at nearly
€116 million.

Financial expenseNet

Financial expensenet was sharply reduced to €123 million in 2002 from €186 million in 2001, reflecting
the combined benefits of lower interest rates and a decline in average net debt. Financial expense-net represented 5.2% of average net debt for the year versus 5.8% in 2001. Average net
debt is calculated using the net debt at the end of each quarter. In addition, the reduction of capital expenditure led to a corresponding decline in related capitalized interest. Capitalized interest
is interest paid on indebtedness incurred to finance capital expenditures. The interest is capitalized and then amortized over the useful life of the asset financed.

32

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Other income/(expense)Net

Other income/(expense)net represented a net expense of €72 million in 2002, versus €108 million in
2001. This decline was due principally to the decrease in gains from asset disposals. Asset disposals generated a net loss of €34 million in 2002, including
€38 million from the main divestments described under "Scope of Activities Included in the Consolidated Financial Statements". With the exception of Rhodiaster, all of the
businesses divested during the year were sold at a profit, but these gains were not sufficient to offset the €109 million loss before tax on the sale of Rhodiaster. The
year-on-year improvement, which is analyzed in Note 21 to the consolidated financial statements, mainly reflects the fact that the 2001 amount includes two items
totaling €50 million, the first related to the closing of a site in Brazil and the second related to an arbitration proceeding in China. In addition, a net gain on foreign
currency of €14 million was recorded in 2002 as opposed to a net loss on foreign currency of €7 million the previous year. In 2001, asset disposals
yielded a net gain of €15 million.

Income taxes

In 2002, the Group recorded a tax charge of €66 million compared to an €86 million benefit in 2001 after
reclassifying the tax benefit arising on the Group's equity in the losses of affiliated companies, which amounted to nearly €8 million that year. The Group's effective tax rate
was 42.3%. The effective rate was higher than the statutory tax rate in France of 33.3% due principally to the fact that certain capital losses resulting from divestitures were not recognized for tax
deduction purposes.

In
2001, a deferred tax asset was recorded in respect of tax losses generated during the year. This led to recognition of a total tax benefit of €86 million,
excluding the tax benefit arising on the losses of affiliated companies.

Equity in earnings/(losses) of affiliated companies

Equity affiliates made a negative contribution of €38 million in 2002 compared with a negative contribution of
€16 million the previous year. The sharp deterioration stemmed from the ongoing crisis in the textile market, which caused the losses from Nylstar (a textile yarns joint venture
with SNIA) to worsen by €42 million.

Amortization of goodwill

Amortization of goodwill decreased 37% to €47 million in 2002, compared with €75 million in 2001. In 2001, this item
included accelerated amortization in the amount of €25 million.

Minority interests

Minority interests amounted to €(9) million in 2002, compared to €(5) million in 2001. The increase in minority
interests was largely due to the profits generated by Rhodia Heng-Chang, which has been consolidated globally since January 2002 and held by Rhodia at 70%.

Net loss

Rhodia ended the year with a net loss of €4 million, or €0.02 per share, versus a loss of
€213 million, or €1.19 per share, in 2001. The average number of shares used to calculate loss per share was 178,765,518 in 2002 and 179,103,640 in 2001.

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Consolidated Operating Results for 2000 and 2001

Net Sales

The table below sets forth management's estimates of the effect of changes in the scope of consolidation, exchange rates, price and volume on Rhodia's
consolidated net sales by division between 2000 and 2001. The method of calculating these estimates is described under "Presentation of Financial and Other Information".

|                            |  |       |  |      |    |      |   |       |  | On a comparable basis |    |     
|--------------------------- |  | ----- |  | ---- | -- | ---- | - | ----- |  | --------------------- | -- | ----
|
|
|
|Consumer Specialties(1)     |  | 2,192 |  | (1.0 | )% | 0.8  | % | 2,188 |  | (1.7                  | )% | 0.6 
|Polyamide(1)                |  | 1,589 |  | (0.3 | )  | (4.1 | ) | 1,520 |  | (6.5                  | )  | 1.5 
|Fine Organics(1)            |  | 1,185 |  | 7.5  |    | (2.2 | ) | 1,248 |  | (1.9                  | )  | (0.4
|Industrial Specialties(1)   |  | 1,239 |  | 0.0  |    | (3.5 | ) | 1,195 |  | 0.9                   |    | 1.2 
|Services and Specialties(1) |  | 984   |  | 0.7  |    | (0.6 | ) | 985   |  | (4.3                  | )  | 7.1 
|Other(2)                    |  | 230   |  | 10.4 |    | 7.0  |   | 271   |  | (19.9                 | )  | 0.7 
|                            |  |       |  |      |    |      |   |       |  |                       |    |     
|Net sales                   |  | 7,419 |  | 1.2  |    | (1.3 | ) | 7,407 |  | (3.3                  | )  | 1.6 
|                            |  |       |  |      |    |      |   |       |  |                       |    |     

---

34

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The tables below set forth Rhodia's consolidated net sales and contribution by Division and contribution to net sales by geographic region for the
fiscal years ended December 31, 2000 and 2001.

|                          |  | Year ended December 31, |  
|------------------------- |  | ----------------------- | -
|
|
|
|Net sales                 |  | 7,419                   |  
|Contribution by Division: |  |                         |  
|Consumer Specialties      |  | 30                      | %
|Polyamide                 |  | 21                      |  
|Fine Organics             |  | 14                      |  
|Industrial Specialties    |  | 16                      |  
|Services and Specialties  |  | 13                      |  
|Other(1)                  |  | 6                       |  
|                          |  |                         |  
|Total                     |  | 100                     | %
|                          |  |                         |  

---

|                    |  | Year ended December 31, |  
|------------------- |  | ----------------------- | -
|
|
|Europe              |  | 50                      | %
|North America       |  | 21                      |  
|Latin America       |  | 16                      |  
|Asia/Pacific/Africa |  | 13                      |  
|                    |  |                         |  
|Total               |  | 100                     | %
|                    |  |                         |  

---

Net
sales declined by 1.9%, from €7,419 million in 2000 to €7,279 million in 2001. Changes in scope of consolidation, relating primarily to
the full-year consolidation of Albright & Wilson and ChiRex and disposals of the European surfactants, Empicryl and metal organics businesses, contributed 1.2%. Changes in exchange
rates had a negative impact of 1.3%, reflecting the negative impact of the Brazilian real, the pound sterling and Asian currencies and the positive impact of the dollar/euro exchange rate. On a
comparable basis, net
sales declined 1.7%, representing a 3.3% drop in volume (primarily reflecting severe downturns in the textile and electronics markets) and a 1.6% increase in prices.

Consumer Specialties

Net sales by the Consumer Specialties Division declined by 1.3% in 2001, to €2,163 million from €2,192 million in
2000, primarily due to the disposal of Albright & Wilson's European surfactants business and Empicryl lubricant additives businesses in April 2001 and June 2001, respectively. Changes in
exchange rates had a positive effect of 0.8%.

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On
a comparable basis, net sales declined 1.1%, comprising a 1.7% decline in volumes and 0.6% due to lower average prices. With a large part of its of net sales generated in North
America, the Division was particularly affected by the slowdown in the U.S. economy during the second half of 2001, worsened by the events of September 11th. Over the full year, the weakness in
demand was especially noticeable in sodium tripoly-phosphates (STPP) and low value-added phosphorus derivatives. Food ingredients continued to expand, without feeling any effects from the North
American slowdown. Growth in the cosmetics, detergent and food markets was driven by new product introductions.

Polyamide

Net sales by the Polyamide Division declined by 9.1% in 2001, to €1,444 million from €1,589 million in 2000. Changes
in exchange rates, related primarily to the Brazilian real, accounted for 4.1% of the decline.

On
a comparable basis, sales declined 5%, comprising a 6.5% decline in volume and a 1.5% positive impact of higher average prices. The decrease reflected difficulties encountered in
textile markets, which slipped into deep recession in 2001 following a worldwide collapse in demand. In addition, the slump in the electronics market, which negatively affected connectors and
electrical equipment, considerably weakened sales in the Engineering Plastics business. However, despite the exceptionally depressed market conditions, the Division as a whole gained new market share
during the year.

Fine Organics

Net sales by the Fine Organics Division amounted to €1,219 million in 2001, up 2.9% from the €1,185 million reported
in 2000. The increase was primarily due to the consolidation of ChiRex, acquired in the fourth quarter of 2000. Changes in exchange rates had a negative impact of 2.2%.

On
a comparable basis, sales decreased 2.3%, comprising a 1.9% decline in volumes and a 0.4% decline in prices. The year's overall performance reflected a significant slowdown in all the
Division's businesses during the second half. In particular, Pharmaceutical Ingredients was adversely affected by market over-capacity and highly aggressive competition from Asian aspirin
and paracetamol producers. Rhodia ChiRex confirmed the growth potential of its Contract Research business, but technical difficulties during start-up of a production plant caused delays in
sales of exclusive pharmaceutical molecules in the fourth quarter.

Industrial Specialties

Net sales by the Industrial Specialties Division declined by 1.5% in 2001, to €1,220 million from €1,238 million in
2000. Changes in exchange rates had a 3.5% negative effect related primarily to the Brazilian real.

On
a comparable basis, net sales increased by 2.1%, comprising a 0.9% increase in volumes and 1.2% attributable to higher average prices. Overall, sales showed resistance to a
deteriorating business environment. The Paint, Paper and Construction Materials business increased sales, despite the unfavorable impact of the U.S. economic slowdown. The pricing power of the three
core businesses, aliphatic di-isocyanates, specialty latex and solvents, contributed to the gain, during this period of slow volume growth. Silica sales were stable overall, with increases
in Europe and the United States in the tires, toothpaste, nutraceutics and other specialty markets and sales decline in the Asian shoe market. Silicone sales demonstrated strong resilience in the face
of challenging conditions in the main markets, particularly in North America.

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Services and Specialties

Net sales by the Services and Specialties Division rose by 2.9% in 2001, to €1,013 million from €984 million in
2000, but results varied in its three businesses.

Acetow
sales rose 11.8% to €455 million in 2001 from €407 million in 2000, led by sustained strong growth in volumes and prices,
particularly in Russia, China and Brazil. At the same time, Acetow began redeploying its cellulose acetate procurement, by halting production in Brazil and increasing operations in the United States
via Primester, a joint venture with Eastman Chemical Co. Sales at Rhodia Eco Services increased 1.5% during the year, to €396 million from €390 million in
2000. This business maintained market share while increasing prices, particularly through the sulfuric acid regeneration business in the United States and the waste treatment business. In Europe, on
the other hand, this business had to deal with a serious deterioration of the sulfuric acid market following the entry of new British competitors. After a favorable year in 2000, Rhodia
Electronics & Catalysis sales fell 13.4% in 2001, to €162 million from €187 million in 2000, due principally to a nearly 50% drop in demand from
the electronics industry. This unfavorable market environment temporarily offset the impact of two years of restructuring the business portfolio and manufacturing base and disrupted the turnaround
that had begun in 2000. Nevertheless, Electronics & Catalysis consolidated market share during the year and confirmed its leadership position in automotive emissions control solutions.

Other

Net sales of Rhodia's other businesses amounted to €433 million in 2001, compared with net sales of €451 million in
2000. In 2001, Rhodiaster posted sales of €337 million, down 5.3% in relation to 2000, and its operating margin remained stable at 16.0%.

Operating expenses

The table below sets forth financial data relating to Rhodia's operating expenses for the fiscal years ended December 31, 2000 and 2001.

|                                      |  | Year ended December 31,
|------------------------------------- |  | -----------------------
|
|
|Production costs and expenses         |  | 5,053                  
|Administrative and selling expenses   |  | 1,138                  
|Research and development expenses     |  | 194                    
|Depreciation and amortization         |  | 492                    
|Restructuring and environmental costs |  | 14                     
|                                      |  |                        
|Operating expenses                    |  | 6,891                  
|                                      |  |                        

Production costs and expenses

Production
costs totaled €5,166 million, up €113 million in relation to 2000. Raw material costs, which are included in this category, were
responsible for an additional €166 million. Also contributing to this increase were charges of approximately €26 million incurred by the Polyamide
Division related to the launching of a new production unit at the Chalampé site in France, including €11 million corresponding to non-capitalized
projects and start-up expenses, plus additional expenses of €15 million for purchases and external storage linked to the temporary production shutdown.

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However,
the Jump program and the WCM program provided relief on certain structural costs, limiting their impact on declining sales and partially offsetting the impact of unusual
charges.

Administrative and selling expenses

Administrative and selling expenses declined by 1.6%, from €1,138 million in 2000 to €1,120 million in 2001.
Estimated savings generated by the Jump program offset costs incurred by the Commercial Excellence and e-Business programs.

Research and development expenses

Research and development expenses increased to €215 million (or €197 million excluding amortization). Research and
development expenses as a percentage of sales increased from 2.9% in 2000 to 3.0% in 2001.

Depreciation and amortization

Depreciation and amortization increased by 10.2% to €542 million in 2001 from €492 million in 2000. The increase in
both depreciation and amortization was due principally to the exceptional amortization described above under "Restructuring charges."

Restructuring and environmental costs

Restructuring and environmental costs increased from €14 million in 2000 to €163 million in 2001, for the reasons
described above under "Restructuring charges and related amortization charges" and in Note 17(d) to the Consolidated Financial Statements.

Operating income

Operating income for 2001 amounted to €91 million compared with €528 million in 2000, after charges for
restructuring costs (€253 million) and other items.

Consumer Specialties

Operating income declined 35.0% from €100 million in 2000 to €65 million in 2001. Operating margin declined from
4.6% in 2000 to 3.0% in 2001. Former Albright & Wilson facilities were restructured during the year, leading to an improvement in capacity utilization. This was particularly the case in the
Phosphates business, which closed four plants and head offices and reduced workforce levels. However, the impact of synergies arising on the integration of Albright & Wilson, which totaled
around €75 million by the end of 2001, was more than offset during the year by higher energy prices and prices for soda ash, elemental phosphorus and other raw materials.
Operating income was also reduced by the €20 million in restructuring expense originally scheduled for 2002 and 2003 but incurred in 2001 in the Phosphates and Phosphorus
Derivatives businesses.

Polyamide

Operating income declined 82.0% from €178 million in 2000 to €32 million in 2001 due principally to the decline in
business, reserves for restructuring (€36 million), exceptional expenses related to capacity expansion at the Butachimie upstream plant (€26 million) and
the impact of higher raw materials prices (partly offset by the reduction in fixed costs). Operating margin declined from 11.2% in 2000 to 2.2% in 2001. The restructuring programs are targeted at
optimizing the industrial base to a best-cost position. In 2001, this involved the closure of five plants and production facilities in order to increase utilization of the Division's
competitive plants, particularly those located in Eastern Europe.

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Fine Organics

Operating income declined from €82 million in 2000 to a loss of €34 million in 2001. Operating margin declined from
6.9% in 2000 to (2.8)% in 2001. In response to the challenging environment, the Division restructured operations to improve competitiveness by adjusting production capacity to market needs. The
Division recorded €92 million of restructuring charges and accelerated amortization and depreciation, and also experienced with high raw materials costs. In the fourth quarter
of 2001, however, the Division noted for the first time a positive impact from lower petrochemical feedstock prices, which had begun to ease in the second half of 2001.

Industrial Specialties

Operating income declined 37.0% from €92 million in 2000 to €58 million in 2001, primarily due to the impact of
restructuring and environmental costs (€12 million) and higher raw materials and energy prices. Operating margin declined from 7.4% in 2000 to 4.8% in 2001. Margins were
adversely impacted by high raw materials prices in the first half of 2001 and by greater price competition in the second half of 2001.

Services and Specialties

Operating income declined 31.4% from €121 million in 2000 to €83 million in 2001, due principally to restructuring
charges. Operating margin
declined from 12.3% in 2000 to 8.2% in 2001. The performance in 2001 was led by sustained growth at Rhodia Acetow and breakeven results at Rhodia Eco Services, which offset the difficulties at Rhodia
Electronics & Catalysis over the year.

Other

Other businesses recorded an operating loss of €113 million in 2001, compared with an operating loss of €45 million
in 2000. This decrease was due principally to €27 million of restructuring charges. The corporate functions were reorganized in 2001. Most corporate management and support
functions that had been included in Division structures were centralized at the Group level, enabling the Divisions to focus more effectively on their specific businesses.

Financial expenseNet

The marginal increase in net financial expense, from €177 million in 2000 to €186 million in 2001, is primarily due
to the impact of acquisitions. Acquisitions carried out in 2000 (Albright & Wilson and ChiRex, consolidated as from April 1, 2000 and October 1, 2000, respectively) affected
financial expense for only part of 2000 whereas in 2001 these charges were incurred on a full-year basis.

Despite
this burden, 2001 net financial expense represented 5.8% of the Group's average net debt, compared with 5.9% in 2000. The series of interest rate cuts in 2001the
positive effects of which take several months before being reflected in financial expensecontributed to a reduction in debt servicing, especially at the end of the year.

Other income/(expense)Net

After an expense of €7 million in 2000, this item increased to an expense of €108 million in 2001. The additional
€101 million expense principally reflects:



39

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Net
gains on the disposal of assets, which rose from €13 million in 2000 to €15 million in 2001, came primarily from the sale of real estate
in Brazil and the Empicryl lubricant additives businesses (Consumer Specialties Division) in June 2001. In 2000, net gains on disposals primarily concerned the sale of the Kallo company.

Income taxes

A deferred tax asset has been recognized, corresponding primarily to the expected tax savings from the application of tax loss carry-forwards generated in 2001.
As a result, Rhodia recorded a tax benefit of €86 million in 2001, compared with a provision of €95 million in 2000.

Equity in earnings/(losses) of affiliated companies

Income from companies accounted for by the equity method fell from €8 million in 2000 to a loss of €16 million in
2001. This sharp decline resulted from the collapse of the polyamide markets as reflected in the performance of Nylstar, a joint venture with SNIA to produce textile yarns. The increase in the
contribution made by Teris (Services and Specialties Division), a joint venture with Suez in the industrial waste treatment sector, were not sufficient to offset this decline.

Amortization of goodwill

Amortization of goodwill increased to €75 million in 2001, compared with €32 million in 2000 due principally to
accelerated goodwill amortization related to the restructuring program.

Net income/(loss)

The Group reported a net loss of €213 million in 2001, compared with net income of €216 million in 2000. In addition
to items affecting operating income, net income was adversely affected by losses of companies accounted for by the equity method (€16 million) and provisions for risks and
exceptional items (€80 million).

Earnings
per share, calculated on the basis of the average number of outstanding shares in 2001 (179,103,640), represented a loss of €1.19 compared with income of
€1.23 in 2000.

Liquidity and Capital Resources

In 2002, Rhodia's principal sources of liquidity were cash flow generated from operations, asset disposals and various sources of external financing, including
the issuance of commercial paper, other debt securities, private placement notes and borrowings under revolving credit facilities. In addition to these sources of financing, Rhodia companies also sell
trade receivables in order to provide cash for their operations. Rhodia believes that its operating cash flows, borrowings under existing committed lines of credit and the proceeds of the offering
will be adequate to allow it to meet its current debt service obligations as they become due, working capital needs, and anticipated capital expenditures.

As
of December 31, 2002, €645 million of Rhodia's debt was maturing in 2003, €404 million in 2004,
€537 million in 2005 and €488 million in 2006. These amounts relate principally to the maturities of debt securities issued under Rhodia's Euro
medium-term note program (with €500 million maturing in 2005 and €300 million maturing in 2006), and amounts drawn under committed credit
facility agreements.

40

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As
of December 31, 2002, Rhodia had €2,116 million of committed credit facilities. €565 million of these facilities expire in 2003,
€1,065 million in 2004, €220 million in 2005 and €177 million in 2006. The amounts expiring in 2004 include a syndicated credit
facility of €600 million. Since December 31, 2002, Rhodia has negotiated new committed credit facilities and certain facilities have expired. As a result, the total
amount of Rhodia's committed credit facilities as of March 31, 2003 was €2,094 million. As of December 31, 2002 Rhodia's short-term borrowings included
€175 million of commercial paper and €269 million of other short-term financings. The commercial paper program consists principally of sales
of Frenchbillets de trésorerie. The €269 million of other short-term borrowings are generally
uncommitted revolving financings granted to Rhodia SA and to various subsidiaries.

Another
important source of Rhodia's financial liquidity is the monthly or quarterly sale of some of its uncollected trade receivables. Certain Rhodia companies sold uncollected trade
receivables during 2002 and 2001, in accordance with multi-year asset securitization agreements entered into with various banks under which receivables can be sold, on a
non-recourse basis, either to qualifying special purpose entities (QSPEs) or directly to banks, and are settled against cash payments and undivided interests in a defined pool of
receivables (residual interests). The QSPEs then sell the interests they purchased in those receivables to commercial paper conduits. In 2002, Rhodia entered into a new multi-year asset
securitization agreement under which certain European subsidiaries can fund up to €240 million of trade receivables through a QSPE that then sells the interests it purchased in
those receivables to a commercial paper conduit. As of December 31, 2002, trade receivables outstanding of €627 million had been sold, with respect to which Rhodia received cash
payments of €531 million. The balance is paid to Rhodia after the collection of the trade receivables is made, ordinarily within three months of the sale. See Notes 11 and 29(f)
to the Consolidated Financial Statements.

Some
of Rhodia's committed credit lines are subject to certain financial covenants regarding a maximum level of net debt to EBITDA, a minimum level of EBITDA to net interest expense, a
minimum level of stockholders' equity and/or a maximum level of consolidated net indebtedness to capitalization. Financial covenant calculations are based on French GAAP financial information. As of
December 31, 2002, Rhodia satisfied all of its financial covenants. Most of Rhodia's committed credit facility agreements and the agreement governing the U.S. private placement notes contain a
covenant requiring the Company to maintain a ratio of net debt to EBITDA of less than 3.5 and a ratio of EBITDA to net financial expense of greater than 5.0. In facilities for which the ratio of
EBITDA to net financial expense is tested after December 31, 2004, such ratio will be 4.5 or less for such testing dates. Net Debt, EBITDA and net financial expense are defined in the
agreements and differ from similar measures used elsewhere in this annual report on Form 20-F. At December 31, 2002 Rhodia's ratio of net debt to EBITDA amounted to 3.3 and its ratio of
EBITDA to net financial expense amounted to 6.8. These covenants are tested annually, and under some agreements, semi-annually. Rhodia's ability to comply with these covenants will depend on its
operating performance and level of indebtedness. If Rhodia's operating performance is insufficient to comply with these covenants, Rhodia could be required to take other measures to reduce its
indebtedness, including asset disposals. Rhodia might not be successful in completing such disposal. Five of the committed credit facility agreements (with combined commitments of
€672 million) contain a covenant, to be tested on December 31, 2003 and 2004, as applicable, requiring Rhodia to maintain a minimum stockholders' equity of
€1,829 million. €410 million of these facilities expire in 2004 and €96 million expire in 2005. Rhodia has signed a binding agreement to amend one of
these facilities to, among other things, remove the stockholders' equity covenant and reduce the ratio of EBITDA to net financial expense to 4.0. As of December 31, 2002 total stockholders'
equity amounted to €1,835 million and as of March 31, 2003 it amounted to €1,700 million. In addition, the agreement governing the $290 million U.S. private
placement notes contains a covenant requiring Rhodia to maintain a minimum stockholders' equity of €1,600 million on an ongoing basis. Future drawings under the credit facilities will
be available only if, among other things, Rhodia meets the various financial covenants included in these facilities. Rhodia is currently in

41

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discussions
with the lenders under several of these credit facilities to renegotiate or extend the facilities and modify the terms of these financial covenants. Such discussions may not be successful.

Consolidated Balance Sheet

Operating working capital

Rhodia's operating working capital decreased from €1,401 million at December 31, 2001, to €892 million at
December 31, 2002. This change in operating working capital was due principally to a group-wide effort to lower inventory levels and improve the collection of accounts receivable.
At December 31, 2002, cash and cash equivalents were
€143 million, of which €65 million was held in euro and the equivalents of €34 million was held in Brazilian real, €22 million in
U.S. dollars, €8 million in Swiss francs, €7 million in pounds sterling and €7 million in other currencies.

Consolidated net debt

Consolidated net debt (defined as long-term debt, plus short-term borrowings and current portion of long-term debt, minus cash
and cash equivalents and marketable securities) was reduced to €2,133 million at December 31, 2002 from €2,572 million at year-end
2001. Liquid assets (cash and cash equivalents and marketable securities) totaled €251 million at December 31, 2002, and short-term financial debt
(short-term borrowings and current portion of long-term debt) amounted to €645 million. At December 31, 2001, Rhodia had liquid assets of
€413 million and short-term financial debt of €1,036 million. The decrease stemmed from the use of cash flow from operations and the
deconsolidation of debt relating to business disposals, as well as from a favorable currency effect. This was partially offset by advances made to joint-venture partners, consolidation of businesses
recently acquired in China and Venezuela, continued investments in intangible assets and the distribution of dividends. At December 31, 2002, the net
debt-to-stockholders' equity (including minority interests) ratio stood at 1.15 versus 1.09 one year earlier.

Other long-term liabilities

Long-term contingency reserves amounted to €1,233 million at December 31, 2002 compared with
€1,239 million at December 31, 2001. Reserves at December 31, 2002 consisted mainly of reserves for pension and retirement costs
(€788 million) and deferred income taxes (€217 million). Other long-term liabilities amounted to €141 million,
virtually unchanged from €149 million a year earlier.

Stockholders' equity and minority interests

Stockholders' equity including minority interests stood at €1,858 million at December 31, 2002, a decrease of
€493 million compared with the year-earlier figure. The decline primarily corresponds to the €397 million negative translation adjustment (due
principally to the devaluation of the Brazilian real), recognition of the 2002 net loss of €4 million, 2001 dividend payments of €21 million and purchases
of treasury stock amounting to €10 million.

Consolidated Statements of Cash Flow

Net cash provided by operating activities

Net cash provided by operating activities decreased from €1,002 million in 2000 to €676 million in 2001 and to
€506 million in 2002. The decline was due principally to the evolution of net results over the three years, which declined from net income of €216 million in
2000 to net losses of €213 million in 2001 and €4 million in 2002. Net cash provided by operating activities declined in 2002 due to cash expenditures relating
to restructuring reserves accrued in 2001. The change in other operating assets and liabilities, principally due to exceptional pension contributions also contributed to this decline.

42

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In
France, retirement indemnities arise pursuant to labor agreements, internal conventions and applicable local legal requirements. Retirement indemnities in France are funded from
current cash flows, and there is no legal requirement to maintain assets to fund these liabilities. As of December 31, 2002, Rhodia had projected benefit obligations of
€674 million with respect to our French retirement indemnities.

In
the United States and the United Kingdom, liabilities arise pursuant to labor agreements, pension schemes and plans and other employee benefit plans, some of which are required to
maintain assets to fund their liabilities. As a result of stock market declines in 2002, the market value of the assets in our funded pension plans, including our nonqualified and foreign plans, has
declined. In 2002, the pension plan assets for certain of our foreign pension plans fell below required levels with respect to their related accumulated benefit obligation. Applicable laws and
regulations would have allowed us to spread contributions to cover the shortfall over 3 to 5 years. However, Rhodia chose to cover most of the shortfall by making an exceptional cash contribution of
€145 million to U.S. and U.K. pension plans in September and December 2002. With respect to our foreign plans, as of December 31, 2002, Rhodia had projected benefit
obligations of €1,382 million and plan assets of €1,122 million.

Net cash used by investing activities

Net cash used by investing activities amounted to €60 million for 2002, €154 million for 2001 and
€2,049 million in 2000. The factors affecting the decline in net cash used by investing activities included:



Net cash provided (used) by financing activities

Net cash provided by financing activities comprises mainly changes in short-term and long-term borrowings.



43

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Long-term
borrowings decreased over the three-year period due principally to repayment of certain long-term debts coming to maturity and the
application of proceeds from the disposal of assets.

Commitments

The tables below set forth gross financial debt, capital lease obligations and operating leases as of December 31, 2002, as well as the maturity/payment
schedules for each of these items. See Notes 18 and 23(b) to the Consolidated Financial Statements.

|                          |  | As of December 31, 2002
|------------------------- |  | -----------------------
|
|Gross financial debt      |  | 2,384                  
|Capital lease obligations |  | 6                      

|                 |  | As of December 31, 2002
|---------------- |  | -----------------------
|
|Operating leases |  | 258                    

Rhodia's gross financial debt includes €1,087 million in bonds and €1,297 million in other
instruments. At December 31, 2002, Rhodia held €1,209 million of its long-term debt (including capital leases) in euro, €972 million in
U.S. dollars and €203 million in other currencies. This breakdown does not reflect Rhodia's exposure to these currencies' interest rates. As of December 31, 2002,
maturities in 2003 are comprised of €201 million of current maturities of long-term debt and €175 million of commercial paper and other
short-term financings granted to Rhodia and to various subsidiaries.

At
December 31, 2002, the net present value of total future minimum lease payment (at an assumed discount rate of 6%) was €214 million. Operating leases are
payments in relation to the leasing of movable equipment, such as barges and rail cars, the sale-leaseback of real estate and the rental of office buildings.

Off-balance sheet and other commitments

Sale of Rhodiaster

In
October 2002, Rhodia sold its investment in Rhodiaster to Gruppo Mossi & Ghisolfi. Since it was impossible in Brazil to obtain approvals from the competition authorities (CADE)
and the stock exchange administration (CVM) before closing, Rhodia granted Gruppo Mossi & Ghisolfi an option to resell the shares acquired to Rhodia if these authorizations were denied. Both
the CADE and CVM authorizations have subsequently been granted.

Rhodia
and Mossi & Ghisolfi entered into an agreement granting a purchase price increase to Rhodia if a certain EBITDA level is exceeded for the four quarters after the date of
sale, or a purchase price adjustment in favor of the purchaser if this EBITDA level is not reached. The maximum price adjustment, positive or negative, for the four quarters combined is
€13 million. Rhodia and

44

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Mossi &
Ghisolfi are currently in discussions concerning the application of the aforementioned purchase price adjustment clause. In addition, adjustments may be made to the purchase price after
the date of sale based on trade payable amounts and the value of certain finished goods of the sold businesses. Total consideration for this transaction includes a €13 million
payable to Rhodia, of which €7 million is payable upon Rhodia delivering to the purchaser final documentation on an investment project and €6 million is
payable within three years of the closing when the investment starts. On the date of the sale, Rhodia entered into an agreement with Rhodiaster under which Rhodia will pay to Rhodiaster an
$18 million incentive over the twelve-month period following the sale. In return for these incentives, Rhodiaster will not terminate a steam supply agreement before September 30, 2003.
On the basis of the economics of this arrangement, Rhodia considered that this incentive was a price reduction and accordingly recorded a short-term accrual for the amount of the incentive. Finally,
Rhodia recorded a receivable of €5.3 million from the purchaser payable either in cash, or in receivables to be collected from current customers of Rhodiaster. In relation to
environmental matters, Rhodia is responsible for (i) remediation of pollution arising from the activities conducted by Rhodia prior to the date of sale and (ii) damages arising out of
any breach of representations and warranties made by Rhodia with respect to certain environmental matters, in each case subject to certain limitations as to amount and duration. Rhodia's maximum
liability under the sale agreement is €97.5 million except with respect to certain remediation actions identified and agreed upon on the date of sale, discontinued activities
and title to the transferred shares. The sale included standard guarantees related to accounting, tax, employee and other matters.

Sale of phenol, HCl and soda ash businesses

In October 2002, Rhodia sold its phenol, HCl (hydrochloric acid) and soda ash businesses to Bain Capital and retained an 18.2% holding of the new group.
Guarantees are limited as to the time period and amount involved. In connection with the transfer, Rhodia recorded a vendor note from the purchaser for a total of €22 million
which payment is subordinated to the repayment of the new group's bank debt from the acquisition.

The
commitments and specific guarantees are:



45

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This
sale also includes customary warranties related to accounting, tax, environmental, employee and other matters.

In
connection with other divestitures, Rhodia has also given certain representations, warranties and indemnities to purchasers and some divestitures are subject to purchase price
adjustments.

Other off-balance sheet commitments

From time to time, Rhodia guarantees the obligations of its joint ventures and other non-consolidated companies. Guarantees of debt of joint ventures amounted to
€171 million as of December 31, 2002, compared with €186 million as of December 31, 2001. The decrease was due principally to the divestitures of Rhodia's
stake in Teris and in Latexia and to exchange rate variations. Rhodia's principal guarantee to joint-ventures is its guarantee of certain debts of Primester. Guarantees of indebtedness of other
non-consolidated companies amounted to €26 million at December 31, 2002, compared with €74 million at December 31, 2001, principally due to the
consolidation of some affiliates in Asia as from January 1, 2003. See Note 23 to the Consolidated Financial Statements.

Rhodia
has also granted residual value guarantees under equipment operating leases, totaling €70 million (net of deferred profits of €69 million)
as of December 31, 2002. An independent appraiser has projected that the fair values of the leased equipment are in excess of the amounts guaranteed. See Note 29 to the
Consolidated Financial Statements.

Net Income and Stockholders' Equity Under U.S. GAAP

The following table summarizes net sales, operating income, net income and stockholders' equity under French GAAP and U.S. GAAP for the three years ended
December 31, 2002, as well as an explanation of the principal differences. A reconciliation to U.S. GAAP is provided in Note 29 to the Consolidated Financial Statements.

|                         |             | 2000                                        |       | 2001 |       | 2002 |      
|------------------------ | ----------- | ------------------------------------------- | ----- | ---- | ----- | ---- | -----
|
|Net sales:               |             |                                             |       |      |       |      |      
|                         | French GAAP |                                             | 7,419 |      | 7,279 |      | 6,617
|                         | U.S. GAAP   |                                             | 6,647 |      | 6,554 |      | 6,061
|Operating income(1):     |             |                                             |       |      |       |      |      
|                         | French GAAP |                                             | 528   |      | 91    |      | 351  
|                         | U.S. GAAP   |                                             | 404   |      | (207  | )    | 254  
|Net income/(loss):(1)    |             |                                             |       |      |       |      |      
|                         | French GAAP |                                             | 216   |      | (213  | )    | (4   
|                         | U.S. GAAP:  |                                             |       |      |       |      |      
|                         |             | Income/(loss) from continuing operations(1) |       | 222  |       | (256 | )    
|                         |             | Income/(loss) from discontinued operations  |       | (6   | )     | 19   |      
|                         |             | Net income/(loss)(1)                        |       | 216  |       | 237  |      
|Stockholders' equity(2): |             |                                             |       |      |       |      |      
|                         | French GAAP |                                             | 2,593 |      | 2,267 |      | 1,835
|                         | U.S. GAAP   |                                             | 2,409 |      | 1,990 |      | 1,437

---

46

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The
accounting for discontinued operations under U.S. GAAP changed in 2002. Financial Accounting Standards No. 144,Accounting for the Impairment or
Disposal of Long-Lived Assets, ("FAS 144") requires that a disposal of a business that qualifies as a component of an entity must be accounted for as a
discontinued operation. The results of operations of these disposals, including financial expenses, income taxes and the gain/(loss) on the disposal are all reflected as discontinued operations and
prior periods must be restated in a comparable manner. Under French GAAP, the results of operations of businesses sold are included until their respective dates of disposal.

The
differences in net sales in 2002, 2001 and 2000 of €556 million, €725 million and €772 million, respectively, are
the result of applying FAS 144 for the accounting for discontinued operations for U.S. GAAP in 2002.

Differences
in Operating income in 2001 and 2002 of €35 million and €7 million respectively, reflect the recognition of the indemnification
payments from Aventis as additional contributed capital resulting from the transfer of these assets to Rhodia on January 1, 1998, in accordance with US GAAP. Differences in operating income in
2002, 2001 and 2000 of €47 million, €85 million and €59 million, respectively, are the result of applying FAS 144 for the
accounting for discontinued operations for U.S. GAAP in 2002. Differences in operating income in 2001 and 2000 of €75 million and €32 million,
respectively, result from including the amortization of goodwill (including accelerated amortization of goodwill) in operating income for U.S. GAAP. Differences in operating income in 2002, 2001 and
2000 of €43 million, €103 million and €33 million, respectively, are the result of including the loss on the sales of receivables
and other income/(expense) in operating income for U.S. GAAP. In addition, Rhodia has reclassified certain income statement line items in 2001 and 2000 to conform to the presentation in
2002 of operating income in accordance with U.S. GAAP. The amounts reclassified included "Loss on sales of receivables" amounting to €27 million in 2001 and
€17 million in 2000 and "Other income/(expense)" amounting to €76 million in 2001 and €16 million in 2000. These items were previously classified
below operating income and are now included in operating income. These items are identical under French GAAP and U.S. GAAP and are presented in Note 21 (Other Income/ExpenseNet) to
the Consolidated Financial Statements. This reclassification did not affect net income under U.S. GAAP.

The
difference in net income in 2002 of €47 million is from adopting Statement of Financial Accounting Standards No. 142,Accounting
for Goodwill and Other Intangible Assets, ("FAS 142"). The accounting for goodwill under U.S. GAAP changed in 2002. FAS 142 requires that Rhodia cease the
amortization of goodwill and indefinite-lived intangible assets and replace it with periodic tests of the impairment of these assets. French GAAP requires that Rhodia amortize goodwill and
indefinite-lived assets. In addition, the differences in Net income/(loss) in 2001 and 2002 of €24 million and €5 million, respectively, reflect the
recognition, net of tax of the indemnification payments from Aventis as additional contributed capital.

The
presentation of income from continuing operations and discontinued operations is as a result of adopting FAS 144 in 2002 for U.S. GAAP.

47

---

The
differences in stockholders' equity result from the following:



Restatement of Reconciliation to U.S. GAAP

As part of its preparation of Note 29 (Reconciliation to U.S. GAAP and New U.S. Accounting Standards) to the Consolidated Financial Statements, Rhodia
determined that it was necessary to restate financial information presented in the U.S. GAAP reconciliation note included in Rhodia's previously issued financial statements. A restatement was made in
order to correctly reflect the minimum pension liability, net of tax, in accordance with FAS 87Employers' Accounting for Pensions. The effect of the
restatement on Stockholders' equity as of December 31, 2001 was a reduction of €218 million under U.S. GAAP. The effect on Comprehensive income/(loss) was an increase in
comprehensive loss of €34 million in 2001 and a reduction of comprehensive income of €7 million in 2000. A restatement was made in order to correctly
reflect the indemnification payments from Aventis as additional contributed capital resulting from the transfer of these assets to Rhodia on January 1, 1998, in accordance with US GAAP. The
effect of this restatement on Stockholders' equity as of December 2001 was a reduction of €24 million under US GAAP. The effect on the net income/(loss) was an increase
of the loss of €24 million. The effect of this restatement on Stockholders' equity as of December 2002 was a decrease of €9million. The effect on the net
income/(loss) was an increase of the loss of €5 million. These changes had no effect on Rhodia's primary financial statements and related notes, since they are prepared in
accordance with French GAAP.

Environmental Matters

Rhodia's businesses must comply worldwide with a vast body of changing and increasingly stringent laws and regulations in such areas as emissions, the storage,
manufacture of, disposal or discharge of regulated substances, environmental protection, health and safety. In most jurisdictions in which Rhodia operates, industrial activities are subject to
obtaining permits, licenses and other authorizations, or to prior notification. As in the past, Rhodia intends to continue to make investments each year in order to comply with these regulations and
standards. Some regulations could restrict Rhodia's ability to modify or expand its facilities or continue production. The installation of expensive pollution monitoring and control equipment or other
major expenditures may be necessary. Rhodia may also have to bear considerable costs if new regulations require that hazardous waste (including slightly radioactive waste)

48

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that
is currently stored on its own sites be disposed at off-sites locations. Furthermore, many of Rhodia's currently or formerly owned or operated plants were or have been in operation
for many years, and the soil and ground water at some sites have been contaminated, as is frequently the case in the chemical industry. Other sites may also become contaminated in the future or other
contamination may be discovered at present or former locations. Rhodia invests in equipment to treat or prevent soil and ground water contamination at various sites. The on-site treatment
of industrial waste or its off-site disposal may also require Rhodia to undertake costly remediation work. When Rhodia was formed, Rhône-Poulenc (now Aventis) commissioned
an independent expert to conduct an environmental audit of the main operations of its two Chemicals and Fibers & Polymers businesses. This audit was updated in 1999, and since that date the
Group continues to carry out audits of its sites.

As
of December 31, 2002, Rhodia's accrued reserve for probable future remediation expenses amounted to €146 million, compared to
€183 million in 2001. In addition, Rhodia and Aventis were parties to an Environmental Indemnification Agreement, dated May 26, 1998, which entitled Rhodia to
indemnification from Aventis in case of unexpected environmental liabilities. On March 27, 2003 Rhodia and Aventis entered into an agreement to settle Rhodia's present and future claims under
the Environmental Indemnification Agreement. Pursuant to the settlement, Aventis agreed to pay Rhodia a total of €88 million, which amount includes €26 million
previously received by Rhodia in 2002 and €31 million received in the first quarter of 2003. The remaining €31 million will be paid no later than June
2007 upon the making of any future environmental claims by Rhodia, and bears interest through the date of payment. On the basis of current information, provisions established for environmental matters
and amounts Rhodia has received and expects to receive pursuant to the environmental indemnity, the Group's obligations to comply with environmental regulations or undertake remedial action are not
expected to have a material adverse effect on its operations, earnings or financial situation. The terms of the Aventis environmental indemnity arrangements are described in "Item 7. Major
Stockholders and Related Party TransactionsAgreements with Aventis". However, the occurrence of new events, such as a modification of existing regulations, the promulgation of new
regulations or the development or discovery of new facts or conditions, could result in substantial additional expenditures that Rhodia would have to bear, and could have a material adverse effect on
its operations, earnings or financial situation.

In
addition, Rhodia has been and may in the future be liable to contribute to the cleanup of facilities to which it has sent wastes for disposal, pursuant to the U.S. Comprehensive
Environmental Response, Compensation and Liability Act (commonly known as "Superfund") and other similar laws. Under these laws, the owner or operator of contaminated properties and the generator of
wastes sent to a contaminated disposal facility can be jointly and severally liable for the remediation of such properties, regardless of fault.

Outlook

The statements below are forward-looking statements based on management's current knowledge and beliefs. Actual results may differ
significantly from those indicated below for a number of reasons, including those set forth under "Item 3. Key InformationForward-looking Statements" and "Item 3. Key
InformationRisk Factors".

The
outlook for 2003 is currently uncertain, particularly in light of international geopolitical instability, and its potential repercussions on the global economy. Rhodia believes that
these factors are likely to have a significant effect on currency exchange rates and petrochemical commodities prices, which in turn materially affect our operating results.

Rhodia
expects growth of sales to be limited to slightly above expected growth in average gross domestic product of OECD countries. Sales are expected to remain weak during the first
half, and

49

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improve
gradually through the second half of 2003. This growth is expected to result principally from increases in sales volumes, as well as price increases for some of Rhodia's products.

Rhodia
believes that all divisions should see an increase in their sales in terms of volume, with the exception of Pharmaceuticals and Agrochemicals whose volumes are expected to decline
compared to 2002, due principally to weakness in end-market demand. Industrial Care and Services should achieve further growth in all its businesses. Although the Silicones business should continue to
be adversely affected by depressed market conditions in the first half of the year. Automotive, Electronics and Fibers should continue to deliver sales growth, primarily through sustained increases in
selling prices for Rhodia's products, launch of new products in Engineering plastics, increased sales in polyamide intermediates and the growing market for Eolys in the autocatalysis market for diesel
engines. Consumer Care and Food is expected to show some volume growth driven principally by innovation across its core markets and increased available capacity for its Acetow and food businesses.
Prices for Rhodia's products are expected to increase only slightly at the Group's consolidated level and should be generated principally from Automotive, Electronics and Fibers. In all other
divisions, prices should be flat on a year on year basis.

Rhodia
expects that continued strength of the euro versus the US dollar in 2003 would have a negative translation and transaction foreign exchange impact, affecting all Divisions. Rhodia
expects that the gradual decline in raw materials costs following the decline in oil prices observed since the end of March together with a recovery in certain selling prices should result in improved
operating margins as the year progresses, if such decline in oil prices is sustained over the year. The two divisions which will be most affected by oil price fluctuations are Automotive, Electronics
and Fibers and to a lesser extent, Pharmaceuticals and Agrochemicals.

50

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PART III

Item 18. Financial Statements

The following Consolidated Financial Statements are filed as part of this annual report.

Report of Independent Auditors

F-3Consolidated Balance Sheets

F-4Consolidated Statements of Income

F-6Consolidated Statements of Stockholders' Equity

F-7Consolidated Statements of Cash Flows

F-8Notes to the Consolidated Financial Statements

F-9Consolidated Subsidiaries

F-59


Item 19. Exhibits

|10.1 |  | Consent of Independent Auditors.                                         
|---- |  | -------------------------------------------------------------------------
|99   |  | Certifications pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

51

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INDEX TO FINANCIAL STATEMENTS

The following Consolidated Financial Statements are included as part of this annual report.

|Report of Independent Auditors                  |  | F-3 
|----------------------------------------------- |  | ----
|Consolidated Balance Sheets                     |  | F-4 
|Consolidated Statements of Operations           |  | F-6 
|Consolidated Statements of Stockholders' Equity |  | F-7 
|Consolidated Statements of Cash Flows           |  | F-8 
|Notes to the Consolidated Financial Statements  |  | F-10
|Consolidated Subsidiaries                       |  | F-59

F-1

---

(This
page has been left blank intentionally.)

F-2

---



RHODIA AND SUBSIDIARIES        Report of Independent Auditors

To the Stockholders of Rhodia,

We have audited the accompanying consolidated balance sheets of Rhodia as of December 31, 2002 and December 31, 2001, and the related consolidated
statements of operations, stockholders' equity and cash-flows for each of the three years in the period ended December 31, 2002 which, as described in Note 1, have been
prepared on the basis of accounting principles generally accepted in France. These financial statements are the responsibility of Rhodia's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In
our opinion, the consolidated financial statements referred to below (page F-4 to F-65) present fairly, in all material respects, the financial position of Rhodia and
its subsidiaries at December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in France.

Accounting
principles generally accepted in France vary in certain important respects from accounting principles generally accepted in the United States of America. The application of
the latter, as restated, would have affected the determination of consolidated net income for each of the three years in the period ended December 31, 2002 and the determination of consolidated
stockholders' equity at
December 31, 2002 and 2001, to the extent summarized in Note 29 to the consolidated financial statements.

As
explained in note 4 to these financial statements, one of the company's reporting units is still in a development stage and the carrying value of the related assets could be impacted
if there were further delays in launching new drugs.

Paris,
France
April 4, 2003, except for Note 29(d) for which the date is July 25, 2003

PricewaterhouseCoopers

F-3

---



RHODIA GROUP

CONSOLIDATED BALANCE SHEETS

December 31,

(In millions of €)

|                              |                                                | Note |   | 2002  |     | 2001  |     | 2000 
|----------------------------- | ---------------------------------------------- | ---- | - | ----- | --- | ----- | --- | -----
|Assets                        |                                                |      |   |       |     |       |     |      
|Goodwill                      |                                                | 4    |   | 1,186 |     | 1,354 |     | 1,404
|Other intangible assets       |                                                | 5    |   | 177   |     | 206   |     | 180  
|Tangible assets               |                                                | 6    |   | 2,743 |     | 3,561 |     | 3,759
|Investments and other assets: |                                                |      |   |       |     |       |     |      
|                              | Deposits and long-term receivables             |      |   |       | 120 |       | 98  |      
|                              | Investments accounted for by the equity method |      | 7 |       | 172 |       | 238 |      
|                              | Investments at cost                            |      | 8 |       | 67  |       | 75  |      
|                              | Deferred charges and other assets              |      | 9 |       | 841 |       | 584 |      
|                              |                                                |      |   |       |     |       |     |      
|Total long-term assets        |                                                |      |   | 5,306 |     | 6,116 |     | 6,224
|                              |                                                |      |   |       |     |       |     |      
|Inventories                   |                                                | 10   |   | 835   |     | 1,044 |     | 1,185
|Accounts receivable           |                                                | 11   |   | 378   |     | 524   |     | 819  
|Other current assets          |                                                | 12   |   | 917   |     | 916   |     | 1,079
|Marketable securities         |                                                | 14   |   | 108   |     | 180   |     | 94   
|Cash and cash equivalents     |                                                |      |   | 143   |     | 233   |     | 165  
|                              |                                                |      |   |       |     |       |     |      
|Total current assets          |                                                |      |   | 2,381 |     | 2,897 |     | 3,342
|                              |                                                |      |   |       |     |       |     |      
|Total Assets                  |                                                |      |   | 7,687 |     | 9,013 |     | 9,566
|                              |                                                |      |   |       |     |       |     |      

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-4

---

|                                                                                                           |  | Note |  | 2002  |   | 2001  |   | 2000  |  
|---------------------------------------------------------------------------------------------------------- |  | ---- |  | ----- | - | ----- | - | ----- | -
|Liabilities and Stockholders' Equity                                                                       |  |      |  |       |   |       |   |       |  
|Common stock; par value €1 in 2002, €15 in 2001 and 2000; 179,309,188 shares issued in 2002, 2001 and 2000 |  |      |  | 179   |   | 2,690 |   | 2,690 |  
|Additional paid-in capital                                                                                 |  |      |  | 2,514 |   | 3     |   | 3     |  
|Retained earnings/(deficit)                                                                                |  |      |  | (418  | ) | (374  | ) | (74   | )
|Cumulative translation adjustment                                                                          |  |      |  | (440  | ) | (52   | ) | (26   | )
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total stockholders' equity                                                                                 |  | 15   |  | 1,835 |   | 2,267 |   | 2,593 |  
|Minority interests                                                                                         |  | 16   |  | 23    |   | 84    |   | 87    |  
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total stockholders' equity and minority interests                                                          |  |      |  | 1,858 |   | 2,351 |   | 2,680 |  
|Commitments and contingencies                                                                              |  | 23   |  |       |   |       |   |       |  
|Reserves for pensions, deferred income taxes and other costs in excess of one year                         |  | 17   |  | 1,233 |   | 1,239 |   | 1,149 |  
|Other long-term liabilities                                                                                |  |      |  | 141   |   | 149   |   | 57    |  
|Long-term debt                                                                                             |  | 18   |  | 1,739 |   | 1,949 |   | 2,077 |  
|Short-term borrowings and current portion of long-term debt                                                |  | 18   |  | 645   |   | 1,036 |   | 1,248 |  
|Accounts payable                                                                                           |  |      |  | 948   |   | 885   |   | 1,123 |  
|Short-term reserves for pensions, deferred income taxes and other costs                                    |  | 17   |  | 301   |   | 474   |   | 332   |  
|Other current liabilities                                                                                  |  | 19   |  | 822   |   | 930   |   | 900   |  
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total current liabilities                                                                                  |  |      |  | 2,716 |   | 3,325 |   | 3,603 |  
|                                                                                                           |  |      |  |       |   |       |   |       |  
|Total Liabilities and Stockholders' Equity                                                                 |  |      |  | 7,687 |   | 9,013 |   | 9,566 |  
|                                                                                                           |  |      |  |       |   |       |   |       |  

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-5

---



RHODIA GROUP

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31,

(In millions of €)

|                                                               |  | Note |  | 2002        |   | 2001        |   | 2000        |  
|-------------------------------------------------------------- |  | ---- |  | ----------- | - | ----------- | - | ----------- | -
|Net sales                                                      |  |      |  | 6,617       |   | 7,279       |   | 7,419       |  
|                                                               |  |      |  |             |   |             |   |             |  
|Production costs and expenses                                  |  |      |  | (4,489      | ) | (5,166      | ) | (5,053      | )
|Administrative and selling expenses                            |  |      |  | (1,104      | ) | (1,120      | ) | (1,138      | )
|Research and development expenses                              |  | 25   |  | (201        | ) | (197        | ) | (194        | )
|Depreciation and amortization                                  |  |      |  | (447        | ) | (542        | ) | (492        | )
|Restructuring and environmental costs                          |  |      |  | (25         | ) | (163        | ) | (14         | )
|                                                               |  |      |  |             |   |             |   |             |  
|Operating income                                               |  |      |  | 351         |   | 91          |   | 528         |  
|Financial expensenet                                          |  | 20   |  | (123        | ) | (186        | ) | (177        | )
|Other income/(expense)net                                     |  | 21   |  | (72         | ) | (108        | ) | (7          | )
|                                                               |  |      |  |             |   |             |   |             |  
|Income/(loss) of consolidated subsidiaries before income taxes |  |      |  | 156         |   | (203        | ) | 344         |  
|Income taxes                                                   |  | 22   |  | (66         | ) | 86          |   | (95         | )
|                                                               |  |      |  |             |   |             |   |             |  
|Income/(loss) of consolidated subsidiaries                     |  |      |  | 90          |   | (117        | ) | 249         |  
|Equity in earnings/(losses) of affiliated companies            |  |      |  | (38         | ) | (16         | ) | 8           |  
|Amortization of goodwill                                       |  |      |  | (47         | ) | (75         | ) | (32         | )
|                                                               |  |      |  |             |   |             |   |             |  
|Income/(loss) before minority interests                        |  |      |  | 5           |   | (208        | ) | 225         |  
|Minority interests                                             |  |      |  | (9          | ) | (5          | ) | (9          | )
|                                                               |  |      |  |             |   |             |   |             |  
|Net income/(loss)                                              |  |      |  | (4          | ) | (213        | ) | 216         |  
|                                                               |  |      |  |             |   |             |   |             |  
|Earnings/(loss) per share (in €)                               |  |      |  |             |   |             |   |             |  
|  Basic                                                       |  |      |  | (0.02       | ) | (1.19       | ) | 1.23        |  
|Average shares outstanding                                     |  |      |  | 178,765,518 |   | 179,103,640 |   | 175,843,305 |  
|                                                               |  |      |  |             |   |             |   |             |  
|  Diluted                                                     |  |      |  | (0.02       | ) | (1.19       | ) | 1.23        |  
|Average shares after dilution                                  |  |      |  | 178,765,518 |   | 179,103,640 |   | 176,351,932 |  
|                                                               |  |      |  |             |   |             |   |             |  

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-6

---



RHODIA GROUP

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31,

(In millions of €)

|                                                      |  | Common stock
(note 15a) |   | Additional
paid-in
capital
(note 15a) |  | Retained
earnings/
(deficit)
(note 15c) |   | Net income/
(loss) |   | Cumulative
translation
adjustment
(note 15d) |   | Total
Stockholders'
Equity
(note 15) |  
|----------------------------------------------------- |  | ----------------------- | - | ------------------------------------- |  | --------------------------------------- | - | ------------------ | - | -------------------------------------------- | - | ------------------------------------ | -
|Balance, December 31, 1999                            |  | 2,621                   |   | 3                                     |  | (462                                    | ) | 227                |   | 1                                            |   | 2,390                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Allocation to retained earnings                       |  |                         |   |                                       |  | 227                                     |   | (227               | ) |                                              |   |                                     |  
|Dividends paid                                        |  |                         |   |                                       |  | (70                                     | ) |                    |   |                                              |   | (70                                  | )
|Net income                                            |  |                         |   |                                       |  |                                         |   | 216                |   |                                              |   | 216                                  |  
|Treasury stock transactions                           |  |                         |   |                                       |  | 16                                      |   |                    |   |                                              |   | 16                                   |  
|Translation                                           |  |                         |   |                                       |  | (1                                      | ) |                    |   | (27                                          | ) | (28                                  | )
|Capital increase                                      |  | 69                      |   |                                       |  |                                         |   |                    |   |                                              |   | 69                                   |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Balance, December 31, 2000                            |  | 2,690                   |   | 3                                     |  | (290                                    | ) | 216                |   | (26                                          | ) | 2,593                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Allocation to retained earnings                       |  |                         |   |                                       |  | 216                                     |   | (216               | ) |                                              |   |                                     |  
|Dividends paid                                        |  |                         |   |                                       |  | (85                                     | ) |                    |   |                                              |   | (85                                  | )
|Net loss                                              |  |                         |   |                                       |  |                                         |   | (213               | ) |                                              |   | (213                                 | )
|Treasury stock transactions                           |  |                         |   |                                       |  |                                        |   |                    |   |                                              |   |                                     |  
|Translation                                           |  |                         |   |                                       |  | (2                                      | ) |                    |   | (26                                          | ) | (28                                  | )
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Balance, December 31, 2001                            |  | 2,690                   |   | 3                                     |  | (161                                    | ) | (213               | ) | (52                                          | ) | 2,267                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Allocation to retained earnings                       |  |                         |   |                                       |  | (213                                    | ) | 213                |   |                                              |   |                                     |  
|Dividends paid                                        |  |                         |   |                                       |  | (21                                     | ) |                    |   |                                              |   | (21                                  | )
|Net loss                                              |  |                         |   |                                       |  |                                         |   | (4                 | ) |                                              |   | (4                                   | )
|Reclassification                                      |  | (1                      | ) | 1                                     |  |                                         |   |                    |   |                                              |   |                                     |  
|Treasury stock transactions                           |  |                         |   |                                       |  | (10                                     | ) |                    |   |                                              |   | (10                                  | )
|Translation                                           |  |                         |   |                                       |  | (9                                      | ) |                    |   | (388                                         | ) | (397                                 | )
|Reduction in par value of common stock from €15 to €1 |  | (2,510                  | ) | 2,510                                 |  |                                         |   |                    |   |                                              |   |                                     |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  
|Balance, December 31, 2002                            |  | 179                     |   | 2,514                                 |  | (414                                    | ) | (4                 | ) | (440                                         | ) | 1,835                                |  
|                                                      |  |                         |   |                                       |  |                                         |   |                    |   |                                              |   |                                      |  

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-7

---



RHODIA GROUP

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31,

(In millions of €)

|                                                                                         |                                                               | 2002   |      | 2001   |      | 2000   |     
|---------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ------ | ---- | ------ | ---- | ------ | ----
|Net income/(loss)                                                                        |                                                               | (4     | )    | (213   | )    | 216    |     
|Adjustments to reconcile net income/(loss) to net cash provided by operating activities: |                                                               |        |      |        |      |        |     
|Minority interests                                                                       |                                                               | 9      |      | 5      |      | 9      |     
|Depreciation and amortization of assets and changes in reserves                          |                                                               | 415    |      | 750    |      | 515    |     
|Equity in (earnings)/losses of affiliated companies                                      |                                                               | 42     |      | 41     |      | (4     | )   
|Dividends received from affiliated companies                                             |                                                               | 3      |      | 21     |      | 16     |     
|Net (gains)/losses from disposals of assets                                              |                                                               | 35     |      | (15    | )    | (13    | )   
|Other (gains)/losses from operating activities                                           |                                                               | 36     |      | (184   | )    | (9     | )   
|Change in working capital:                                                               |                                                               |        |      |        |      |        |     
|                                                                                         | (Increase)/decrease in inventories                            |        | 14   |        | 123  |        | (82 
|                                                                                         | (Increase)/decrease in accounts receivable                    |        | (19  | )      | 219  |        | 272 
|                                                                                         | Increase/(decrease) in accounts payable                       |        | 204  |        | (185 | )      | 240 
|                                                                                         | Increase/(decrease) in other operating assets and liabilities |        | (229 | )      | 114  |        | (158
|                                                                                         |                                                               |        |      |        |      |        |     
|Net cash provided by operating activities                                                |                                                               | 506    |      | 676    |      | 1,002  |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Additions to property, plant and equipment                                               |                                                               | (374   | )    | (483   | )    | (503   | )   
|Other capital investments                                                                |                                                               | (52    | )    | (102   | )    | (138   | )   
|Acquisition of Albright & Wilson and Chirex                                              |                                                               |       |      |       |      | (1,383 | )   
|Proceeds from disposals of assets                                                        |                                                               | 363    |      | 500    |      | 124    |     
|(Increase)/decrease in loans and short-term investments                                  |                                                               | 3      |      | (69    | )    | (149   | )   
|                                                                                         |                                                               |        |      |        |      |        |     
|Net cash used for investing activities                                                   |                                                               | (60    | )    | (154   | )    | (2,049 | )   
|                                                                                         |                                                               |        |      |        |      |        |     
|Capital increase                                                                         |                                                               |       |      | 6      |      | 63     |     
|Dividends paid to Rhodia stockholders                                                    |                                                               | (21    | )    | (85    | )    | (70    | )   
|Share (purchases)/sales                                                                  |                                                               | (15    | )    |       |      | 16     |     
|New long-term borrowings                                                                 |                                                               | 3,156  |      | 1,927  |      | 2,222  |     
|Repayments of long-term borrowings                                                       |                                                               | (3,424 | )    | (1,770 | )    | (1,697 | )   
|Increase/(decrease) in short-term borrowings                                             |                                                               | (194   | )    | (535   | )    | 479    |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Net cash provided by/(used for) financing activities                                     |                                                               | (498   | )    | (457   | )    | 1,013  |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Net effect of exchange rate changes on cash                                              |                                                               | (38    | )    | 3      |      | 5      |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Increase/(decrease) in cash and cash equivalents                                         |                                                               | (90    | )    | 68     |      | (29    | )   
|Cash and cash equivalents at beginning of year                                           |                                                               | 233    |      | 165    |      | 194    |     
|                                                                                         |                                                               |        |      |        |      |        |     
|Cash and cash equivalents at end of year                                                 |                                                               | 143    |      | 233    |      | 165    |     
|                                                                                         |                                                               |        |      |        |      |        |     

The
accompanying notes are an integral part of the Consolidated Financial Statements.

F-8

---



RHODIA GROUP        INDEX TO NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

|Note |  |                                                               |  | Page
|---- |  | ------------------------------------------------------------- |  | ----
|1.   |  | Accounting policies                                           |  | F-10
|2.   |  | Comparability and evolution of consolidation scope            |  | F-15
|3.   |  | Transactions with Aventis Group                               |  | F-17
|4.   |  | Goodwill                                                      |  | F-17
|5.   |  | Other intangible assets                                       |  | F-19
|6.   |  | Tangible assets                                               |  | F-19
|7.   |  | Investments accounted for by the equity method                |  | F-20
|8.   |  | Investments at cost                                           |  | F-22
|9.   |  | Deferred charges and other assets                             |  | F-22
|10.  |  | Inventories                                                   |  | F-23
|11.  |  | Accounts receivable                                           |  | F-23
|12.  |  | Other current assets                                          |  | F-23
|13.  |  | Valuation allowances                                          |  | F-24
|14.  |  | Marketable securities                                         |  | F-24
|15.  |  | Stockholders' equity                                          |  | F-25
|16.  |  | Minority interests                                            |  | F-26
|17.  |  | Reserves for pensions, deferred income taxes and other costs  |  | F-26
|18.  |  | Financial debt (short-term and long-term)                     |  | F-32
|19.  |  | Other current liabilities                                     |  | F-35
|20.  |  | Financial expensenet                                         |  | F-35
|21.  |  | Other income/(expense)net                                    |  | F-36
|22.  |  | Income taxes                                                  |  | F-36
|23.  |  | Commitments and contingencies                                 |  | F-38
|24.  |  | Information by segment and geographical area                  |  | F-45
|25.  |  | Research and development expenses                             |  | F-48
|26.  |  | Wages, benefits and number of employees                       |  | F-49
|27.  |  | Stock option plans                                            |  | F-49
|28.  |  | Subsequent events                                             |  | F-51
|29.  |  | Reconciliation to U.S. GAAP and new U.S. accounting standards |  | F-51
|30.  |  | Consolidated subsidiaries end of 2002                         |  | F-59

F-9

---



RHODIA GROUP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in € millions, unless otherwise stated)

1.     ACCOUNTING POLICIES

The consolidated financial statements of Rhodia are prepared in accordance with rule no 99-02 issued by the
Comité de la Réglementation Comptable (CRC) relating to the consolidated financial statements of commercial societies and public companies.
Rule no 00-06, issued by the CRC in January 2002, which defines how companies account for liabilities, has been applied by Rhodia since January 1,
2000. Note 29 provides a reconciliation between accounting principles generally accepted in France (French GAAP) and accounting principles generally accepted in the United States
(U.S. GAAP). The accounting policy disclosed in note 1p) differs from French GAAP. However, this policy has no material effect on Rhodia's consolidated financial statements.

(a)   Consolidation policies

The consolidation is prepared from the accounts as of December 31.

Rhodia's
consolidated financial statements include the accounts of its significant majority-owned subsidiaries (more than 50%). Minority investments in companies where Rhodia's interest
is more than 20% are accounted for under the equity method. This method is also applied to 50%-owned joint ventures operationally managed by the other partner (see note 7).

All
significant intercompany transactions are eliminated.

The
results of companies acquired are included from their respective date of acquisition. The results of companies sold are included until their respective date of sale.

(b)   Translation of foreign currencies

For countries other than those with high inflation:



F-10

---



For
countries with high inflation:



(c)   Goodwill

Goodwill represents the excess of the acquisition cost over the fair value of net identifiable assets of businesses acquired on the date of the transaction.
Goodwill is amortized on a straight-line basis over a period of not more than forty years.

(d)   Other intangible assets

Other intangible assets, consisting principally of patents, trademarks and software, are carried at cost, including capitalized interest, and are amortized on a
straight-line basis over their
estimated useful lives. For patents and trademarks this period is generally twenty-five years and for software from three to five years.

(e)   Tangible assets

Land, buildings and equipment are carried at cost, including capitalized interest. Depreciation is calculated on a straight-line basis over the
estimated useful lives of the assets.

The
principal useful lives employed are:

| | Buildings            |                          | 1040 years
| | --------------------- | ------------------------ | -----------
| | Plant and equipment: |                          |            
| |                       | Machinery and equipment |            
| |                       | Other equipment         |            
| | Vehicles             |                          | 420 years 
| | Furniture            |                          | 1015 years

Assets
leased under a long-term contract or other arrangement that transfers substantially all of the benefits and risks of ownership to Rhodia are capitalized based on their
fair market value and depreciated as described above, and a corresponding financial debt is recorded.

F-11

---

(f)    Asset impairment tests

Goodwill:

For
each enterprise of Rhodia, which corresponds to a reporting unit, Rhodia annually compares the net book value of the assets and liabilities that are associated with the enterprise,
including goodwill, with the fair value of the enterprise, which corresponds to the discounted cash flows of the enterprise, in the absence of an active market. Rhodia updates this comparison whenever
events or circumstances indicate that the net book value of goodwill may not be recoverable. The methodology of valuing the reporting units is described in note 4. When the market value is less
than the book value, the market value of all assets relative to the enterprise is taken into account in determining the amount of the accelerated amortization of goodwill.

Other
long-lived assets:

The
book values of other long-lived assets are reviewed whenever events or circumstances indicate that the future cash flows of these assets may not support their carrying
value. Rhodia compares the net book values of these assets with the undiscounted future cash flows. When this comparison indicates that accelerated depreciation must be recorded, the amount recorded
is the difference between the net book value and the discounted future cash flows.

(g)   Research and development expenses

Research and development expenses are recorded net of subsidies and are expensed as incurred.

(h)   Investments at cost

Other investments are carried at the lower of cost or net realizable value; such net realizable value being assessed on the basis of the equity of the entity,
forecasts and earnings projections and share price.

(i)    Inventories

Inventories are stated at the lower of average cost or net realizable value. Due to the rate of inventory turnover, average cost approximates current cost.

(j)    Investments in debt and equity securities and short-term deposits

Investments in debt and equity securities are stated at quoted market value (if publicly traded) or at the lower of cost or net realizable value (if not publicly
traded). Net realizable value is determined by reference to various criteria, including net equity and future financial results of the related company. Short-term deposits are stated at
the lower of cost or market.

(k)   Deferred income taxes

Deferred income taxes are determined at the level of each tax entity. Deferred income taxes are recorded based on the differences between the tax bases of assets
and liabilities and their carrying values for financial reporting purposes. Tax rates applicable to future periods are used to calculate

F-12

---

year-end
deferred income tax amounts. Any non-recoverable withholding taxes on undistributed earnings of consolidated companies are also recorded. No tax accrual is recorded on
undistributed earnings as Rhodia intends to reinvest these earnings.

Deferred
tax assets resulting from net operating losses and deductible temporary differences are systematically recognized. A valuation allowance is also recorded when their future
realization is not likely.

(l)    Pension, retirement and other post-employment obligations

Rhodia accounts for commitments with respect to pension, retirement and other post-employment obligations based on the "projected unit credit method"
including assumptions for discount rates, expected long-term rates of return on plan assets and rates of increase in compensation levels which vary from country to country. Rhodia funds
its obligations through pension fund assets or, if not funded, records its obligations through balance sheet accruals, net of unrecognized net gains or losses. The unrecognized gains or losses are
amortized over the remaining service lives of active employees for the portion in excess of 10% of the total projected benefit obligation.

(m)  Financial instruments

Rhodia uses various financial instruments to manage its exposure to interest rate and currency risks. Generally, these instruments are valued on a
mark-to-market basis with gains or losses recorded in the statement of operations. In the case of effective hedges of specific assets or liabilities, the exchange gains or
losses are included in the measurement of the related transaction. In the case of hedging the net investment of a foreign subsidiary, the revaluation of the investment is recorded in cumulative
translation adjustments, net of tax.

(n)   Environmental and product liabilities

Rhodia recognizes losses and accrues liabilities relating to environmental and product liability matters if available information indicates that the event of loss
is probable and can reasonably be estimated. With respect to environmental liabilities, Rhodia estimates losses on a case by case basis using available information. With respect to product
liabilities, Rhodia estimates losses on the basis of current facts and circumstances, prior experience with similar matters, the number of claims and the anticipated cost of administering, defending
and (in some cases), settling such claims. If an event of loss is reasonably possible but cannot be reasonably estimated, Rhodia provides appropriate disclosure in note 23a to its consolidated
financial statements if such contingency is material. Rhodia records anticipated recoveries from third parties as an asset only when realization is deemed probable.

(o)   Cash and cash equivalents in the Consolidated Statements of Cash Flows

"Cash and cash equivalents" include the following items: cash on hand, cash in banks, and short-term investments with original maturity of less than
three months. The market value of these items is similar to their book value due to their very short-term maturity.

F-13

---

(p)   Stock options

Stock option and stock purchase plans are accounted for in accordance with the intrinsic value method. This method consists of measuring compensation expense
based on the difference between the market value and exercise price of the options at the grant (measurement) date. The effect on net income that would have resulted from the use of the fair value
approach is disclosed in note 29g.

(q)   Sales of accounts receivable

Transfers of accounts receivable are accounted for as sales when the transferred assets have been isolated from Rhodia and are beyond the reach of its creditors,
when each transferee obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, and when Rhodia does not maintain
effective control over the transferred assets. Residual interests are recorded at fair value.

(r)   Special purpose entities

In the management of its operations, if the need arises, Rhodia may use and own shares of special purpose entities, especially in connection with the sales of
accounts receivable. Consolidation of these entities is not required since they meet the specific criteria for non-consolidation.

(s)   Estimates and assumptions

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosures of contingent assets and liabilities. Actual amounts could differ from these estimates.

(t)    Revenue recognition

Rhodia's policy is to recognize revenue upon transfer of title and risks of loss, and when persuasive evidence of an arrangement exists, delivery has occurred or
services have been rendered, the customer's price is fixed or determinable, and collectibility is reasonably assured. Revenue for services are recognized when services are performed.

(u)   Earnings per share

Basic earnings per share are computed by dividing net earnings by the average number of shares outstanding during the period, net of shares held by Rhodia.
Diluted earnings per share are computed by dividing net earnings by the average number of shares outstanding during the period, increased by the number of additional shares that would have been
outstanding if the dilutive potential common shares (corresponding primarily to stock subscription options) had been issued. Dilutive potential common shares are determined by calculating the number
of common shares that could be purchased on the open market using the funds obtained from the exercise of stock subscription options.

F-14

---

(v)   Operating income

Operating income consists of revenues and expenses resulting from operations. It excludes income and expenses related to investments, to financing or tax
strategies and to disposals of activities.

(w)  Treasury stock

Rhodia S.A. has been authorized by the general stockholders' meeting to trade in Rhodia's shares on the open market. The costs of acquiring any shares under these
stockholder authorizations that are not intended to be used for a specific purpose are deducted from stockholders' equity. If these shares are subsequently sold on the open market, the gain or loss is
credited or charged to stockholders' equity. Any shares purchased under these stockholder authorizations that are intended to be used for a specific purpose, or to maintain the share market price, or
for distribution to employees are recorded as an asset.

2.     COMPARABILITY AND EVOLUTION OF CONSOLIDATION SCOPE

2.1.  Comparability

2.1.1.  Accounting principles

Rhodia, after taking into account the quotation of its shares on the Paris and New York stock exchanges, and the divergence between French GAAP and U.S. GAAP,
particularly relating to the accounting for the amortization of goodwill, has reclassified Amortization of goodwill below Operating income in accordance with
regulation no 99-02.

Accordingly, the Operating income for 2001 and 2000 reflects a reclassification of €75 million and €32 million,
respectively.

In
addition, in order to reflect the net results of affiliated companies, Rhodia has reclassified the income tax provision relating to the associated companies from Income taxes to
Equity in earnings/(losses) of affiliated companies.

Accordingly, Income taxes and Equity in earnings/(losses) of affiliated companies for 2001 and 2000 reflect a reclassification of €(8) million and
€9 million, respectively.

Goodwill
and Other intangible assets are now shown separately on Rhodia's balance sheet. Certain intangible assets at December 31, 2001 and 2000 of
€52 million and €54 million, respectively, that were previously recorded as "Deferred charges and other assets" have been reclassified to "Other
intangible assets". Also, the negative equity of affiliated companies of €54 million and €53 million, respectively, at December 31, 2001 and 2000
that was previously recorded as a reduction of the balance sheet item "Investments accounted for by the equity method" has been reclassified to "Reserves for pensions, deferred income taxes and other
costs in excess of one year".

2.1.2.  Comparative information

No significant acquisitions or disposals occurred in 2002; therefore, no pro forma accounts are presented.

F-15

---

2.2.  Evolution

Significant divestments in 2002

During 2002, in line with Rhodia's previously announced objective to divest non-strategic businesses, the following businesses were divested:



Net
sales of these businesses in 2002, 2001 and 2000 were €556 million, €725 million and €772 million, respectively.

Significant divestments in 2001

In April 2001, the European surfactants businesses of Albright & Wilson's (A&W) (research, manufacturing and marketing) were sold to Huntsman
International LLC.

In
June 2001, the Empicryl lubricant additives businesses of A&W were sold to Group Degussa AG. Empicryl, which is used in the lubricants industry to improve viscosity, was
manufactured at Whitehaven.

Net
sales of A&W's European surfactants and Empicryl lubricant additives businesses for the period April 1, 2000 to December 31, 2000 were
€339 million.

Significant acquisitions in 2000

In March 2000, Rhodia acquired Albright & Wilson which has a global presence in phosphates, phosphorus byproducts and surfactants. A&W has been
fully consolidated in Rhodia's financial statements from April 1, 2000. Total cost of acquisition was €925 million, including transaction expenses. Goodwill of
€596 million is being amortized on a straight-line basis over 35 years.

In
September 2000, Rhodia acquired Chirex Inc. (Chirex). Chirex has been fully consolidated in Rhodia's financial statements from October 1, 2000. Chirex provides
high technological services to the pharmaceutical industry: contract research and development and outsourced manufacturing of active

F-16

---

ingredients.
Chirex was acquired for a total cost of €569 million, including transaction expenses, and has been consolidated based on the fair values of the assets acquired and
liabilities assumed. Goodwill of €461 million is being amortized on a straight-line basis over 30 years. The increase between the provisional and final
goodwill of €19 million is principally due to an adjustment of the fair value of net assets acquired.

3.     TRANSACTIONS WITH AVENTIS GROUP

(a)   Operational, administrative and financial transactions

As of December 31, 2002, 2001 and 2000, Aventis held 25.2% of Rhodia's capital. Up until October 15, 1999, Rhodia was controlled by Aventis. After
Rhodia's independence, operational, administrative and financial transactions are still carried out between these two groups. These transactions are not significant. All of these transactions are
conducted at similar conditions to market.

(b)   Other transaction

In accordance with the Environmental Indemnification Agreement with Aventis (note 23a), Rhodia recorded a receivable from Aventis of
€35 million as of December 31, 2001. In 2002, an additional €3 million was recorded and €26 million was collected.

4.     GOODWILL

|                                   |  | 2002  |   | 2001 |  
|---------------------------------- |  | ----- | - | ---- | -
|
|Balance, January 1                 |  | 2,287 |   | (933 | )
|Additions/(reductions) to goodwill |  | 20    |   | (7   | )
|Goodwill amortization              |  |      |   | (47  | )
|Translation                        |  | (267  | ) | 133  |  
|                                   |  |       |   |      |  
|Balance, December 31               |  | 2,040 |   | (854 | )
|                                   |  |       |   |      |  

Net goodwill as of December 31 relates to the following acquisitions:

|                       |  | 2002  |  | 2001 
|---------------------- |  | ----- |  | -----
|A&W                    |  | 503   |  | 557  
|Chirex                 |  | 354   |  | 432  
|RTZ                    |  | 53    |  | 61   
|Stauffer Chemicals Inc |  | 115   |  | 141  
|Kofran                 |  | 33    |  | 34   
|Other                  |  | 128   |  | 129  
|                       |  |       |  |      
|Total                  |  | 1,186 |  | 1,354
|                       |  |       |  |      

F-17

---



In
accordance with note 1f), asset impairment tests were performed for each enterprise of Rhodia.

The
methodology used consists of the development of discounted cash flows, using the following principal assumptions:



The
enterprise value determined as of December 31, 2002 for the Chirex reporting unit confirms that the goodwill is recoverable. However, this reporting unit, which experienced
operating losses in 2001 and 2002, is still in a development phase. Therefore, its forecasts are characterized by a level of uncertainty that will necessitate regular assessments that the assumptions
made in the fourth quarter of 2002, which are summarized below, are realized:



Considering
all these above assumptions, the terminal value represents essentially the total enterprise value of the Chirex reporting unit.

F-18

---

5.     OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following as of December 31:

|                       |  | 2002 |  | 2001
|---------------------- |  | ---- |  | ----
|
|Patents and trademarks |  | 101  |  | (63 
|Software               |  | 260  |  | (165
|Other                  |  | 80   |  | (36 
|                       |  |      |  |     
|Total                  |  | 441  |  | (264
|                       |  |      |  |     

---

Amortization charges relating to other intangible assets are as follows:

|                                 |  | 2002 |   | 2001 |   | 2000 |  
|-------------------------------- |  | ---- | - | ---- | - | ---- | -
|Patents, trademarks and software |  | (30  | ) | (34  | ) | (35  | )
|Other                            |  | (3   | ) | (5   | ) | (7   | )
|                                 |  |      |   |      |   |      |  
|Total                            |  | (33  | ) | (39  | ) | (42  | )
|                                 |  |      |   |      |   |      |  

6.     TANGIBLE ASSETS

(a)   Tangible assets consist of the following as of December 31:

|                          |  | 2002  |  | 2001  
|------------------------- |  | ----- |  | ------
|
|Land                      |  | 208   |  | (45   
|Buildings                 |  | 1,125 |  | (655  
|Plant and equipment       |  | 5,633 |  | (3,748
|Assets under construction |  | 225   |  |      
|                          |  |       |  |       
|Total                     |  | 7,191 |  | (4,448
|                          |  |       |  |       

---

F-19

---

Included in the above table are the following amounts related to assets subject to capital leases as of December 31:

|                              |  | 2002 |   | 2001 |  
|----------------------------- |  | ---- | - | ---- | -
|Land                          |  | 2    |   | 2    |  
|Buildings                     |  | 16   |   | 16   |  
|Plant and equipment           |  | 15   |   | 130  |  
|                              |  |      |   |      |  
|Gross valueat cost           |  | 33   |   | 148  |  
|Less accumulated depreciation |  | (22  | ) | (117 | )
|                              |  |      |   |      |  
|Net book value                |  | 11   |   | 31   |  
|                              |  |      |   |      |  

(b)   Movements

|                                          |  | 2002  |   | 2001  |   | 2000  |  
|----------------------------------------- |  | ----- | - | ----- | - | ----- | -
|Net book value, January 1                 |  | 3,561 |   | 3,759 |   | 2,947 |  
|                                          |  |       |   |       |   |       |  
|Additions                                 |  | 368   |   | 518   |   | 509   |  
|Disposals                                 |  | (157  | ) | (181  | ) | (103  | )
|Depreciation for the year                 |  | (409  | ) | (500  | ) | (450  | )
|Other (translation, changes in structure) |  | (620  | ) | (35   | ) | 856   |  
|                                          |  |       |   |       |   |       |  
|Net book value, December 31               |  | 2,743 |   | 3,561 |   | 3,759 |  
|                                          |  |       |   |       |   |       |  

7.     INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

|                                            |  | 2002 |   | 2001 |   | 2000 |  
|------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Balance, January 1(1)                       |  | 238  |   | 269  |   | 225  |  
|                                            |  |      |   |      |   |      |  
|Equity in income/(losses)                   |  | (38  | ) | (16  | ) | 8    |  
|Rhodia's share of Butachimie's income taxes |  | (2   | ) | (23  | ) |     |  
|Dividends paid                              |  | (3   | ) | (21  | ) | (16  | )
|Changes in scope of consolidation           |  | (26  | ) | 24   |   | 46   |  
|Translation                                 |  | 3    |   | 5    |   | 6    |  
|                                            |  |      |   |      |   |      |  
|Balance, December 31                        |  | 172  |   | 238  |   | 269  |  
|                                            |  |      |   |      |   |      |  

---

The useful lives of the tangible assets at Nylstar, accounted for by the equity method, have been revised to conform to the useful lives used by
Rhodia. The impact on income amounted to €3.8 million.

F-20

---

Distribution
of the investments accounted for by the equity method:

|                              |  | % Ownership |  | 2002 |  | 2001
|----------------------------- |  | ----------- |  | ---- |  | ----
|Nylstar Group                 |  | 50.00       |  | 51   |  | 81  
|Butachimie                    |  | 50.00       |  | 56   |  | 18  
|Teris Group(1)                |  |            |  |     |  | 54  
|Rhodia Hengchang(1)           |  |            |  |     |  | 11  
|Other (less than €10 million) |  |             |  | 65   |  | 74  
|                              |  |             |  |      |  |     
|Total                         |  |             |  | 172  |  | 238 
|                              |  |             |  |      |  |     

---

(a)   Joint-ventures accounted for by the equity method

Rhodia holds a 50% interest in Butachimie. Rhodia purchases 50% of Butachimie's production, and almost all of these purchases are sold on to Rhodia companies,
which produce nylon thread. Because Butachimie's production is closely integrated with the industrial process of Rhodia, the operating results of this entity are accounted for as a reduction of
Production costs and expenses in the consolidated statements of operations rather than being included in Equity in earnings/(losses) of affiliated companies. In addition, income taxes are not
presented in Equity in earnings/(losses) of affiliated companies but in Income taxes.

Besides
its interest in Butachimie, Rhodia has other joint-ventures with a 50% ownership interest, the most important of which are Nylstar (nylon thread business) and Primester
(cellulose acetate business) whose partners are SNIA (Italy) and Eastman Chemicals Company (USA), respectively.

Financial
information, aggregated relative to these joint-ventures, is presented below.

Statement
of operations (excluding Butachimie) and balance sheet as of December 31 (including Butachimie):

|                     |  | 2002  |   | 2001  |  | 2000 
|-------------------- |  | ----- | - | ----- |  | -----
|Net sales            |  | 873   |   | 1,357 |  | 1,263
|Operating income     |  | (7    | ) | 6     |  | 69   
|Current assets       |  | 600   |   | 740   |  | 810  
|Total assets         |  | 1,724 |   | 2,189 |  | 2,114
|Stockholders' equity |  | 276   |   | 355   |  | 457  
|Financial debt       |  | 783   |   | 1,199 |  | 988  

The variation in 2002, especially net sales, reflects the disposals of Teris and Latexia (see note 2.2).

F-21

---

(b)   Other affiliates accounted for by the equity method:

|                           |  | 2002 |   | 2001 |   | 2000
|-------------------------- |  | ---- | - | ---- | - | ----
|Net sales                  |  | 175  |   | 226  |   | 196 
|Net income/(loss)          |  | (4   | ) | (2   | ) | 5   
|Total assets (December 31) |  | 236  |   | 363  |   | 353 

(c)   Commercial transactions between Rhodia consolidated companies and affiliates accounted for by the equity method:

|                                                             |  | 2002 |  | 2001 |  | 2000
|------------------------------------------------------------ |  | ---- |  | ---- |  | ----
|Purchases from affiliates accounted for by the equity method |  | 167  |  | 160  |  | 174 
|Sales to affiliates accounted for by the equity method       |  | 139  |  | 188  |  | 184 

8.     INVESTMENTS AT COST

Investments at cost consist of the following as of December 31:

|                                |  | % Ownership |  | 2002 |  | 2001
|------------------------------- |  | ----------- |  | ---- |  | ----
|Phosphoric Fertilizers Industry |  | 8.41        |  | 9    |  | 6   
|Stilon                          |  | 14.80       |  | 6    |  | 7   
|Other (less than €5 million)    |  |             |  | 52   |  | 62  
|                                |  |             |  |      |  |     
|Total                           |  |             |  | 67   |  | 75  
|                                |  |             |  |      |  |     

Stilon is an affiliate of Nylstar Group (accounted for by the equity method). Rhodia owns an additional 14.80%. Rhodia's investment value equals
its share of Stilon's stockholders' equity. The Other category includes some entities that are majority owned or owned by more than 20%. However, these entities are not consolidated because they are
not significant.

9.     DEFERRED CHARGES AND OTHER ASSETS

Deferred charges and other assets consist of the following as of December 31:

|                                                |  | 2002 |  | 2001
|----------------------------------------------- |  | ---- |  | ----
|Long term receivables                           |  | 108  |  | 74  
|Long term deferred tax assets                   |  | 195  |  | 128 
|Minimum pension liability adjustment (note 17c) |  | 270  |  | 231 
|Prepaid pension cost (note 17c)(1)              |  | 252  |  | 137 
|Other                                           |  | 16   |  | 14  
|                                                |  |      |  |     
|Total                                           |  | 841  |  | 584 
|                                                |  |      |  |     

---

F-22

---



10.   INVENTORIES

Inventories
consist of the following as of December 31:

|                              |  | 2002 |   | 2001  |  
|----------------------------- |  | ---- | - | ----- | -
|Raw materials and spare parts |  | 350  |   | 457   |  
|Work in progress              |  | 50   |   | 78    |  
|Finished products             |  | 512  |   | 597   |  
|                              |  |      |   |       |  
|Gross book value              |  | 912  |   | 1,132 |  
|Valuation allowances          |  | (77  | ) | (88   | )
|                              |  |      |   |       |  
|Net book value                |  | 835  |   | 1,044 |  
|                              |  |      |   |       |  

11.   ACCOUNTS RECEIVABLE

Accounts
receivable consist of the following as of December 31:

|                                      |  | 2002 |   | 2001 |  
|------------------------------------- |  | ---- | - | ---- | -
|Accounts receivable                   |  | 417  |   | 567  |  
|Less: allowance for doubtful accounts |  | (39  | ) | (43  | )
|                                      |  |      |   |      |  
|Net receivables                       |  | 378  |   | 524  |  
|                                      |  |      |   |      |  

Certain Rhodia companies sold uncollected receivables during 2002 and 2001 in accordance with multi-year agreements entered into with
various banks. The amount of receivables sold as of December 31, 2002 and 2001 was €627 million and €718 million, respectively, which generated a
net cash collection of €531 million in 2002 compared with €617 million in 2001. The average amount of receivables sold in 2002 was
€635 million compared with €613 million in 2001, which generated an average net cash collection of €539 million in 2002 compared
with €519 million in 2001. Residual interests are stated at fair value, based on the present value of estimated cash flows.

12.   OTHER CURRENT ASSETS

Other current assets consist of the following as of December 31:

|                                                        |  | 2002 |  | 2001
|------------------------------------------------------- |  | ---- |  | ----
|Prepaid and recoverable taxes                           |  | 239  |  | 217 
|Prepaid expenses and accrued interest                   |  | 29   |  | 36  
|Short-term loans and current portion of long-term loans |  | 122  |  | 71  
|Assets held for sale                                    |  | 17   |  | 9   
|Deferred income taxes                                   |  | 152  |  | 242 
|Other receivables                                       |  | 261  |  | 255 
|Other                                                   |  | 97   |  | 86  
|                                                        |  |      |  |     
|Total                                                   |  | 917  |  | 916 
|                                                        |  |      |  |     

F-23

---

13.   VALUATION ALLOWANCES

Valuation allowances as of December 31 2002, 2001 and 2000, and the movements for the years ended December 31, 2002 and 2001 follow:

|                                                         |  | January 1,
2002 |   | (Charged)/
credited to
costs and
expenses |   | Change in
structure |   | Other
movements(1) |   | December 31,
2002 |  
|-------------------------------------------------------- |  | --------------- | - | ----------------------------------------- | - | ------------------- | - | ------------------ | - | ----------------- | -
|Deposits and long-term loans                             |  | (32             | ) | (2                                        | ) | 5                   |   | 3                  |   | (26               | )
|Deferred charges, long-term receivables and other assets |  | (149            | ) | (21                                       | ) |                    |   | 9                  |   | (161              | )
|Inventories                                              |  | (88             | ) | 1                                         |   | 3                   |   | 7                  |   | (77               | )
|Trade accounts receivable                                |  | (43             | ) | (3                                        | ) |                    |   | 7                  |   | (39               | )
|Other provisions                                         |  | (15             | ) | 11                                        |   | (7                  | ) | (1                 | ) | (12               | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  
|Total                                                    |  | (327            | ) | (14                                       | ) | 1                   |   | 25                 |   | (315              | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  

---

|                                                         |  | January 1,
2001 |   | (Charged)/
credited to
costs and
expenses |   | Change in
structure |   | Other
movements(1) |   | December 31,
2001 |  
|-------------------------------------------------------- |  | --------------- | - | ----------------------------------------- | - | ------------------- | - | ------------------ | - | ----------------- | -
|Deposits and long-term loans                             |  | (19             | ) | (12                                       | ) |                    |   | (1                 | ) | (32               | )
|Deferred charges, long-term receivables and other assets |  | (185            | ) | 30                                        |   |                    |   | 6                  |   | (149              | )
|Inventories                                              |  | (86             | ) | (1                                        | ) |                    |   | (1                 | ) | (88               | )
|Trade accounts receivable                                |  | (44             | ) | 1                                         |   | (1                  | ) | 1                  |   | (43               | )
|Other provisions                                         |  | (15             | ) |                                          |   |                    |   |                   |   | (15               | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  
|Total                                                    |  | (349            | ) | 18                                        |   | (1                  | ) | 5                  |   | (327              | )
|                                                         |  |                 |   |                                           |   |                     |   |                    |   |                   |  

---

Deferred tax assets valuation allowances are reported in note 22.

14.   MARKETABLE SECURITIES

As of December 31, 2002 and 2001, respectively, marketable securities consisted of €108 million and €180 million of
short-term investments with a market value approximating book value.

F-24

---



15.   STOCKHOLDERS' EQUITY

(a)   Common stock

At the May 21, 2002 stockholders' meeting, the stockholders approved a reduction in capital (not motivated by losses) in an amount of
€2,510 million by way of reduction in the par value of the common stock from €15 to €1. The amount of the reduction in common stock, par value,
was credited to additional paid-in capital.

As
of December 31, 2002, Rhodia's total capital amounted to €179 million, composed of 179,309,188 shares, same as of December 2001 and 2000.

The
average number of shares outstanding in 2002 amounted to 178,765,518 shares. Basic earnings per share are determined directly on the basis of this amount. Diluted earnings per share
are determined based on the average number of shares outstanding increased by the number of shares that would be issued if all dilutive common stock instruments at year end were exercised, which
amounted to 178,765,518 shares in 2002. Diluted earnings per share is equal to basic earnings per share in 2002 and 2001 as the loss would result in dilutive common stock instruments being
anti-dilutive.

The
board of directors, at their June 20, 2000 meeting, in accordance with the authorization given by the stockholders at the stockholders' meeting of April 18, 2000,
initiated a capital increase reserved for employees with the obligation that the shares be placed in the employee savings plan for five years. The capital increase officially occurred on
September 1, 2000 with 4,568,147 new shares being issued.

As
of December 31, 2002, 2001 and 2000, Aventis owned 25.2% of the capital of Rhodia. Rhodia shares owned by Aventis allow Aventis to cover its obligation to reimburse holders of
Aventis bonds exchangeable for Rhodia shares. These bonds were issued by Aventis at the time of the secondary public offering. On November 29, 2002, Aventis made a cash tender offer to
repurchase all of these bonds. There are no longer any exchangeable bonds into Rhodia shares.

(b)   Treasury stock

In July 2000, Rhodia entered into a put option with a bank for 1,610,820 shares exercisable in 2002. On September 12, 2002, as a result of the
exercise of that option, Rhodia purchased the shares for cash and resold them on the open market for cash. In addition, Rhodia sold on the open market 216,599 shares acquired in previous years.

The
sale of these shares on the open market generated a charge to retained earnings of €10 million, net of tax. As of December 31, 2002, Rhodia does not
hold any of its own shares, nor is a party to options to purchase or sell its own shares.

(c)   Rhodia S.A. distributable retained earnings

The Rhodia S.A. distributable retained earnings amount to €381 million and €382 million as of December 31,
2002 and 2001, respectively. Dividend equalization tax (precompte mobilier) may be due in the case of distribution of distributable reserves.

F-25

---

(d)   Translation adjustments

The negative variance in the cumulative translation adjustments for 2002 is mainly attributed to the Brazilian real (€230 million), the
U.S. dollar (€105 million) and the U.K. pound sterling (€48 million).

16.   MINORITY INTERESTS

|                                        |  | 2002 |   | 2001 |  
|--------------------------------------- |  | ---- | - | ---- | -
|Balance, January 1                      |  | 84   |   | 87   |  
|                                        |  |      |   |      |  
|Minority interests in net income/(loss) |  | 9    |   | 5    |  
|Dividends distributed                   |  | (1   | ) | (5   | )
|Change in structure                     |  | (63  | ) | (6   | )
|Translation                             |  | (6   | ) | 3    |  
|                                        |  |      |   |      |  
|Balance, December 31                    |  | 23   |   | 84   |  
|                                        |  |      |   |      |  

The variation in 2002 relates essentially to the sale of Rhodia-Ster.

Minority
interests consist of the following as of December 31:

|                         |  | 2002 |  | 2001
|------------------------ |  | ---- |  | ----
|Osiris                   |  | 7    |  | 2   
|Rhodia Hengchang         |  | 6    |  |    
|A&W Chemicals            |  | 3    |  | 3   
|Rhodia-Ster              |  |     |  | 71  
|Other (below €3 million) |  | 7    |  | 8   
|                         |  |      |  |     
|Balance, December 31     |  | 23   |  | 84  
|                         |  |      |  |     

17.   RESERVES FOR PENSIONS, DEFERRED INCOME TAXES AND OTHER COSTS

(a)   Reserves for pensions, deferred income taxes and other costs consist of the following at December 31

|                             |  | 2002  |  | 2001
|---------------------------- |  | ----- |  | ----
|
|Pension and retirement costs |  | 788   |  | 50  
|Deferred income taxes        |  | 217   |  | 19  
|Restructuring                |  | 38    |  | 117 
|Environmental                |  | 78    |  | 17  
|Other                        |  | 112   |  | 98  
|                             |  |       |  |     
|Total                        |  | 1,233 |  | 301 
|                             |  |       |  |     

F-26

---

(b)   Movements

|                                |  | Balance,
January 1 |  | New
Measures |  | Expenditures
Charged
to Reserves(1) |   | Change in
Structure |   | Translation |   | Balance,
December 31
|------------------------------- |  | ------------------ |  | ------------ |  | ----------------------------------- | - | ------------------- | - | ----------- | - | --------------------
|Pension and retirement costs(2) |  | 790                |  | 120          |  | (56                                 | ) | (9                  | ) | (7          | ) | 838                 
|Deferred income taxes           |  | 238                |  | 55           |  |                                    |   | (9                  | ) | (48         | ) | 236                 
|Restructuring                   |  | 309                |  | 25           |  | (152                                | ) |                    |   | (27         | ) | 155                 
|Environmental                   |  | 121                |  | 3            |  | (12                                 | ) |                    |   | (17         | ) | 95                  
|Other                           |  | 255                |  | 172          |  | (183                                | ) | (2                  | ) | (32         | ) | 210                 
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     
|Total 2002                      |  | 1,713              |  | 375          |  | (403                                | ) | (20                 | ) | (131        | ) | 1,534               
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     
|Pension and retirement costs(2) |  | 701                |  | 132          |  | (49                                 | ) | 6                   |   |            |   | 790                 
|Deferred income taxes           |  | 237                |  |             |  | (4                                  | ) | 3                   |   | 2           |   | 238                 
|Restructuring                   |  | 238                |  | 163          |  | (113                                | ) | 15                  |   | 6           |   | 309                 
|Environmental                   |  | 97                 |  | 21           |  | (4                                  | ) | 5                   |   | 2           |   | 121                 
|Other                           |  | 208                |  | 121          |  | (86                                 | ) | 11                  |   | 1           |   | 255                 
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     
|Total 2001                      |  | 1,481              |  | 437          |  | (256                                | ) | 40                  |   | 11          |   | 1,713               
|                                |  |                    |  |              |  |                                     |   |                     |   |             |   |                     

---

c)     Pension, retirement and other post-employment obligations

Rhodia provides pension and retirement benefits, including defined benefit pension plans which cover the majority of employees. The specific features of the plans
(benefit formulas, funding policies and types of assets held) vary depending on regulations and laws in the country in which the employees are located. Concerning defined benefit plans in France,
these plans are unfunded.

Actuarial
valuations of these obligations are calculated each year in most countries. These calculations are based on: (a) turnover assumptions for current personnel, mortality
assumptions for plan participants and assumptions concerning future salary increases; (b) a retirement age of 60 to 65 and other retirement assumptions reflecting local economic and demographic
factors; (c) discount rates (used in determining the actuarial present value of the projected benefit obligation) of 5.75% as of December 31, 2002 compared with 6% as of
December 31, 2001 for French plans, and 4% to 6.75% as of December 31, 2002 compared with 4.25% to 7.5% as of December 31, 2001 for foreign plans; and (d) expected
long-term rates of return on plan assets, ranging from 2% to 9% as of December 31, 2002 compared with 4% to 10% as of December 31, 2001.

As
of October 1, 1988, the vested benefits of retired and early-retired employees of French companies were irrevocably transferred to an insurance company.

F-27

---



The following tables reconcile the funded status of the plans with amounts recognized in the consolidated balance sheets as of December 31, 2002 and 2001.

|                                                                                      |                                 | Pension and retirement
benefits |      | Other post-employment
benefits |     
|------------------------------------------------------------------------------------- | ------------------------------- | ------------------------------- | ---- | ------------------------------ | ----
|
|PROJECTED BENEFIT OBLIGATION                                                          |                                 |                                 |      |                                |     
|Benefit obligation, January 1                                                         |                                 | 2,173                           |      | 2,095                          |     
|                                                                                      |                                 |                                 |      |                                |     
|French companies                                                                      |                                 | 614                             |      | 621                            |     
|Foreign companies                                                                     |                                 | 1,559                           |      | 1,474                          |     
|                                                                                      |                                 |                                 |      |                                |     
|Service cost                                                                          |                                 | 37                              |      | 46                             |     
|Interest cost                                                                         |                                 | 131                             |      | 138                            |     
|Plan changes                                                                          |                                 | 5                               |      | 1                              |     
|Acquisitions and divestitures                                                         |                                 | (16                             | )    | 50                             |     
|Curtailments and settlements                                                          |                                 | 1                               |      | 2                              |     
|Actuarial (gains)/losses                                                              |                                 | 22                              |      | (34                            | )   
|Benefits paid                                                                         |                                 | (138                            | )    | (146                           | )   
|Translation                                                                           |                                 | (159                            | )    | 21                             |     
|                                                                                      |                                 |                                 |      |                                |     
|Benefit obligation, December 31                                                       |                                 | 2,056                           |      | 2,173                          |     
|                                                                                      |                                 |                                 |      |                                |     
|French companies                                                                      |                                 | 674                             |      | 614                            |     
|Foreign companies                                                                     |                                 | 1,382                           |      | 1,559                          |     
|PLAN ASSETS AT FAIR VALUE                                                             |                                 |                                 |      |                                |     
|Fair value, January 1                                                                 |                                 | 1,281                           |      | 1,407                          |     
|Actual return on plan assets                                                          |                                 | (73                             | )    | (121                           | )   
|Employer contributions                                                                |                                 | 158                             |      | 29                             |     
|Plan participant contributions                                                        |                                 | 4                               |      | 5                              |     
|Benefits paid                                                                         |                                 | (91                             | )    | (102                           | )   
|Acquisitions and divestitures                                                         |                                 |                                |      | 6                              |     
|Curtailments and settlements                                                          |                                 | (15                             | )    |                               |     
|Translation                                                                           |                                 | (142                            | )    | 57                             |     
|                                                                                      |                                 |                                 |      |                                |     
|Fair value, December 31                                                               |                                 | 1,122                           |      | 1,281                          |     
|                                                                                      |                                 |                                 |      |                                |     
|Projected benefit obligation in excess of (less than) plan assets                     |                                 | 934                             |      | 892                            |     
|Adjustment required to recognize minimum liability                                    |                                 | 270                             |      | 231                            |     
|Unamortized net gains/(losses):                                                       |                                 |                                 |      |                                |     
|                                                                                      | Unrecognized net gains/(losses) |                                 | (607 | )                              | (455
|                                                                                      | Net transition (debit)/credit   |                                 |     |                                |    
|                                                                                      | Plan amendments                 |                                 | (11  | )                              | (15 
|                                                                                      |                                 |                                 |      |                                |     
|PENSION LIABILITY (PREPAID PENSION COST) RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET |                                 | 586                             |      | 653                            |     
|                                                                                      |                                 |                                 |      |                                |     
|Long-term liability                                                                   |                                 | 788                             |      | 743                            |     
|Short-term liability                                                                  |                                 | 50                              |      | 47                             |     
|Prepaid pension cost                                                                  |                                 | (252                            | )    | (137                           | )   

F-28

---

The plans for which the accumulated benefit obligation, based on current salaries, is in excess of plan assets is summarized below:

|                               |  | 2002 |  | 2001
|------------------------------ |  | ---- |  | ----
|French companies               |  |      |  |     
|Accumulated benefit obligation |  | 626  |  | 575 
|Projected benefit obligation   |  | 667  |  | 614 
|Plan assets at fair value      |  |     |  |    
|Foreign companies              |  |      |  |     
|Accumulated benefit obligation |  | 229  |  | 328 
|Projected benefit obligation   |  | 233  |  | 343 
|Plan assets at fair value      |  | 69   |  | 206 

Net periodic pension cost includes the following components:

|                                              |  | 2002 |   | 2001 |   | 2000 |  
|--------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Benefits earned during the year               |  | 37   |   | 51   |   | 40   |  
|Interest cost on projected benefit obligation |  | 131  |   | 138  |   | 124  |  
|Expected return on plan assets                |  | (102 | ) | (128 | ) | (74  | )
|Net amortization and other deferrals          |  | 38   |   | 31   |   | (9   | )
|                                              |  |      |   |      |   |      |  
|Net pension expense                           |  | 104  |   | 92   |   | 81   |  
|                                              |  |      |   |      |   |      |  

(d)   Reserves for restructuring costs

Restructuring costs for the years ended December 31, 2002, 2001 and 2000 follow:

|                                         |  | 2002 |   | 2001 |   | 2000 |  
|---------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Reserves as of January 1                 |  | 309  |   | 238  |   | 188  |  
|                                         |  |      |   |      |   |      |  
|New measures                             |  | 29   |   | 178  |   | 32   |  
|Changes in estimates of earlier measures |  | (4   | ) | (15  | ) | (18  | )
|                                         |  |      |   |      |   |      |  
|Charged to operations                    |  | 25   |   | 163  |   | 14   |  
|                                         |  |      |   |      |   |      |  
|Expenditures charged to the reserve      |  | (152 | ) | (113 | ) | (84  | )
|Effect of changes in structure(1)        |  |     |   | 15   |   | 112  |  
|Effect of changes in exchange rates      |  | (27  | ) | 6    |   | 8    |  
|                                         |  |      |   |      |   |      |  
|Long-term reserves                      |  | 38   |   | 62   |   | 67   |  
|Short-term reserves                     |  | 117  |   | 247  |   | 171  |  
|                                         |  |      |   |      |   |      |  
|Reserves as of December 31               |  | 155  |   | 309  |   | 238  |  
|                                         |  |      |   |      |   |      |  

---

In 2002, new measures for €29 million principally concerned industrial restructuring at the Eco Services
activityServices & Specialties Division (€9 million), to the launch of industrial restructuring

F-29

---

at
ChirexFine Organics Division (€7 million) and productivity plans at various headquarters sites (€4 million).

In
2002, utilization of provisions for €152 million mainly corresponds to expenses relating to the 2001 restructuring plans in particular:



In
2001, Rhodia launched a major reorganization plan. New measures relating to this plan amounted to €178 million and mainly involve rationalization plans and
productivity improvements in the following countries:



F-30

---



In
2001, the changes of estimates mainly relate to reduced environmental costs at Lille, France (€7 million) and Pont de Claix
(€8 million).

The
utilization of reorganization provisions in 2001 relate mainly to:



In
2000, following the acquisition of A&W, Rhodia launched restructuring initiatives at several A&W sites. Restructuring provisions linked to these plans amount to
€101 million, principally relating to the following measures:



In
2000, new measures principally concerned plant rationalization at several European sites in the Fine Organics and Polyamide Divisions. In 2000, changes in estimates principally
concerned lower estimates of environmental costs in North America at Mt. Pleasant, Tennessee (€4 million) and Oil

F-31

---

City,
Pennsylvania (€7 million). In 2000, restructuring expenses principally related to the A&W plant and administrative sites (€20 million) and the
implementation of plant rationalizations in France.

|                              |  | 2002 |  | 2001
|----------------------------- |  | ---- |  | ----
|Employee termination benefits |  | 67   |  | 158 
|Closure costs                 |  | 37   |  | 89  
|Environmental costs           |  | 51   |  | 62  
|                              |  |      |  |     
|Total                         |  | 155  |  | 309 
|                              |  |      |  |     

Employee termination benefits include certain early retirement, severance and other benefits associated with termination plans. The plans
implemented by the non-French Rhodia companies include compulsory and voluntary measures. Compulsory severance benefits are reserved for as of the date of announcement of the plan by the
management having the appropriate authority to approve the plan, and voluntary severance benefits are reserved for upon acceptance by employees. Environmental costs included under this caption relate
to operations subject to restructuring measures (see also (e) and note 23(a)).

(e)   Environmental

Environmental liabilities decreased €(26) million compared with 2001. Expenditures charged to the reserve totalling €(12) million
and translation totalling €(17) million principally explain the decrease.

18.   FINANCIAL DEBT (SHORT-TERM AND LONG-TERM)

(a)   Financial debt consists of the following as of December 31

|                               |  | 2002  |  | 2001 
|------------------------------ |  | ----- |  | -----
|Bonds                          |  | 1,087 |  | 1,101
|Other loans and financial debt |  | 1,297 |  | 1,884
|                               |  |       |  |      
|Total                          |  | 2,384 |  | 2,985
|                               |  |       |  |      

In 2002, Rhodia pursued the same funding policy initiated in 2000 and 2001. In addition, Rhodia completed a private placement of
$290 million of notes with American investors. The notes are repayable in full in July 2009 and 2012. Several bank borrowings have been obtained or renewed.

F-32

---



(b)   Analysis by currency

|               |  | 2002  |  | 2001 
|-------------- |  | ----- |  | -----
|Euro           |  | 1,209 |  | 1,494
|U.S. dollar    |  | 972   |  | 1,220
|Japanese yen   |  | 94    |  | 90   
|U.K. sterling  |  | 29    |  | 11   
|Brazilian real |  | 3     |  | 13   
|Other          |  | 77    |  | 157  
|               |  |       |  |      
|Total          |  | 2,384 |  | 2,985
|               |  |       |  |      

This breakdown by currency of origin does not reflect Rhodia's exposure to these currencies' interest rates. A portion of these loans are drawn
down and hedged in various other currencies, notably pounds sterling.

(c)   Maturities of financial debt as of December 31 follows

|                 |  | 2002  |  | 2001 
|---------------- |  | ----- |  | -----
|2002             |  |      |  | 1,036
|2003             |  | 645   |  | 108  
|2004             |  | 404   |  | 597  
|2005             |  | 537   |  | 670  
|2006             |  | 488   |  | 536  
|2007             |  | 6     |  | 2    
|2008             |  | 5     |  | 7    
|Subsequent years |  | 299   |  | 29   
|                 |  |       |  |      
|Total            |  | 2,384 |  | 2,985
|                 |  |       |  |      

As of December 31, 2002, maturities in 2003 are comprised of €201 million of current maturities of
long-term debt and €175 million of commercial paper (with a stable amount outstanding during 2002), and other short-term financings granted to Rhodia or
less significantly to multiple subsidiaries. The short-term facilities are generally revolving credit agreements without a specific maturity date or are automatically renewed that Rhodia
in prudence classifies as short-term debt as in previous years.

F-33

---

(d)   Analysis by interest rate

Financial debt breaks down between fixed and floating rate debt (excluding the effect of interest rate swapssee note 23d) as of
December 31 follows:

|              |  | 2002  |  | 2001 
|------------- |  | ----- |  | -----
|Floating rate |  | 1,259 |  | 2,091
|Fixed rate    |  | 1,125 |  | 894  
|              |  |       |  |      
|Total         |  | 2,384 |  | 2,985
|              |  |       |  |      

After interest rate swaps, the fixed rate portion of Rhodia's financial debt is equal to €1,358 million as of
December 31, 2002 compared with €1,422 million as of December 31, 2001.

(e)   Obligations under capital leases

|                 |  | 2002 |  | 2001
|---------------- |  | ---- |  | ----
|2002             |  |     |  | 13  
|2003             |  | 2    |  | 3   
|2004             |  | 2    |  | 2   
|2005             |  | 1    |  | 1   
|2006             |  | 1    |  | 2   
|2007             |  |     |  |    
|Subsequent years |  |     |  |    
|                 |  |      |  |     
|Total            |  | 6    |  | 21  
|                 |  |      |  |     

(f)    Fair value of financial debt

The
fair value of Rhodia's long-term debt (including current portion) has been estimated based on market rates and terms available to Rhodia for issues with similar
maturities, which approximates book value.

(g)   Rating

Rhodia is rated by two international rating agencies. A possible change in these ratings cannot accelerate the repayment of any outstanding debt, nor increase in
the interest cost of any financings, except for an increase in the interest rate in the private placement discussed in note 18a). In the case of a change in the rating, interest costs could
increase a maximum of €3.5 million per year.

(h)   Available lines of credit

The undrawn amount of the total committed lines of credit at December 31, 2002 was €1,019 million.

F-34

---

Most
of these credit lines are subject to certain financial covenants regarding a maximum level of net financial debt/EBITDA or a minimum level of EBITDA/interest or on minimum
stockholders' equity level. As of December 31, 2002, all financial covenants were met by Rhodia, including the covenant based on a minimum level of stockholders' equity. Most of the credit
lines impacted by the minimum stockholders' equity covenant mature in 2003 or 2004. The minimum stockholders' equity covenant is measured annually, except for the private placement for which Rhodia
must maintain at all times a certain minimum consolidated net worth.

19.   OTHER CURRENT LIABILITIES

Other current liabilities consist of the following as of December 31:

|                                             |  | 2002 |  | 2001
|-------------------------------------------- |  | ---- |  | ----
|Payables related to fixed asset acquisitions |  | 59   |  | 81  
|Accrued payroll costs                        |  | 197  |  | 216 
|Accrued taxes                                |  | 169  |  | 178 
|Accrued interest payable                     |  | 46   |  | 42  
|Unrealized losses on financial instruments   |  | 23   |  | 45  
|Other                                        |  | 328  |  | 368 
|                                             |  |      |  |     
|Total                                        |  | 822  |  | 930 
|                                             |  |      |  |     

20.   FINANCIAL EXPENSENET

|                            |  | 2002 |   | 2001 |   | 2000 |  
|--------------------------- |  | ---- | - | ---- | - | ---- | -
|Interest expense            |  | (139 | ) | (179 | ) | (195 | )
|Interest income             |  | 31   |   | 24   |   | 24   |  
|Capitalized interest        |  | 8    |   | 19   |   | 8    |  
|Other financial chargesnet |  | (23  | ) | (50  | ) | (14  | )
|                            |  |      |   |      |   |      |  
|Financial expensenet       |  | (123 | ) | (186 | ) | (177 | )
|                            |  |      |   |      |   |      |  

Cash paid to third parties for interest expense in 2002 amounted to €127 million (2001:
€163 million; 2000: €157 million). The decrease of capitalized interest reflects the return to normal capital expenditures in 2002 after exceptional
capital expenditures during the period 1999 to 2001.

F-35

---

21.   OTHER INCOME/(EXPENSE)NET

|                                             |  | 2002 |   | 2001 |   | 2000 |  
|-------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Gains/(losses) on disposals of assetsnet(1) |  | (34  | ) | 15   |   | 13   |  
|Net gains/(losses) on foreign currency       |  | 14   |   | (7   | ) | 18   |  
|Dividends from other investments             |  | 3    |   | 4    |   | 4    |  
|Losses on financial assets                   |  | (12  | ) | (17  | ) | (9   | )
|Loss on sales of receivables                 |  | (29  | ) | (27  | ) | (17  | )
|Other income/(expense)net(2)                |  | (14  | ) | (76  | ) | (16  | )
|                                             |  |      |   |      |   |      |  
|Total                                        |  | (72  | ) | (108 | ) | (7   | )
|                                             |  |      |   |      |   |      |  

---

22.   INCOME TAXES

(a)   Analysis of income taxes

|                      |  | 2002 |   | 2001 |   | 2000 |  
|--------------------- |  | ---- | - | ---- | - | ---- | -
|
|French companies      |  | (72  | ) |     |   | (155 | )
|Foreign companies     |  | 228  |   | (66  | ) | (48  | )
|                      |  |      |   |      |   |      |  
|Total                 |  | 156  |   | (66  | ) | (203 | )
|                      |  |      |   |      |   |      |  
|Current income taxes  |  |      |   | (59  | ) |      |  
|Deferred income taxes |  |      |   | (7   | ) |      |  
|                      |  |      |   |      |   |      |  
|Total                 |  |      |   | (66  | ) |      |  
|                      |  |      |   |      |   |      |  

Current income taxes means cash paid or to be paid to tax administrations for the year based on the rules and rates applicable in the different
countries. Cash paid to tax administrations in 2002 amounted to €36 million (2001: €56 million; 2000: €48 million). For French
companies controlled more than 95% by Rhodia, current income taxes are calculated based on an integrated tax group in place since January 1, 1999 that is for a five-year period,
renewable by Rhodia. Rhodia does not discount deferred taxes.

(b)   Analysis of effective tax rate (in %)

Income before income taxes in 2002 was €156 million compared with €(203) million in 2001 and
€344 million in 2000.

F-36

---



The
effective income tax rate in 2002 was 42.3% compared with 42.4% in 2001 and 27.6% in 2000. An analysis of the effective incomes tax rate follows:

|                                                              |  | 2002  |   | 2001 |   | 2000  |  
|------------------------------------------------------------- |  | ----- | - | ---- | - | ----- | -
|
|Statutory tax rate in France                                  |  | (33.3 | ) | 33.3 |   | (33.3 | )
|                                                              |  |       |   |      |   |       |  
|Effect of French surtax                                       |  |      |   | 2.1  |   | (0.8  | )
|Effect of rate differences between France and other countries |  | 4.4   |   | 3.3  |   | (3.9  | )
|Loss carryforwards and other tax credits                      |  | 7.1   |   | 9.2  |   | 4.7   |  
|Permanent differences on losses on disposals of assets        |  | (10.0 | ) |     |   |      |  
|Other permanent differences                                   |  | (10.5 | ) | (5.5 | ) | 5.7   |  
|                                                              |  |       |   |      |   |       |  
|Effective tax rate                                            |  | (42.3 | ) | 42.4 |   | (27.6 | )
|                                                              |  |       |   |      |   |       |  

(c)   Deferred income taxes recorded on the balance sheet at December 31

|                                  |  | 2002 |   | 2001 |  
|--------------------------------- |  | ---- | - | ---- | -
|Long-term liabilities             |  | (217 | ) | (224 | )
|Short-term liabilities            |  | (19  | ) | (14  | )
|                                  |  |      |   |      |  
|Total                             |  | (236 | ) | (238 | )
|                                  |  |      |   |      |  
|Long-term assetsnet              |  | 195  |   | 128  |  
|Short-term assetsnet             |  | 152  |   | 242  |  
|                                  |  |      |   |      |  
|Totalnet of valuation allowances |  | 347  |   | 370  |  
|                                  |  |      |   |      |  
|Net                               |  | 111  |   | 132  |  
|                                  |  |      |   |      |  

Deferred tax liabilities principally relate to temporary differences between the book value and tax basis of tangible assets. Deferred tax assets
principally relate to pension and retirement provisions and to tax loss carryforwards.

The
temporary differences giving rise to deferred tax assets comprise mainly (tax effect): pension benefits and retirement indemnities which are generally not tax deductible until paid
€117 million in 2002 (€108 million in 2001), provisions not deductible until paid and other temporary differences €194 million in
2002 (€249 million in 2001), and tax loss carry-forwards €203 million in 2002 (€169 million in 2001).

F-37

---

The
tax loss carry-forwards remain available for use as follows:

|                 |  | 2002 |  | 2001
|---------------- |  | ---- |  | ----
|2002             |  |     |  | 17  
|2003             |  | 7    |  | 6   
|2004             |  | 8    |  | 13  
|2005             |  | 11   |  | 11  
|2006             |  | 56   |  | 53  
|2007             |  | 13   |  |    
|Subsequent years |  | 108  |  | 69  
|                 |  |      |  |     
|                 |  | 203  |  | 169 
|                 |  |      |  |     

(d)   Valuation allowances against deferred tax assets

Valuation allowances are recorded against deferred tax assets for temporary differences and tax loss carryforwards if these assets are not likely to be recovered.
In 2002, Rhodia recorded valuation allowances of €167 million (2001: €156 million) against deferred tax assets. They include deferred tax assets related
to tax losses (2002: €76 million; 2001: €72 million) that will be forfeited if the losses cannot be set off against taxable income within a specified
period.

23.   COMMITMENTS AND CONTINGENCIES

|                                                                                            |  | 2002 |  | 2001
|------------------------------------------------------------------------------------------- |  | ---- |  | ----
|Capital commitments for the acquisition of industrial assets                                |  | 18   |  | 39  
|Guarantees given in respect of indebtedness of companies accounted for on the equity method |  | 171  |  | 186 
|Guarantees given in respect of indebtedness of other non-consolidated companies             |  | 26   |  | 74  
|Recourse on sales of receivables                                                            |  | 30   |  | 29  
|Liens granted(1)                                                                            |  | 43   |  | 51  
|                                                                                            |  |      |  |     
|Total                                                                                       |  | 288  |  | 379 
|                                                                                            |  |      |  |     

---

(a)   Environmental matters

Rhodia's business is subject to extensive, evolving and increasingly stringent laws and regulations in the jurisdictions in which it does business and maintains
properties governing the release or discharge of regulated materials into the environment or otherwise relating to the environmental protection or human health and safety. Compliance with
environmental laws and regulations has resulted in significant ongoing costs for Rhodia, and could restrict its ability to modify or expand its facilities or continue production, or require Rhodia to
install costly pollution control equipment or incur significant expenses, including remediation costs and fines and penalties. Rhodia could also incur significant

F-38

---

expenses
in the event that new laws, regulations or governmental policies were to require that hazardous wastes, including radioactive wastes, currently stored on-site, be disposed of at
off-site locations.

In
addition, many manufacturing sites have an extended history of industrial use. As is typical for such businesses, soil and groundwater contamination has occurred in the past at some
sites, and might occur or be discovered at other sites in the future. Rhodia is currently in the process of investigating and remediating or monitoring soil and groundwater contamination at certain
sites. Rhodia has been and may in the future be liable to contribute to the cleanup of disposal facilities to which it has sent wastes for disposal, pursuant to the U.S. Comprehensive Environmental
Response, Compensation and Liability Act (commonly known as "Superfund") and other similar laws. Under these laws, the owner or
operator of contaminated properties and the generator of wastes sent to a contaminated disposal facility can be jointly and severally liable for the remediation of such properties, regardless of
fault.

Under
certain conditions, Rhodia may claim indemnification from Aventis, pursuant to the Environmental Indemnification Agreement with Aventis, dated May 26, 1998, with respect to
costs that may arise from certain unanticipated environmental liabilities. In 2001, Rhodia made a claim to Aventis pursuant to this agreement for several sites and recorded a receivable from Aventis
of €35 million. During 2002, an additional €3 million was recorded and €26 million was collected. The Environmental Indemnification
Agreement expires on December 31, 2007 and the aggregate amount of claims for indemnification is limited to €122 million.

On
December 27, 2002, Rhodia made a written offer to Aventis to settle all environmental claims in connection with the Environmental Indemnification Agreement upon the payment by
Aventis to Rhodia of €88 million.

Based
on current information and reserves established for environmental matters and the provisions of the Environmental Indemnification Agreement, management does not believe that
environmental compliance will have a material adverse effect on Rhodia's business, financial condition or results of operations. However, there can be no assurances that future events, such as changes
in existing laws, the promulgation of new laws or the development or discovery of new facts or conditions will not cause Rhodia to incur significant additional costs and liabilities that could have a
material adverse effect on its business, financial condition or results of operations. Based on available information, management estimates that reasonably possible losses related to environmental
contingencies (net of indemnification from Aventis) amount to approximately €50 million as of December 31, 2002.

F-39

---

(b)   Operating leases

Future minimum lease payments for operating leases as of December 31 are as follows:

|                                                                                       |  | 2002 |  | 2001
|-------------------------------------------------------------------------------------- |  | ---- |  | ----
|2002                                                                                   |  |     |  | 61  
|2003                                                                                   |  | 53   |  | 54  
|2004                                                                                   |  | 48   |  | 48  
|2005                                                                                   |  | 43   |  | 45  
|2006                                                                                   |  | 28   |  | 29  
|2007                                                                                   |  | 16   |  |    
|Thereafter                                                                             |  | 70   |  | 41  
|                                                                                       |  |      |  |     
|Total                                                                                  |  | 258  |  | 278 
|                                                                                       |  |      |  |     
|Net present value of total future minimum lease payments (assumed discount rate of 6%) |  | 214  |  | 232 
|                                                                                       |  |      |  |     

These payments are in relation to the leasing of movable equipment, including barges, rail cars, etc., leasing of real estate and the rental of
office buildings.

Rhodia
has issued residual value guarantees under equipment operating leases that totaled €70 million (net of deferred profits of
€69 million that are recorded in Other long-term liabilities) as of December 31, 2002. Rhodia does not expect to pay any amounts under the residual value guarantees since
the fair values of the leased equipment are projected, by an independent appraiser, to be in excess of the residual value guarantees.

(c)   Financial instruments

Rhodia's policy consists of systematically covering its overall exposure to currency risks on transactions. The risk of a loss of competitiveness and energy price
fluctuations are not systematically hedged. Interest rate risks are hedged based on Rhodia's estimated future exposure, which is periodically reviewed by financial management. The financial
instruments used by Rhodia are described in the section d) and e). The nominal amounts summarized in section d) do not represent the amounts exchanged between the parties, and thus are
not a measure of Rhodia's exposure through its use of such instruments.

(d)   Interest rate risk management

Rhodia's exposure to interest rate risk essentially relates to its indebtedness (note 18) and to a lesser extent its interest rate management activities.

As
of December 31, 2002 and 2001, Rhodia has firm contracts and options. These firm contracts and options are essentially for a duration between three months to six years.

F-40

---

As
of December 31, 2002 and 2001, Rhodia held the following nominal amounts of rate contracts and options (converted into euros at the closing rates). The category "Rate
contracts" include fixed rate contracts for purchases and sales. The category "Options" include purchase and sale options:

|                    |  | 2002  |  | 2001 
|------------------- |  | ----- |  | -----
|
|Swaps               |  |       |  |      
|Euro                |  | 4,350 |  | 550  
|U.S. dollar         |  | 1,112 |  |     
|Japanese yen        |  | 72    |  |     
|                    |  |       |  |      
|Subtotal            |  | 5,534 |  | 550  
|                    |  |       |  |      
|Futures and options |  |       |  |      
|Euro                |  | 170   |  | 2,150
|U.S. dollar         |  | 76    |  | 5,170
|Japanese yen        |  | 20    |  |     
|                    |  |       |  |      
|Subtotal            |  | 266   |  | 7,320
|                    |  |       |  |      
|Total               |  | 5,800 |  | 7,870
|                    |  |       |  |      

For
a better understanding of its interest rate position, Rhodia considers that its interest rate contracts and options with matching parameters (settlement dates, notional amounts and
reference rates) offset each other. After netting, the balances in the table above would be €840 million for interest rate contracts and €7,260 million for
options as of December 31, 2002, and €2,485 million for interest rate contracts and €3,176 million for options as of December 31, 2001.

The
amount of rate contracts and options refer to the nominal amount of these contracts and hence do not reflect the sensitivity of these operations. The sensitivity to interest rate on
such activities is controlled regularly.

(e)   Foreign exchange risk management

Rhodia principally uses fixed or open forward exchange contracts traded over-the-counter on organized markets to manage its foreign
exchange risk. The term of these contracts is generally less than six months.

F-41

---

The
nominal amounts of Rhodia's forward exchange contracts as of December 31 are summarized below. They have been converted into euros at the closing rate.

|                 |  | 2002  |  | 2001 
|---------------- |  | ----- |  | -----
|
|U.S. dollar      |  | 1,017 |  | 1,001
|Pound sterling   |  | 181   |  | 393  
|Japanese yen     |  | 182   |  | 315  
|Brazilian real   |  | 103   |  | 133  
|Other currencies |  | 94    |  | 96   
|                 |  |       |  |      
|Total            |  | 1,577 |  | 1,938
|                 |  |       |  |      

(f)    Fair value of financial instruments

The fair value of financial instruments as of December 31 is summarized below:

|                           |  | 2002 |  
|-------------------------- |  | ---- | -
|
|Foreign exchange contracts |  | (23  | )
|Interest rate contracts    |  | 3    |  
|                           |  |      |  
|Total                      |  | (20  | )
|                           |  |      |  

(g)   Management of risk of oil-based commodities

Rhodia's exposure to oil-based commodities relates essentially to its purchases of petrochemicals and natural gas. This exposure is hedged using
swaps, options and futures that are accounted for on a mark-to-market basis. The nominal value of these contracts as of December 31 (in Brent barrels based equivalents
is 3.5 million barrels) is equivalent to hedging 4.4 million barrels of oil.

(h)   Concentration of counterparty risk

The transactions that potentially generate a concentration of a counterparty risk for Rhodia include short-term deposits, derivative instruments and
other financial instruments, and accounts receivable.

Rhodia
places its short-term deposits and enters into interest and currency contracts with major banks and financial institutions. Counterparty risk related to accounts
receivable is limited due to the large number of customers, their diversification in many industries and their diverse geographic locations. Therefore, as of December 31, 2002 and 2001, Rhodia
believes that its counterparty risk in this respect is not significant.

F-42

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(i)    Claims and litigation

Rhodia is involved in certain litigation in the normal course of business, involving primarily claims by the buyers of businesses sold by Rhodia and civil
liability compensation claims related to chemical products sold in the marketplace.

Some
of the North American subsidiaries have potential liabilities under the Superfund legislation, as well as other federal and state environmental remediation legislation. In light of
the nature of the claims made, the number of defendants and the volume of waste at issue, Rhodia believes that these claims will not result in significant liabilities for Rhodia.

Rhodia
also believes that there are no litigation or exceptional issues, taken individually or as a whole, that could have a significant negative impact on its business, financial
position or results of operations.

(j)    Commitments linked to the 2002 divestments

Sale of Rhodia-Ster

Rhodia sold its investment in the Rhodia-Ster entity on October 4, 2002. Since it was impossible in Brazil to obtain authorizations from the
competition authorities (CADE) and the stock exchange administration (CVM) before closing, Rhodia granted an option to resell to Rhodia the shares acquired from Rhodia if these authorizations were
denied. The CADE authorization has been granted and Mossi & Ghisolfi has applied for CVM authorization.

Rhodia
and Mossi & Ghisolfi have entered into an agreement that ensures additional purchase price to Rhodia if a certain EBITDA level is exceeded for the four quarters after the
date of sale, or a purchase price adjustment in favor of Mossi & Ghisolfi if this EBITDA level is not reached. The maximum price adjustment, positive or negative, for the four quarters combined
is €13 million.

Total
consideration for this transaction includes a €13 million payable to Rhodia, of which €7 million is payable upon Rhodia delivering to
the purchaser final documentation on an investment project and €6 million is payable within three years after the closing when this investment is started. On the date of the
sale, Rhodia entered into an agreement with Rhodia-Ster under which Rhodia will pay to Rhodia-Ster an $18 million incentive over the twelve-month period following the sale. In return for these
incentives, Rhodia-Ster will not terminate a steam supply agreement before September 30, 2003. On the basis of the economics of this arrangement, Rhodia considered that this incentive was a
price reduction and recorded accordingly a short-term accrual for the amount of such incentive.

In
relation to environmental matters, Rhodia is responsible for remediation efforts for unknown contamination through the date of sale based on the activities conducted by Rhodia.

The
sale included usual guarantees related to accounting, tax and employee matters.

Sale of phenol, HCL and soda ash

Rhodia sold the phenol, HCL (hydrochoric acid) and soda ash businesses to Bain Capital and retained an 18.2% holding of the new group. Guarantees are limited as
to the time period and amount involved and to Rhodia's knowledge, are not expected to be called.

F-43

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In
connection with the transfer, Rhodia recorded a vendor note from the purchaser for a total of €22 million which payment is subordinated to the repayment of the
new group's bank debt from the acquisition.

The
commitments and specific guarantees are as discussed below:



This
sale also had the usual guarantees related to accounting, tax and employee matters.

F-44

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24.   INFORMATION BY SEGMENT AND GEOGRAPHICAL AREA

Rhodia has five global divisions and also had some remaining business interest in the Polyester activity, included in Other, until the sale of
Rhodia-Ster.

Segment information

|                                                                |  | Fine
Organics |   | Consumer
Specialties |   | Industrial
Specialties |   | Polyamide |   | Services &
Specialties |   | Other |   | Consolidated |  
|--------------------------------------------------------------- |  | ------------- | - | -------------------- | - | ---------------------- | - | --------- | - | ---------------------- | - | ----- | - | ------------ | -
|2002                                                            |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Statement of operations information:                            |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Net sales                                                       |  | 1,213         |   | 1,878                |   | 1,129                  |   | 1,353     |   | 954                    |   | 284   |   | 6,811        |  
|Intersegment revenues                                           |  | (113          | ) | (7                   | ) | (34                    | ) | (25       | ) | (15                    | ) |      |   | (194         | )
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Net salesexternal                                              |  | 1,100         |   | 1,871                |   | 1,095                  |   | 1,328     |   | 939                    |   | 284   |   | 6,617        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Depreciation and amortization (excluding goodwill amortization) |  | (92           | ) | (99                  | ) | (65                    | ) | (86       | ) | (78                    | ) | (27   | ) | (447         | )
|Operating income                                                |  | 36            |   | 126                  |   | 75                     |   | 123       |   | 95                     |   | (104  | ) | 351          |  
|Amortization of goodwill                                        |  | (17           | ) | (21                  | ) | (5                     | ) | (1        | ) | (3                     | ) |      |   | (47          | )
|Equity in earnings/(losses) of affiliated companies             |  |              |   | 5                    |   | (2                     | ) | (46       | ) | 5                      |   |      |   | (38          | )
|Cash flow and balance sheet information:                        |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Capital expenditures                                            |  | 62            |   | 58                   |   | 62                     |   | 90        |   | 74                     |   | 28    |   | 374          |  
|Investments accounted for by the equity method                  |  | 9             |   | 41                   |   |                       |   | 109       |   | 9                      |   | 4     |   | 172          |  
|Total segment assets                                            |  | 1,266         |   | 1,925                |   | 810                    |   | 1,062     |   | 774                    |   | (347  | ) | 5,490        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Assets not identifiable with segments                           |  |               |   |                      |   |                        |   |           |   |                        |   |       |   | 2,197        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|Total assets                                                    |  |               |   |                      |   |                        |   |           |   |                        |   |       |   | 7,687        |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  
|                                                                |  |               |   |                      |   |                        |   |           |   |                        |   |       |   |              |  

F-45

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|2001                                                            |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|--------------------------------------------------------------- |  | ----- | - | ----- | - | ----- | - | ----- | - | ----- | - | ---- | - | ----- | -
|Statement of operations information:                            |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Net sales                                                       |  | 1,219 |   | 2,163 |   | 1,220 |   | 1,444 |   | 1,013 |   | 433  |   | 7,492 |  
|Intersegment revenues                                           |  | (120  | ) | (10   | ) | (39   | ) | (26   | ) | (18   | ) |     |   | (213  | )
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Net salesexternal                                              |  | 1,099 |   | 2,153 |   | 1,181 |   | 1,418 |   | 995   |   | 433  |   | 7,279 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Depreciation and amortization (excluding goodwill amortization) |  | (107  | ) | (119  | ) | (67   | ) | (101  | ) | (89   | ) | (59  | ) | (542  | )
|Operating income                                                |  | (34   | ) | 65    |   | 58    |   | 32    |   | 83    |   | (113 | ) | 91    |  
|Amortization of goodwill                                        |  | (38   | ) | (21   | ) | (5    | ) | (1    | ) | (9    | ) | (1   | ) | (75   | )
|Equity in earnings/(losses) of affiliated companies             |  |      |   | 5     |   | (1    | ) | (28   | ) | 7     |   | 1    |   | (16   | )
|Cash flow and balance sheet information:                        |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Capital expenditures                                            |  | 108   |   | 109   |   | 72    |   | 104   |   | 63    |   | 27   |   | 483   |  
|Investments accounted for by the equity method                  |  | 9     |   | 49    |   | 8     |   | 102   |   | 67    |   | 3    |   | 238   |  
|Total segment assets                                            |  | 1,657 |   | 2,201 |   | 904   |   | 1,180 |   | 945   |   | (12  | ) | 6,875 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Assets not identifiable with segments                           |  |       |   |       |   |       |   |       |   |       |   |      |   | 2,138 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|Total assets                                                    |  |       |   |       |   |       |   |       |   |       |   |      |   | 9,013 |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  
|                                                                |  |       |   |       |   |       |   |       |   |       |   |      |   |       |  

F-46

---

|2000                                                            |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|--------------------------------------------------------------- |  | ----- | - | ----- | - | ----- | - | ----- | - | --- | - | --- | - | ----- | -
|Statement of operations information:                            |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Net sales                                                       |  | 1,185 |   | 2,192 |   | 1,238 |   | 1,589 |   | 984 |   | 451 |   | 7,639 |  
|Intersegment revenues                                           |  | (125  | ) | (17   | ) | (27   | ) | (30   | ) | (21 | ) |    |   | (220  | )
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Net salesexternal                                              |  | 1,060 |   | 2,175 |   | 1,211 |   | 1,559 |   | 963 |   | 451 |   | 7,419 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Depreciation and amortization (excluding goodwill amortization) |  | (79   | ) | (108  | ) | (63   | ) | (93   | ) | (75 | ) | (74 | ) | (492  | )
|Operating income                                                |  | 82    |   | 100   |   | 92    |   | 178   |   | 121 |   | (45 | ) | 528   |  
|Amortization of goodwill                                        |  | (6    | ) | (17   | ) | (5    | ) |      |   | (3  | ) | (1  | ) | (32   | )
|Equity in earnings/(losses) of affiliated companies             |  |      |   | 6     |   | (4    | ) | 4     |   | 3   |   | (1  | ) | 8     |  
|Cash flow and balance sheet information:                        |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Capital expenditures                                            |  | 94    |   | 99    |   | 62    |   | 105   |   | 67  |   | 76  |   | 503   |  
|Investments accounted for by the equity method                  |  | 5     |   | 39    |   | 16    |   | 157   |   | 45  |   | 7   |   | 269   |  
|Total segment assets                                            |  | 1,632 |   | 2,473 |   | 970   |   | 1,312 |   | 917 |   | 259 |   | 7,563 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Assets not identifiable with segments                           |  |       |   |       |   |       |   |       |   |     |   |     |   | 2,003 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  
|Total assets                                                    |  |       |   |       |   |       |   |       |   |     |   |     |   | 9,566 |  
|                                                                |  |       |   |       |   |       |   |       |   |     |   |     |   |       |  

Segment assets reflect assets directly identifiable with the segments: goodwill, other intangible and tangible assets, investments accounted for
by the equity method, inventories and accounts receivable. They also include accounts receivable sold which are eliminated in the "Other" column since this operation is considered a Corporate
activity.

As
of December 31, 2002, assets not identifiable with segments correspond primarily to cash and cash equivalents and marketable securities (€251 million),
other current assets (€917 million), deposits and long-term receivables (€120 million), other investments
(€67 million) and deferred charges and other assets (€841 million). These assets are not available on a segment basis as they are managed on either a
legal entity basis or directly at the Corporate level.

Each
operating segment is individually managed and the measurement of the segments' profitability is operating income. Statements of Operations information include operating income and
related components that are directly identifiable with the segment. Reconciling information between

F-47

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reportable
segment operating income and Rhodia's income/(loss) of consolidated subsidiaries before income taxes is shown in the following table:

|                                                               |                            | 2002 |      | 2001 |      | 2000 |     
|-------------------------------------------------------------- | -------------------------- | ---- | ---- | ---- | ---- | ---- | ----
|Total operating income                                         |                            | 351  |      | 91   |      | 528  |     
|Other information not directly identifiable with the segments: |                            |      |      |      |      |      |     
|                                                               | Financial expensenet      |      | (123 | )    | (186 | )    | (177
|                                                               | Other income/(expense)net |      | (72  | )    | (108 | )    | (7  
|                                                               |                            |      |      |      |      |      |     
|Income/(loss) of consolidated subsidiaries before income taxes |                            | 156  |      | (203 | )    | 344  |     
|                                                               |                            |      |      |      |      |      |     

Information by geographical area of production:

|                  |  | France |  | Rest of
Europe |  | North
America |  | South
America |  | Other |  | Elimina-
tions |   | Consoli-
dated
|----------------- |  | ------ |  | -------------- |  | ------------- |  | ------------- |  | ----- |  | -------------- | - | --------------
|2002              |  |        |  |                |  |               |  |               |  |       |  |                |   |               
|Revenues          |  | 2,634  |  | 1,730          |  | 1,803         |  | 1,031         |  | 631   |  | (1,212         | ) | 6,617         
|Long-lived assets |  | 1,602  |  | 1,253          |  | 1,568         |  | 453           |  | 280   |  |               |   | 5,156         
|2001              |  |        |  |                |  |               |  |               |  |       |  |                |   |               
|Revenues          |  | 2,685  |  | 2,296          |  | 1,945         |  | 1,181         |  | 656   |  | (1,484         | ) | 7,279         
|Long-lived assets |  | 1,700  |  | 1,194          |  | 1,857         |  | 974           |  | 262   |  |               |   | 5,987         
|2000              |  |        |  |                |  |               |  |               |  |       |  |                |   |               
|Revenues          |  | 2,872  |  | 2,590          |  | 1,786         |  | 1,204         |  | 690   |  | (1,723         | ) | 7,419         
|Long-lived assets |  | 1,653  |  | 1,437          |  | 1,859         |  | 994           |  | 251   |  |               |   | 6,194         

Long-lived assets include goodwill, other intangible and tangible assets, investments accounted for by the equity method, other
investments and other long-term assets excluding deferred tax assets, and long-term deposits and receivables from Aventis companies.

25.   RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses, including depreciation and amortization, amounted to €218 million in 2002 (€215 million
in 2001 and €212 million in 2000). Research and development expenses on the Consolidated Statements of Operations are shown excluding depreciation and amortization.

F-48

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26.   WAGES, BENEFITS AND NUMBER OF EMPLOYEES

(a)   Wage and benefits of employees

Wages and benefits amounted to €1,546 million in 2002 (€1,572 million in 2001,
€1,554 million in 2000).

(b)   Number of employees

The number of employees as of December 31:

|                |  | 2002   |  | 2001   |  | 2000  
|--------------- |  | ------ |  | ------ |  | ------
|
|France          |  | 9,148  |  | 9,847  |  | 10,300
|Other countries |  | 15,375 |  | 17,078 |  | 19,148
|                |  |        |  |        |  |       
|Total           |  | 24,523 |  | 26,925 |  | 29,448
|                |  |        |  |        |  |       

(c)   Compensation and benefits paid to the members of the board of directors and the Executive Committee

Compensation and benefits allocated to the members of the board of directors (including Directors' fees) and the Executive Committee totaled
€9.9 million (26 people) in 2002, €8.0 million (25 people) in 2001 and €6.1 million (25 people) in 2000. Contributions paid in 2002
with respect to pension for these persons amounted to €0.6 million (€0.5 million in 2001 and €0.6 million in 2000).

27.   STOCK OPTION PLANS

In accordance with the authorization of the stockholders at the stockholders' meeting of April 18, 2000, the board of directors decided at its
March 20, 2002 meeting to grant two options plans for the purchase of Rhodia shares. Options were granted for 2,000,000 and 1,000,000 shares, respectively, with the second plan having
conditions for exercising based on meeting certain financial targets at the end of 2002.

Options
granted under the 2001 and 2002 Plans are exercisable over a twelve-year period, with a vesting period of four years for tax residents of France and three years for
tax residents of other countries from the respective dates that the board of directors approved the stock option plans. Options granted under the 1998, 1999/1, 1999/2, 2000/1 and 2000/2 Plans are
exercisable over a ten-year period, with a five-year vesting period for tax residents of France and three years for tax residents of other countries from the respective dates
that the board of directors approved the stock option plans.

F-49

---

The
following table summarizes the status of the stock option plans as of December 31, 2002, 2001 and 2000:

|                                           |  | 2002       |   | 2001  |  | 2000     
|------------------------------------------ |  | ---------- | - | ----- |  | ---------
|
|Number of options outstanding, January 1   |  | 7,415,422  |   | 15.87 |  | 4,935,298
|                                           |  |            |   |       |  |          
|Options granted                            |  | 3,000,000  |   | 12.04 |  | 2,580,267
|Options cancelled/forfeited                |  | (1,316,160 | ) | 12.98 |  | (100,143 
|                                           |  |            |   |       |  |          
|Number of options outstanding, December 31 |  | 9,099,262  |   | 15.02 |  | 7,415,422
|                                           |  |            |   |       |  |          
|Number of options exercisable, December 31 |  | 828,688    |   | 15.10 |  | 13,460   
|                                           |  |            |   |       |  |          

The following table shows the main features of the stock option plans in place as of December 31, 2002:

|Stock Option Plan                                                 |  | Plan
1998 |   | Plan
1999/1 |   | Plan
1999/2 |   | Plan
2000/1 |   | Plan
2000/2 |  | Plan
2001 |   | Plan
2002  |  
|----------------------------------------------------------------- |  | --------- | - | ----------- | - | ----------- | - | ----------- | - | ----------- |  | --------- | - | ---------- | -
|Date of stockholders' meeting approval                            |  | 05/13/98  |   | 05/13/98    |   | 05/13/98    |   | 05/13/98    |   | 04/18/00    |  | 04/18/00  |   | 04/18/00   |  
|Date of board of directors' approval                              |  | 06/24/98  |   | 02/23/99    |   | 02/23/99    |   | 03/30/00    |   | 09/27/00    |  | 03/16/01  |   | 03/20/02   |  
|Date of grant                                                     |  | 06/24/98  |   | 02/23/99    |   | 02/23/99    |   | 03/30/00    |   | 09/27/00    |  | 03/16/01  |   | 03/20/02   |  
|Options granted                                                   |  | 1,600,000 |   | 1,580,000   |   | 1,200,000   |   | 2,100,000   |   | 150,000     |  | 2,580,267 |   | 3,000,000  |  
|Granted to the board of directors and Executive Committee (a)     |  | 550,000   |   | 558,000     |   | 369,000     |   | 800,000     |   |            |  | 925,000   |   | 970,000    |  
|Number of participants at December 31, 2002                       |  | 15        |   | 361         |   | 360         |   | 526         |   | 3           |  | 787       |   | 564        |  
|Exercise price (€)                                                |  | 21.34     |   | 15.00       |   | 15.00       |   | 17.14       |   | 16.26       |  | 15.70     |   | 12.04      |  
|Maximum term (years)                                              |  | 10        |   | 10          |   | 10          |   | 10          |   | 10          |  | 12        |   | 12         |  
|Weighted average remaining contractual life (years)               |  | 5.50      |   | 6.17        |   | 6.17        |   | 7.25        |   | 7.75        |  | 10.25     |   | 11.25      |  
|Options outstanding at beginning of year                          |  | 18,510    |   | 1,519,200   |   | 1,128,105   |   | 2,032,275   |   | 150,000     |  | 2,567,332 |   |           |  
|Options granted                                                   |  |          |   |            |   |            |   |            |   |            |  |          |   | 3,000,000  |  
|Options cancelled/forfeited                                       |  | (700      | ) | (32,500     | ) | (32,100     | ) | (126,000    | ) |            |  | (109,985  | ) | (1,014,875 | )
|Options outstanding at end of year                                |  | 17,810    |   | 1,486,700   |   | 1,096,005   |   | 1,906,275   |   | 150,000     |  | 2,457,347 |   | 1,985,125  |  
|Granted to the board of directors and Executive Committee (b)     |  |          |   | 425,500     |   | 241,500     |   | 742,000     |   |            |  | 905,000   |   | 660,000    |  
|Options exercisable at end of year                                |  | 12,960    |   | 474,600     |   | 341,128     |   |            |   |            |  |          |   |           |  
|Exercisable by the board of directors and Executive Committee (b) |  |          |   | 30,000      |   | 50,000      |   |            |   |            |  |          |   |           |  

---

F-50

---

The weighted average remaining contractual life of the outstanding options at the end of 2002 was 8.63 years, 8.91 years in 2001 and
8.65 years in 2000.

28.   SUBSEQUENT EVENTS

No significant transactions have occurred between December 31, 2002 and February 3, 2003 (the date when the board of directors approved Rhodia 2002
consolidated financial statements).

29.   RECONCILIATION TO U.S. GAAP AND NEW U.S. ACCOUNTING STANDARDS

Rhodia applies French GAAP in the preparation of the consolidated financial statements. The differences between French GAAP and U.S. GAAP that could have a
material effect on Rhodia's consolidated financial statements are described below. The 2002, 2001 and 2000 Stockholders' equity, Net income/(loss), Operating income/(loss) and Comprehensive
income/(loss) reconciliations have been restated as described below.

(a)   Accounting for derivative instruments and hedging activities

Accounting for Derivatives and Hedging Activities (FAS 133) defines the accounting principles for derivative instruments and hedging activities.
FAS 133 requires that Rhodia measure all derivatives at fair value and to recognize them in the consolidated balance sheet as an asset or liability. Gains or losses resulting from changes in
the values of derivatives are accounted for depending on the intended use of the derivative and whether it qualifies for hedge accounting.

For
Rhodia, the principal difference between FAS 133 and French GAAP relates to the accounting for cash flow hedges. Under FAS 133, Rhodia would record the value of cash
flow hedges with an offset to
Other comprehensive income. Under French GAAP, cash flow hedges are commitments and are not recorded on the balance sheet.

The
effect on Stockholders' equity as of December 31, 2002 and 2001 of applying FAS 133 would be a reduction of Stockholders' equity. Upon realization of cash flow hedges,
Other comprehensive income would be reclassified into Net income. The application of this standard had no impact on Rhodia's net income for the years ended December 31, 2002 and 2001.

(b)   Goodwill and Other intangible assets

The accounting for goodwill and indefinite-lived assets under U.S. GAAP changed in 2002. Accounting for Goodwill and Other Intangible Assets
(FAS 142) is effective as of January 1, 2002 (July 1, 2001 with respect to acquisitions after June 30, 2001). FAS 142 requires that Rhodia cease the amortization of
goodwill and indefinite-lived intangible assets and replace it with periodic tests of the impairment of these assets. French GAAP requires that Rhodia amortize goodwill and indefinite-lived assets.
Rhodia has completed the transitional impairment test of its goodwill and there is no impairment of its goodwill.

F-51

---

(c)   Pensions

Under FAS 87, Employers' Accounting for Pensions, if the accumulated benefit obligation exceeds the fair value of plan assets, a liability equal to the
unfunded accumulated benefit obligation is recognized on the balance sheet. Recognition of an additional minimum liability is required when an unfunded accumulated benefit obligation exists and
(a) an asset has been recognized as prepaid pension cost, (b) the liability already recognized as unfunded accrued pension costs is less than the unfunded benefit obligation, or
(c) no accrued or prepaid pension cost has been recognized. If an additional minimum liability is recognized an equal amount shall be recognized as an intangible asset, provided that the
intangible asset recognized does not exceed the amount of unrecognized prior service costs. If the additional liability to be recognized exceeds unrecognized prior service costs, the excess shall be
reported, net of tax, as a component of stockholders' equity. The above described minimum liability requirement does not exist under French GAAP.

(d)   Environmental Indemnification Agreement (Restatement)

Rhodia and Aventis entered into an Environmental Indemnification Agreement, dated May 26, 1998, which provided for indemnification between Rhodia and
Aventis principally with respect to certain environmental liabilities that could arise in connection with Rhodia's chemical business at sites transferred to Rhodia effective January 1, 1998.
Under U.S. GAAP, these indemnification payments from Aventis are accounted for as additional contributed capital resulting from the transfer of these assets to Rhodia on January 1, 1998. Under
French GAAP, the indemnification obligation by Aventis against environmental claims is recorded as a reduction in the related environmental expense.

Previously,
Rhodia accounted for this agreement under U.S. GAAP using the same method as under French GAAP. The effect of this restatement on the consolidated financial statements was to
reduce stockholders' equity by €9 million and €24 million at December 31, 2002 and 2001 and the effect on the Statement of Operations is as follows:

|                                                   |  | 2002 as restated |  | 2002 as reported |  | 2001 as restated |   | 2001 as reported |  
|-------------------------------------------------- |  | ---------------- |  | ---------------- |  | ---------------- | - | ---------------- | -
|
|Statement of operation:                            |  |                  |  |                  |  |                  |   |                  |  
|Operating income                                   |  | 254              |  | 261              |  | (207             | ) | (172             | )
|Net income/(loss)                                  |  | 38               |  | 43               |  | (237             | ) | (213             | )
|Basic and diluted earnings/(loss) per share (in €) |  | 0.21             |  | 0.24             |  | (1.32            | ) | (1.19            | )

|                            |  |      |   |      |   |      |   |      |  
|--------------------------- |  | ---- | - | ---- | - | ---- | - | ---- | -
|Comprehensive income/(loss) |  | (539 | ) | (537 | ) | (334 | ) | (310 | )

F-52

---

(e)   Reconciliation between French GAAP and U.S. GAAP



A reconciliation of net income/(loss) and earnings/(loss) per share between French GAAP and U.S. GAAP for the years ended December 31, 2002 and 2001
follows:

|                                        |  | 2002
restated |   | 2001
restated |  
|--------------------------------------- |  | ------------- | - | ------------- | -
|Net income/(loss) (French GAAP)         |  | (4            | ) | (213          | )
|Amortization of goodwill                |  | 47            |   |              |  
|Environmental Indemnification Agreement |  | (5            | ) | (24           | )
|                                        |  |               |   |               |  
|Net income/(loss) (U.S. GAAP)           |  | 38            |   | (237          | )
|                                        |  |               |   |               |  

|                                                       |  | 2002 restated |  | 2001 restated |  
|------------------------------------------------------ |  | ------------- |  | ------------- | -
|
|Basic and diluted earning/(loss) per share (U.S. GAAP) |  | 0.21          |  | (1.32         | )
|                                                       |  |               |  |               |  

There is no dilution as stock option prices exceed market prices. A reconciliation of net income/(loss) and earnings/(loss) per share between
French GAAP and U.S. GAAP for the year ended December 31, 2000 has not been presented as no differences were present.

Rhodia's
net income/(loss) adjusted for amortization of goodwill and earnings/(loss) per share for the years ended December 31, 2002, 2001 and 2000, adjusted to exclude
amortization of goodwill were as follows:

|                                                        |  | 2002
restated |  | 2001
restated |   | 2000
|------------------------------------------------------- |  | ------------- |  | ------------- | - | ----
|Net income/(loss) (U.S. GAAP)                           |  | 38            |  | (237          | ) | 216 
|Amortization of goodwill                                |  |              |  | 50            |   | 32  
|                                                        |  |               |  |               |   |     
|Net income/(loss) adjusted for amortization of goodwill |  | 38            |  | (187          | ) | 248 
|                                                        |  |               |  |               |   |     

F-53

---



|                                             |  | 2002
restated |  | 2001
restated |   | 2000
|-------------------------------------------- |  | ------------- |  | ------------- | - | ----
|
|Basic and diluted earnings/(loss) per share: |  |               |  |               |   |     
|U.S. GAAP                                    |  | 0.21          |  | (1.32         | ) | 1.23
|Amortization of goodwill                     |  |              |  | 0.28          |   | 0.18
|                                             |  |               |  |               |   |     
|Adjusted for amortization of goodwill        |  | 0.21          |  | (1.04         | ) | 1.41
|                                             |  |               |  |               |   |     



The Stockholders' equity reconciliation as of December 31, 2001 has been restated to reflect the charge to equity, net of tax, of recognizing the minimum
liability in accordance with FAS 87 and to reflect the effect of the Aventis Environmental Indemnification Agreement for the years ended December 31, 2002 and 2001. A reconciliation of
Stockholders' equity between French GAAP and U.S. GAAP as of December 31, 2002 and 2001 follows:

|                                                   |  | December 31, |  
|-------------------------------------------------- |  | ------------ | -
|
|Stockholders' equity (French GAAP)                 |  | 1,835        |  
|Derivatives (cash flow hedgesnet of tax)(1)       |  | (38          | )
|Amortization of goodwill                           |  | 47           |  
|Pension liability over plan assets(2)              |  | (395         | )
|Environmental Indemnification AgreementNote 29(d) |  | (9           | )
|Translation                                        |  | (3           | )
|                                                   |  |              |  
|Stockholders' equity (U.S. GAAP)                   |  | 1,437        |  
|                                                   |  |              |  

---



Comprehensive income/(loss) includes all changes in Stockholders' equity during a period except those resulting from investments by and distributions to
stockholders. The Comprehensive income reconciliation for the years ended December 31, 2001 and 2000 have been restated to reflect a charge

F-54

---

to
equity, net of tax, of recognizing the minimum liability in accordance with FAS 87, and for the years ended December 31, 2002 and 2001 to reflect the capital contribution resulting
from the Aventis Environmental Indemnification Agreement. The following table presents Comprehensive income/(loss) for the years ended December 31, 2002, 2001 and 2000:

|                                   |  | 2002 restated |   | 2001 restated |   | 2000 restated |  
|---------------------------------- |  | ------------- | - | ------------- | - | ------------- | -
|Net income/(loss) (U.S. GAAP)      |  | 38            |   | (237          | ) | 216           |  
|Derivatives                        |  | (3            | ) | (35           | ) |              |  
|Pension liability over plan assets |  | (177          | ) | (34           | ) | (7            | )
|Translation                        |  | (397          | ) | (28           | ) | (28           | )
|                                   |  |               |   |               |   |               |  
|Comprehensive income/(loss)        |  | (539          | ) | (334          | ) | 181           |  
|                                   |  |               |   |               |   |               |  



Amortization of goodwill (note 2.1.1.), and the loss on the sales of receivables and other income/(expense) (note 21) which are recorded below
Operating income/(loss) in accordance with French GAAP should be included in Operating income/(loss) for U.S. GAAP. Loss on sales of receivables and other income/(expense) have been
reclassified in 2001 and 2000 to conform with current year's presentation. A reconciliation of Operating income/(loss) between U.S. GAAP and French GAAP follows:

|                                                    |  | 2002 restated |   | 2001 restated |   | 2000 |  
|--------------------------------------------------- |  | ------------- | - | ------------- | - | ---- | -
|Operating incomeFrench GAAP                        |  | 351           |   | 91            |   | 528  |  
|Operating incomediscontinued operations            |  | (47           | ) | (85           | ) | (59  | )
|Amortization of goodwill                            |  |              |   | (75           | ) | (32  | )
|Loss on sales of receivables                        |  | (29           | ) | (27           | ) | (17  | )
|Other income/(expense)                              |  | (14           | ) | (76           | ) | (16  | )
|Environmental Indemnification Agreement, Note 29(d) |  | (7            | ) | (35           | ) |      |  
|                                                    |  |               |   |               |   |      |  
|Operating income/(loss) U.S. GAAP                   |  | 254           |   | (207          | ) | 404  |  
|                                                    |  |               |   |               |   |      |  

F-55

---

(f)    Goodwill and Other intangible assetsFAS 142 additional disclosures

FAS 142 requires disclosures of the detail by operating segment and the changes in the carrying amount of goodwill for the year ended December 31,
2002, as well as the detail of other intangible assets by nature:

|                           |  | Fine Organics |   | Consumer Specialties |   | Industrial Specialties |   | Polyamide |   | Services & Specialties |   | Consolidated |  
|-------------------------- |  | ------------- | - | -------------------- | - | ---------------------- | - | --------- | - | ---------------------- | - | ------------ | -
|Balance, January 1, 2002   |  | 476           |   | 682                  |   | 102                    |   | 19        |   | 75                     |   | 1,354        |  
|Additions/(reductions)     |  |              |   | 16                   |   | (2                     | ) | (1        | ) |                       |   | 13           |  
|Translation                |  | (67           | ) | (54                  | ) | (6                     | ) |          |   | (10                    | ) | (137         | )
|                           |  |               |   |                      |   |                        |   |           |   |                        |   |              |  
|Balance, December 31, 2002 |  | 409           |   | 644                  |   | 94                     |   | 18        |   | 65                     |   | 1,230        |  
|                           |  |               |   |                      |   |                        |   |           |   |                        |   |              |  

Other intangible assets (all finite-lived) at December 31, 2002 and 2001 consist of the following:

|                                 |  | December 31, 2002 |  | December 31, 2001
|-------------------------------- |  | ----------------- |  | -----------------
|
|Patents, licenses and trademarks |  | 101               |  | (63              
|Capitalized software             |  | 260               |  | (165             
|Other intangible assets          |  | 80                |  | (36              
|                                 |  |                   |  |                  
|Total                            |  | 441               |  | (264             
|                                 |  |                   |  |                  

Anticipated amortization of patents, licenses and trademarks, and other intangible assets is estimated to be €10 million
for each of the next five years.

(g)   Transfers of accounts receivableFAS 140 additional disclosures

Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FAS 140) provides the accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of liabilities, and requires certain disclosures.

Transfers
of accounts receivable are accounted for as sales when the transferred assets have been isolated from Rhodia and are beyond the reach of its creditors, when each transferee
obtains the right, free of conditions that constrain it from taking advantage of that right, to pledge or exchange the transferred assets, or if the transferee is a qualifying special purpose entity,
each holder of beneficial interests obtains the right to pledge or exchange transferred beneficial interests, and when Rhodia does not maintain effective control over the transferred assets.

F-56

---

Rhodia
records the residual interests in receivables sold at fair value based on the present value of estimated cash flows, allocated between the portion of receivables sold and the
portion of receivables retained based on their relative fair values at the date of sale.

Rhodia
services the receivables sold and receives compensation for these services which approximates fair value.

Certain
Rhodia companies sold uncollected receivables during 2002 and 2001, on a monthly or quarterly basis, in accordance with multi-year asset securitization agreements
entered into with various banks under which receivables can be sold, on a non-recourse basis, either to qualifying special purpose entities (QSPEs) or directly to banks, and are settled
against cash payments and undivided interests in a defined pool of receivables (residual interests). The QSPEs then sell the interests they purchased in those receivables to commercial paper conduits.
In 2002, Rhodia entered into a new multi-year asset securitization agreement under which certain European subsidiaries can fund up to €240 million of receivables
through a QSPE that then sells the interests it purchased in those receivables to a commercial paper conduit.

Residual
interests were €96 million and €101 million as of December 31, 2002 and 2001, respectively, are stated at fair value, based
on the present value of estimated cash flows.

The
amount of receivables sold as of December 31, 2002 and 2001 was €627 million and €718 million, respectively, which generated a
net cash collection as of December 31, 2002 and 2001 of €531 million and €617 million, respectively, reflecting a dilution of 15.3% and 14.1%,
respectively. The average amount of receivables sold in 2002 was €635 million compared with €613 million in 2001, which generated an average net cash
collection of €539 million in 2002 compared with €519 million in 2001, reflecting an average dilution of 15.1% and 15.3%, respectively.

The
total amount of receivables sold in 2002 and 2001 to QSPEs was €3.4 billion and €3.5 billion, respectively. The total amount of cash
collected in 2002 and 2001 from QSPEs was €3.4 billion and €3.5 billion, respectively.

The
loss on the sales of receivables was €29 million, €27 million and €17 million for 2002, 2001 and 2000,
respectively, reflecting the economic costs of payment terms given to customers.

F-57

---

(h)   Stock optionsFAS 123 additional disclosures

If Rhodia had followed the fair value method for the stock option and stock purchase plans established in 2002, 2001 and 2000, net income/(loss) and
earnings/(loss) per share would have been as follows:

|                                                                                                                                                                                       |  | 2002 restated |   | 2001 restated |   | 2000 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | - | ------------- | - | ---- | -
|Net income/(loss) as reported under U.S. GAAP                                                                                                                                          |  | 38            |   | (237          | ) | 216  |  
|Less total stock-based employee compensation expense determined under the fair value method described below for all awards at the respective date of grant, net of related tax effects |  | (4            | ) | (4            | ) | (3   | )
|                                                                                                                                                                                       |  |               |   |               |   |      |  
|Pro forma net income/(loss)                                                                                                                                                            |  | 34            |   | (241          | ) | 213  |  
|                                                                                                                                                                                       |  |               |   |               |   |      |  

|                                             |             | 2002 restated |      | 2001 restated |       | 2000
|-------------------------------------------- | ----------- | ------------- | ---- | ------------- | ----- | ----
|
|Basic and diluted earnings/(loss) per share: |             |               |      |               |       |     
|                                             | As reported |               | 0.21 |               | (1.32 | )   
|                                             | Pro forma   |               | 0.19 |               | (1.34 | )   

The fair value of Rhodia stock options granted in 2002, 2001 and 2000 was estimated under the Black-Scholes pricing model using the
following assumptions: duration of options 45 years (2002 and 2001) 46 years (2000), stock price volatility (37%, 34% and 35%, respectively), dividend rate
(2.55%, 2.50% and 2.20%, respectively), and risk free interest rate (5.30%, 4.80% and 4.90%5.20%, respectively).

(i)    Discontinued operationsFAS 144 additional disclosures

The accounting for discontinued operations under U.S. GAAP changed in 2002. Accounting for the Impairment or Disposal of Long-Lived Assets (FAS 144) requires that
a disposal of a business that qualifies as a component of an entity must be accounted for as a discontinued operation. The results of operations of these disposals, including financial expenses,
income taxes and the gain/(loss) on the disposal are all reflected as discontinued operations. Prior periods must be restated in a comparable manner.

F-58

---

Presented
below is consolidated summary financial information for the years ended December 31, 2002, 2001 and 2000 reflecting the 2002 disposals of businesses as discontinued
operations:

|                                                       |  | 2002 restated |   | 2001 restated |   | 2000  |  
|------------------------------------------------------ |  | ------------- | - | ------------- | - | ----- | -
|Net sales                                              |  | 6,061         |   | 6,554         |   | 6,647 |  
|Operating income                                       |  | 254           |   | (207          | ) | 404   |  
|Income/(loss) from continuing operations               |  | 62            |   | (256          | ) | 222   |  
|Discontinued operations(1)                             |  | (24           | ) | 19            |   | (6    | )
|                                                       |  |               |   |               |   |       |  
|Net income/(loss)                                      |  | 38            |   | (237          | ) | 216   |  
|                                                       |  |               |   |               |   |       |  
|Basic and diluted earnings/(loss) per share:           |  |               |   |               |   |       |  
|Earnings/(loss) per share from continuing operations   |  | 0.34          |   | (1.43         | ) | 1.26  |  
|Earnings/(loss) per share from discontinued operations |  | (0.13         | ) | 0.11          |   | (0.03 | )
|                                                       |  |               |   |               |   |       |  
|Earnings/(loss) per share                              |  | 0.21          |   | (1.32         | ) | 1.23  |  
|                                                       |  |               |   |               |   |       |  

---

(j)    Earnings/(loss) per shareFAS 128 additional disclosures

The following table sets forth the computation of diluted earnings per share:

|                                                    |  | 2002        |  | 2001        |  | 2000       
|--------------------------------------------------- |  | ----------- |  | ----------- |  | -----------
|Weighted-average shares outstanding                 |  | 178,765,518 |  | 179,103,640 |  | 175,843,305
|Effect of dilutive securitiesput option (note 15b) |  |            |  |            |  | 508,627    
|                                                    |  |             |  |             |  |            
|Diluted weighted-average shares                     |  | 178,765,518 |  | 179,103,640 |  | 176,351,932
|                                                    |  |             |  |             |  |            

(k)   New accounting standards for U.S. GAAP in 2003

Accounting for Asset Retirement Obligations (FAS 143) requires, as of January 1, 2003, that Rhodia recognize the fair value of a liability for an asset
retirement obligation in the period in which it is incurred if a reasonable estimate of the fair value can be made. Rhodia believes that such obligations cannot be determined and that it cannot make a
reasonable estimate of potential asset retirement
obligations under existing regulations, since its industrial sites have long and indeterminable useful lives.

Accounting
for the Costs Associated with Exit or Disposal Activities (FAS 146) requires, as of January 1, 2003, that Rhodia account for these costs when incurred instead of at the
date of its commitment to an exit plan as permitted under current U.S. GAAP. Since the new standard only impacts the timing of the recognition and the initial measurement of the amount of the
liabilities relating to exit and disposal activities, Rhodia believes that the adoption of this standard will not have a significant effect on its consolidated financial position, results of
operations or cash flows.

F-59

---

Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45) requires that Rhodia recognized a liability at the
inception of the guarantee for guarantees issued or modified after December 31, 2002, for the fair value of the obligation Rhodia assumed in issuing the guarantee. Rhodia has issued guarantees
for its portion of indebtedness of companies accounted for on the equity method and other non-consolidated companies (note 23) and certain guarantees relating to the disposals of
Rhodia-Ster and the phenol, HCL and soda ash businesses in 2002 (note 23j). In addition, Rhodia has issued residual value guarantees under equipment operating leases
(note 23b) that totaled €70 million (net of deferred profits of €69 million that are recorded in Other long-term liabilities) as of
December 31, 2002. Rhodia does not expect to pay any amounts under the residual value guarantees since the fair values of the leased equipment are projected, by an independent appraiser, to be
in excess of the residual value guarantees.

Consolidation
of Variable Interest Entities (FIN 46) will require by July 1, 2003 for any variable interest entity in which Rhodia had acquired an interest before
February 1, 2003, that Rhodia consolidate any variable interest entity in which (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities
without additional subordinated financial support from other parties, or (b) the holders of the equity investment at risk lack any one of following three characteristics of a controlling
financial interest: (i) the direct or indirect ability to make decisions about the entity's activities through voting rights or similar rights, (ii) the obligation to absorb the expected
losses of the entity if they occur, and (iii) the right to receive the expected residual returns of the entity if they occur. Rhodia is currently in the process of assessing any potential
FIN 46 impact in particular in relation to operating leases and asset securitization agreements. However, management believes that no variable interest entity issue would be likely to exist
when FIN 46 will be effective.

F-60

---



30.   CONSOLIDATED SUBSIDIARIES END OF 2002

In 2002, Rhodia's perimeter of consolidation included 179 companies (2001: 196), 153 companies are fully consolidated (2001: 162) and 26 companies are accounted
for on the equity method (2001: 34).

The
companies are:

|Globally integrated subsidiaries                |  | Countries |  | % owned
|----------------------------------------------- |  | --------- |  | -------
|RHODIA ACETOW AG                                |  | GERMANY   |  | 100    
|RHODIA DEUTSCHLAND GMBH                         |  | GERMANY   |  | 100    
|RHODIA ENGINEERING PLASTICS GMBH                |  | GERMANY   |  | 100    
|RHODIA GERMANY INTERNATIONAL                    |  | GERMANY   |  | 100    
|RHODIA GMBH                                     |  | GERMANY   |  | 100    
|RHODIA GRUPPENUNT GMBH                          |  | GERMANY   |  | 100    
|RHODIA PERFORM.FIBRES GMBH                      |  | GERMANY   |  | 100    
|RHODIA SILICON GMBH                             |  | GERMANY   |  | 100    
|RHODIA SYNTECH GMBH                             |  | GERMANY   |  | 100    
|RECIPET ARGENTINA                               |  | ARGENTINA |  | 99.17  
|RHODIA POLIAMIDA SUCURSAL ARGENTINA             |  | ARGENTINA |  | 100    
|RHODIASTER FIPACK ARGENTINA                     |  | ARGENTINA |  | 99.99  
|A&W CHEMICALS PTY LTD AUSTRALIA                 |  | AUSTRALIA |  | 100    
|RHODIA AUSTRALIA PTY                            |  | AUSTRALIA |  | 100    
|RHODIA SILICONES AUSTRALIA PTY LTD              |  | AUSTRALIA |  | 100    
|RHODIA TRADING AUSTRALIA PTY LTD                |  | AUSTRALIA |  | 100    
|RHODIA BELGIUM                                  |  | BELGIUM   |  | 99.99  
|RHODIA CHEMIE NV                                |  | BELGIUM   |  | 100    
|RHODIA ACETOW LTDA                              |  | BRAZIL    |  | 100    
|RHODIA BRAZIL LTDA                              |  | BRAZIL    |  | 100    
|RHODIA PAR                                      |  | BRAZIL    |  | 100    
|RHODIA POLIAMIDA BRASIL                         |  | BRAZIL    |  | 100    
|RHODIA POLIAMIDA LTDA                           |  | BRAZIL    |  | 100    
|RHOPARTPART SERVICIOS E COMERCIO LTDA          |  | BRAZIL    |  | 100    
|RHODIA CANADA INC                               |  | CANADA    |  | 100    
|RHODIA ENGINEERING PLASTICS INC                 |  | CANADA    |  | 100    
|BAOTOU RHODIA RARE EARTHS CO LTD                |  | CHINA     |  | 55     
|BEIJING RP EASTERN CHEMICAL LTD                 |  | CHINA     |  | 70     
|RHODIA CHINA CO LTD                             |  | CHINA     |  | 100    
|RHODIA HENGCHANG ZH. SPECIALTY CHEMICALS CO LTD |  | CHINA     |  | 70     
|RHODIA SILICA QINGDAO CO LTD                    |  | CHINA     |  | 100    
|RHODIA SILICONES SHANGHAI CO LTD                |  | CHINA     |  | 100    
|RHODIA SPECIALITY CHEMICALS WUXI                |  | CHINA     |  | 70     
|RHODIA SUZHOU ANLI SC                           |  | CHINA     |  | 70     
|RUOHAI (ZHEJIANG) FINE CHEMICALS CO LTD         |  | CHINA     |  | 100    
|SHANGHAI LONG MA ENGINEERING PLACTICS CO LTD    |  | CHINA     |  | 66     
|                                                |  |           |  |        

F-61

---

|RHODIA POLYAMIDES CO LTD             |  | SOUTH KOREA   |  | 100  
|------------------------------------ |  | ------------- |  | -----
|RHODIA SILICA KOREA CO LTD           |  | SOUTH KOREA   |  | 100  
|CONUBEN SL                           |  | SPAIN         |  | 83.64
|RHODIA ENGINEERING PLASTICS SA       |  | SPAIN         |  | 100  
|RHODIA HPCII ESPANA                  |  | SPAIN         |  | 100  
|RHODIA IBERIA SA                     |  | SPAIN         |  | 100  
|RHODIA IBERLATEX                     |  | SPAIN         |  | 100  
|RHODIA SILICONAS ESPANA SA           |  | SPAIN         |  | 100  
|ALCOLAC INC                          |  | UNITED STATES |  | 100  
|HEAT ENERGY ADVANCED TECHNOLOGY INC  |  | UNITED STATES |  | 100  
|RHODIA CHIREX AMERICA INC            |  | UNITED STATES |  | 100  
|RHODIA CHIREX INC                    |  | UNITED STATES |  | 100  
|RHODIA ELECTRONICS & CATALYSIS INC   |  | UNITED STATES |  | 100  
|RHODIA ENGINEERING PLASTICS CORPUSA |  | UNITED STATES |  | 100  
|RHODIA FINANCIAL SERVICES INC        |  | UNITED STATES |  | 100  
|RHODIA HOLDING INC                   |  | UNITED STATES |  | 100  
|RHODIA INC                           |  | UNITED STATES |  | 100  
|RHODIA INDIA HOLDINGS INC            |  | UNITED STATES |  | 100  
|RP SPECIALITY CHEMICALS HLDG CO      |  | UNITED STATES |  | 100  
|GESMO                                |  | FRANCE        |  | 100  
|GIE OSIRIS                           |  | FRANCE        |  | 58.41
|GIE SAINT VICTOIRE                   |  | FRANCE        |  | 100  
|ICMDIND. CHIM. MULHOUSE DORNACH     |  | FRANCE        |  | 100  
|ORELIS                               |  | FRANCE        |  | 100  
|RHODIA ACETOL                        |  | FRANCE        |  | 100  
|RHODIA CAP                           |  | FRANCE        |  | 100  
|RHODIA CHIMIE                        |  | FRANCE        |  | 100  
|RHODIA ECO SERVICES                  |  | FRANCE        |  | 100  
|RHODIA ELECTRONICS & CATALYSIS       |  | FRANCE        |  | 100  
|RHODIA ENERGY                        |  | FRANCE        |  | 100  
|RHODIA ENGINEERING PLASTICS SA       |  | FRANCE        |  | 100  
|RHODIA ETANCHEITE                    |  | FRANCE        |  | 100  
|RHODIA FOOD SAS                      |  | FRANCE        |  | 100  
|RHODIA HPCII                         |  | FRANCE        |  | 100  
|RHODIA INTERMEDIAIRES                |  | FRANCE        |  | 100  
|RHODIA ORGANIQUE                     |  | FRANCE        |  | 100  
|RHODIA P.I. BELLE ETOILE             |  | FRANCE        |  | 100  
|RHODIA P.I. CHALAMPE                 |  | FRANCE        |  | 100  
|RHODIA PARTICIPATIONS                |  | FRANCE        |  | 100  
|RHODIA PERFORM.FIBRES SAS            |  | FRANCE        |  | 100  
|RHODIA POLYAMIDE INTERMEDIATES       |  | FRANCE        |  | 100  
|                                     |  |               |  |      

F-62

---

|RHODIA POLYAMIDES ENGINEERING        |  | FRANCE         |  | 65   
|------------------------------------ |  | -------------- |  | -----
|RHODIA PPMC SAS                      |  | FRANCE         |  | 100  
|RHODIA RECHERCHES                    |  | FRANCE         |  | 100  
|RHODIA SERVICES                      |  | FRANCE         |  | 100  
|RHODIA SILICES                       |  | FRANCE         |  | 100  
|RHODIA SILICONES                     |  | FRANCE         |  | 100  
|RHODIANYL SNC                        |  | FRANCE         |  | 100  
|RHODITECH                            |  | FRANCE         |  | 100  
|A&W CHEMICALS (INDIA)                |  | INDIA          |  | 72.93
|RHODIA ENGINEERING PLASTICS SRL      |  | ITALY          |  | 100  
|RHODIA GERONAZZO SPA                 |  | ITALY          |  | 100  
|RHODIA ITALIA SPA                    |  | ITALY          |  | 100  
|RHODIA PERFORM.FIBRES SRL            |  | ITALY          |  | 100  
|RHODIA SILICONI ITALIA SPA           |  | ITALY          |  | 100  
|SRN ITALIA SRL                       |  | ITALY          |  | 100  
|ANAN KASEI CO LTD                    |  | JAPAN          |  | 67.01
|RHODIA JAPAN LTD                     |  | JAPAN          |  | 100  
|RHODIA NICCA LTD                     |  | JAPAN          |  | 60   
|RHODIA INDUSTRIAL YARNS SIA          |  | LATVIA         |  | 100  
|RHODIA CONS SPEC MALAYSIA            |  | MALAYSIA       |  | 100  
|RHODIA MALAYSIA SND BHD              |  | MALAYSIA       |  | 100  
|RHODIA DE MEXICO SA DE C.V.          |  | MEXICO         |  | 100  
|RHODIA ESPECIALIDADES                |  | MEXICO         |  | 100  
|RHODIA FOSFATADOS                    |  | MEXICO         |  | 100  
|RHODIA MEXICANA SA DE C.V.           |  | MEXICO         |  | 100  
|RHODIA SERVICIOS SA DE C.V.          |  | MEXICO         |  | 100  
|TROY GRUPO INDUSTRIAL                |  | MEXICO         |  | 100  
|MEYPRO BV                            |  | NETHERLANDS    |  | 100  
|RHODIA ECO SERVICES NEDERLAND BV     |  | NETHERLANDS    |  | 100  
|RHODIA ENGIN. PLAST. NV (NYLTECH NV) |  | NETHERLANDS    |  | 100  
|RHODIA FINANCE INTERNATIONAL BV      |  | NETHERLANDS    |  | 100  
|RHODIA INTERNATIONAL HOLDINGS BV     |  | NETHERLANDS    |  | 100  
|RHODIA NEDERLAND BV                  |  | NETHERLANDS    |  | 100  
|RHODIA FOOD BIOLACTA SPZ             |  | POLAND         |  | 97.14
|INDALINDUSTRIAS DE ALFARROBA LTD    |  | PORTUGAL       |  | 100  
|HOLMES CHAPEL TRADING LTD            |  | UNITED KINGDOM |  | 100  
|RHODIA CHEMICALS LTD                 |  | UNITED KINGDOM |  | 100  
|RHODIA CHIREX (ANNAN) LTD            |  | UNITED KINGDOM |  | 100  
|RHODIA CHIREX (DUDLEY) LTD           |  | UNITED KINGDOM |  | 100  
|RHODIA CHIREX HOLDINGS LTD           |  | UNITED KINGDOM |  | 100  
|RHODIA CONSUMER SPECIALTIES LTD      |  | UNITED KINGDOM |  | 100  
|                                     |  |                |  |      

F-63

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|RHODIA ECO SERVICES LTD            |  | UNITED KINGDOM |  | 100  
|---------------------------------- |  | -------------- |  | -----
|RHODIA ENGINEERING PLASTICS LTD    |  | UNITED KINGDOM |  | 100  
|RHODIA FOOD UK LTD                 |  | UNITED KINGDOM |  | 100  
|RHODIA HOLDING LTD                 |  | UNITED KINGDOM |  | 100  
|RHODIA HPCII LTD                   |  | UNITED KINGDOM |  | 100  
|RHODIA INDUSTRIAL SPECIALTIES LTD  |  | UNITED KINGDOM |  | 100  
|RHODIA INTERNATIONAL HOLDINGS LTD  |  | UNITED KINGDOM |  | 100  
|RHODIA INVESTMENTS LTD             |  | UNITED KINGDOM |  | 100  
|RHODIA LTD                         |  | UNITED KINGDOM |  | 100  
|RHODIA ORGANIQUE FINE LTD          |  | UNITED KINGDOM |  | 100  
|RHODIA OVERSEAS LTD                |  | UNITED KINGDOM |  | 100  
|RHODIA REORGANISATION LTD          |  | UNITED KINGDOM |  | 100  
|RHODIA SEALANTS LTD                |  | UNITED KINGDOM |  | 100  
|RHODIA TEXEL LTD                   |  | UNITED KINGDOM |  | 100  
|RHODIA UK LTD                      |  | UNITED KINGDOM |  | 100  
|SERTOW SERPUKHOV                   |  | RUSSIA         |  | 97.01
|AW ASIA PACIFIC HOLDINGS PTE       |  | SINGAPORE      |  | 100  
|RHODIA ASIA PACIFIC PTE LTD        |  | SINGAPORE      |  | 100  
|RHODIA INDUSTRIAL YARNS AS         |  | SLOVAKIA       |  | 100  
|MEYHALL AG                         |  | SWITZERLAND    |  | 100  
|PARTICIPATIONS CHIMIQUES           |  | SWITZERLAND    |  | 99.99
|RHODIA CAPITAL MARKET              |  | SWITZERLAND    |  | 100  
|RHODIA INDUSTRIAL YARNS AG         |  | SWITZERLAND    |  | 100  
|SOPARGEST                          |  | SWITZERLAND    |  | 99.98
|RHODIA ENGIN. PLAST. TAIWAN CO LTD |  | TAIWAN         |  | 100  
|AW THAI HOLDINGS LTD               |  | THAILAND       |  | 100  
|RHODIA PPMC THAILAND LTD           |  | THAILAND       |  | 100  
|RHODIA THAI INDUSTRIE              |  | THAILAND       |  | 74   
|ALAVER SA                          |  | URUGUAY        |  | 100  
|ALEXIL S.A.                        |  | URUGUAY        |  | 100  
|FAIRWAY INVESTIMENTOS SA           |  | URUGUAY        |  | 100  
|ZAMIN COMPANY SA                   |  | URUGUAY        |  | 100  
|PETPACK S.A.                       |  | VENEZUELA      |  | 60   
|RHODIA ACETOW VENEZUELA C.A.       |  | VENEZUELA      |  | 100  
|RHODIA SILICES DE VENEZUELA C.A.   |  | VENEZUELA      |  | 100  

F-64

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|Subsidiaries accounted for on the equity method |  | Countries     |  | % owned
|----------------------------------------------- |  | ------------- |  | -------
|WARMEVERBUNDKRAFTWERK FREIBURG GMBH             |  | GERMANY       |  | 47.50  
|A&W AUSTRALIA                                   |  | AUSTRALIA     |  | 50     
|GELYMAR                                         |  | CHILE         |  | 50     
|JADE FINE CHEMICALS WUXI CO LTD                 |  | CHINA         |  | 60     
|LUOPING PHOSPHORUS CHEMICAL CO LTD              |  | CHINA         |  | 50     
|YING LONG                                       |  | CHINA         |  | 73     
|PRODUCTORA ANDINA DE ACIDOS Y DERIVADOS         |  | COLOMBIA      |  | 100    
|AUXILIAR PAPELERA                               |  | SPAIN         |  | 50     
|NYCOA INC                                       |  | UNITED STATES |  | 50     
|OATRIM                                          |  | UNITED STATES |  | 50     
|PRIMESTER                                       |  | UNITED STATES |  | 50     
|BAIKOWSKI CHIMIE                                |  | FRANCE        |  | 30.22  
|BUTACHIMIE                                      |  | FRANCE        |  | 50     
|CEVCOCENTR.ELECTR.VAPEUR PT DE CLAIX           |  | FRANCE        |  | 40     
|COGENERATION CHALAMPE                           |  | FRANCE        |  | 50     
|CYCLEON                                         |  | FRANCE        |  | 50     
|GIE CHIMIE SALINDRES                            |  | FRANCE        |  | 50     
|GIE SPIRAL                                      |  | FRANCE        |  | 58.20  
|NOVANCE                                         |  | FRANCE        |  | 24.99  
|RHODIGAZ                                        |  | FRANCE        |  | 50.04  
|HINDUSTAN GUM & CHEMICALS LTD                   |  | INDIA         |  | 50     
|RHODIA MANYAR                                   |  | INDONESIA     |  | 50     
|RHODIA ORGANO FOOD TECH CO LTD                  |  | JAPAN         |  | 49     
|NYLSTAR NV                                      |  | NETHERLANDS   |  | 50     
|CHEMPHIL AW CORPORATION                         |  | PHILIPPINES   |  | 39.98  
|THAI POLYPHOSPHATES & CHEMICALS                 |  | THAILAND      |  | 30     

F-65

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SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| |  | RHODIA
| |  | ------
| |  | By:   

Date:
July 25, 2003

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CERTIFICATIONS

I,
Jean-Pierre Tirouflet, certify that:



Date:
July 25, 2003

| |  | /s/JEAN-PIERRE TIROUFLETChairman and Chief Executive Officer
| |  | ------------------------------------------------------------

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CERTIFICATIONS

I,
Pierre Prot, certify that:



Date:
July 25, 2003

| |  | /s/PIERRE PROTSenior Vice President and Chief Financial Officer
| |  | ---------------------------------------------------------------

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