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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------
                                   FORM 10-K

<TABLE>
<S>  <C>                                                           <C>
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
             FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                  OR
[ ]  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 1-9859
</TABLE>

                            PIONEER COMPANIES, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                              <C>
                    DELAWARE                                        06-1215192
        (State or other jurisdiction of                          (I.R.S. Employer
         incorporation or organization)                        Identification No.)

            4300 NATIONSBANK CENTER
        700 LOUISIANA STREET, SUITE 4300
                 HOUSTON, TEXAS
                 (713) 570-3200                                       77002
    (Address of principal executive offices)                        (Zip Code)
</TABLE>

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

<TABLE>
<S>                                                          <C>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  CLASS A COMMON STOCK, $.01 PAR VALUE
                                                                       (Title of Class)
</TABLE>

  On February 29, 2000, there were outstanding 10,646,906 shares of the
Company's Class A Common Stock, $.01 par value. The aggregate market value of
the Company's voting stock held by non-affiliates of the Company is $83,898,000
based on the closing price for the Class A Common Stock in consolidated trading
on February 29, 2000.

  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 SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.  YES [X]  NO [ ]

  INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.  [X]

  INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND
REPORTS REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN
CONFIRMED BY A COURT.  YES [X]  NO [ ]

DOCUMENTS INCORPORATED BY REFERENCE:

  Portions of the proxy statement to be filed with the Securities and Exchange
Commission within 120 days after the end of the fiscal year covered by this
report pursuant to Regulation 14A under the Securities Exchange Act of 1934 in
connection with the Company's 2000 Annual Meeting of Stockholders are
incorporated by reference in Part III of this Annual Report on Form 10-K.

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<PAGE>   2

                            PIONEER COMPANIES, INC.

                               TABLE OF CONTENTS
                       ANNUAL REPORT ON FORM 10-K FOR THE
                          YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>        <C>                                                            <C>
                                    PART I
Item 1.    Business....................................................     3
Item 2.    Properties..................................................    10
Item 3.    Legal Proceedings...........................................    12
Item 4.    Submission of Matters to a Vote of Security Holders.........    12
Item 4a.   Executive Officers of the Registrant........................    12

                                   PART II
Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters.........................................    13
Item 6.    Selected Financial Data.....................................    14
Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations...................................    15
Item 7a.   Quantitative and Qualitative Disclosures About Market
           Risk........................................................    21
Item 8.    Financial Statements and Supplementary Data.................    22
Item 9.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure....................................    48

                                   PART III
Item 10.   Directors and Executive Officers of the Registrant..........    48
Item 11.   Executive Compensation......................................    48
Item 12.   Security Ownership of Certain Beneficial Owners and
           Management..................................................    48
Item 13.   Certain Relationships and Related Transactions..............    48

                                   PART IV
Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form
           8-K.........................................................    49
</TABLE>

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<PAGE>   3

                                     PART I

     Unless the context otherwise requires, (i) the term "Pioneer" refers to
Pioneer Companies, Inc. and its consolidated subsidiaries, (ii) the term
"Company" refers to Pioneer Companies, Inc., (iii) the term "PCA" refers to
Pioneer Corporation of America, a wholly-owned subsidiary of the Company, and
(iv) the term "Predecessor Company" refers to PCA and its subsidiaries as they
existed on April 20, 1995, the date they were acquired by the Company.

     Certain statements in this Form 10-K regarding future expectations of
Pioneer's business and Pioneer's results of operations may be regarded as
"forward looking statements" within the meaning of the Securities Litigation
Reform Act. Such statements are subject to various risks, including Pioneer's
high financial leverage, the cyclical nature of the markets for many of
Pioneer's products and raw materials and other risks discussed in detail. Actual
outcomes may vary materially.

ITEM 1. BUSINESS.

     Pioneer manufactures and markets chlorine and caustic soda and several
related products. Pioneer conducts its primary business through its operating
subsidiaries: Pioneer Americas, Inc. (formerly known as Pioneer Chlor-Alkali
Company, Inc.) ("PAI"), PCI Chemicals Canada Inc. ("PCI Canada"), Kemwater North
America Company ("KNA") and KWT, Inc. ("KWT", and together with KNA,
"Kemwater").

     Pioneer owns and operates five chlor-alkali plants and several related
product manufacturing facilities in North America with aggregate production
capacity of approximately 950,000 electrochemical units ("ECUs", each consisting
of 1 ton of chlorine and 1.1 tons of caustic soda). Approximately 60% of
Pioneer's source of electricity, a major raw material in chlor-alkali
production, is hydro-power based, currently the cheapest source in North
America. In addition, over 22% of Pioneer's ECU capacity employs membrane cell
technology, the most efficient available technology. Management believes that
Pioneer is one of the six largest chlor-alkali producers in North America, with
approximately 6% of North American production capacity.

     In addition to its chlor-alkali capacity, Pioneer manufactures hydrochloric
acid, bleach, sodium chlorate and other products.

     As of December 31, 1999, Interlaken Investment Partners, L.P., a Delaware
limited partnership (the "Interlaken Partnership") beneficially owned
approximately 34.9% of the voting power of Pioneer and William R. Berkley (who
may be deemed to beneficially own all shares of Pioneer common stock held by the
Interlaken Partnership) beneficially owned approximately 59.8% of the voting
power of Pioneer.

     Pioneer's five chlor-alkali production facilities are located in Becancour,
Quebec; Tacoma, Washington; St. Gabriel, Louisiana; Henderson, Nevada; and
Dalhousie, New Brunswick. The five facilities produce chlorine and caustic soda
for sale in the merchant markets and for use as raw materials in the manufacture
of downstream products. The Becancour and Henderson facilities also produce
hydrochloric acid and bleach, and the Tacoma facility also produces hydrochloric
acid and calcium chloride. The Dalhousie facility also produces sodium chlorate.

     Pioneer also operates three bleach production and chlorine repackaging
facilities in California and Washington, and distributes these products to
municipalities and selected commercial markets in the western United States
through various distribution channels. All of the chlorine and caustic soda used
as raw materials at these facilities is supplied by the Henderson and Tacoma
chlor-alkali facilities. Because bleach contains a high percentage of water,
freight costs and logistics are an important competitive factor. The facilities
are strategically located in or near most of the large population centers of the
West Coast. Additional production units at Cornwall, Ontario produce
hydrochloric acid, bleach, chlorinated paraffins under the brand name
Cereclor(R), and proprietary pulping additives, PSR 2000(R) and IMPAQT(R).

     In 1997, an unusual charge of $1.0 million was recorded, relating to the
closure of certain bleach production and repackaging plants and the
consolidation of their operations into other locations. In 1998, an

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unusual charge of $0.4 million was recorded, relating to the consolidation and
downsizing of certain administrative functions. In December 1998, Pioneer sold
its pool chemicals business, resulting in a $1.8 million loss from disposal of
assets plus an unusual charge of approximately $1.0 million related to closing
Pioneer's facility at City of Industry, California. Substantially all unusual
charges were paid by December 31, 1998.

     Kemwater manufactures and supplies polyaluminum chlorides to certain
potable and waste water markets in the United States. The products are used
primarily to remove solids from waste water streams and to control hydrogen
sulfide emissions. Kemwater also manufactures and markets aluminum sulfate to
the waste water and pulp and paper industries. Kemwater has exclusive licenses
to certain existing and future advanced water treatment technology in the
development and sale of products and services for the potable water, waste water
and industrial water treatment markets in the United States (other than the
northeastern U.S.) and the Caribbean. In early 1999, Kemwater sold its iron
chlorides business, which is located in the western U.S. This disposal resulted
in a pretax loss of approximately $0.9 million. Pioneer is also currently
negotiating either a sale or restructuring of the remaining business of
Kemwater. No material gain or loss is expected from the completion of such
transactions.

COMPETITION

     The chlor-alkali industry is highly competitive. Many of Pioneer's
competitors, including The Dow Chemical Company ("Dow"), Occidental Chemical
Corporation ("OxyChem"), and PPG Industries, Inc. are larger and have greater
financial resources than Pioneer. There are also several regional companies that
specialize in a smaller number of chemical products. While a significant portion
of Pioneer's business is based upon widely available technology, the difficulty
in obtaining permits for the production of chlor-alkali and chlor-alkali related
products may be a barrier to entry. Pioneer's ability to compete effectively
depends on its ability to maintain competitive prices, to provide reliable and
responsive service to its customers and to operate in a safe and environmentally
responsible manner.

     North America represents approximately 32% of world chlor-alkali production
capacity, with approximately 15.1 million tons of chlorine and 16.6 million tons
of caustic soda production capacity. OxyChem and Dow are the two largest
chlor-alkali producers in North America, together representing approximately 45%
of North American capacity. The remaining capacity is held by approximately 20
companies. Approximately 65% of North American chlor-alkali capacity is located
on the Gulf Coast of Texas and Louisiana. Pioneer's chlor-alkali capacity
represents approximately 6% of total North American capacity. The chlorine and
caustic soda currently produced at Pioneer's Tacoma and Henderson facilities
provide a significant source of supply for the West Coast region, where Pioneer
is the largest supplier of chlorine and bleach for water treatment purposes. The
Tacoma, St. Gabriel and Dalhousie facilities are leading suppliers of premium,
low-salt grade caustic soda in their respective regions. Pioneer believes its
strong regional presence in eastern Canada and the western United States has
enhanced the competitiveness of Pioneer's operations.

EMPLOYEES

     As of December 31, 1999, Pioneer had 978 employees. Ninety-two of Pioneer's
employees at the Henderson, Nevada plant are covered by collective bargaining
agreements with the United Steelworkers of America and with the International
Association of Machinists and Aerospace Workers that are in effect until March
13, 2001, and 117 of Pioneer's employees at the Tacoma facility are covered by
collective bargaining agreements with the International Chemical Workers and the
Operating Engineers that are in effect until June 7, 2000 and June 11, 2003,
respectively. At Pioneer's Becancour facility, 137 employees are covered by
collective bargaining agreements with the Energy and Paper Workers Union that
are in effect until April 30, 2000, and 32 employees at Pioneer's Cornwall
facility are represented by the United Steelworkers Union, with a collective
bargaining agreement that expires on October 31, 2002. Eighteen employees at
Pioneer's Tacoma bleach and chlorine repackaging facility are covered by a
collective bargaining agreement with the Teamsters Union that is in effect until
December 1, 2002. Pioneer's employees at other production facilities are not
covered by union contracts or collective bargaining agreements. Pioneer
considers its relationship with its employees to be good and it has not
experienced any strikes or work stoppages.
                                        4
<PAGE>   5

ENVIRONMENTAL REGULATION

  U.S. Environmental Laws

     Air Quality. Pioneer's U.S. operations are subject to the federal Clean Air
Act and the amendments to that act which were enacted in 1990. Pioneer will be
subject to some of the additional environmental regulations adopted by the
federal EPA and state environmental agencies to implement the Clean Air Act
Amendments of 1990. Among the requirements that are potentially applicable to
Pioneer are those that require the EPA to establish hazardous air pollutant
emissions requirements for chlorine production facilities. Although Pioneer
cannot estimate the cost of complying with these requirements until such
regulations are proposed, at this time Pioneer does not believe that such
requirements will have a material adverse effect on it.

     Most of Pioneer's plants manufacture or use chlorine, which is in gaseous
form if released into the air. Chlorine gas in relatively low concentrations can
irritate the eyes, nose and skin and in large quantities or high concentrations
can cause permanent injury or death. From 1995 to date, there have been minor
releases at Pioneer's plants, none of which has had any impact on human health
or the environment. Those releases were controlled by plant personnel, in some
cases with the assistance of local emergency response personnel, and there were
no material claims against Pioneer as a result of those incidents. Pioneer
maintains systems to detect emissions of chlorine at its plants, and the Tacoma,
St. Gabriel and Henderson plants are members of their local industrial emergency
response networks. Pioneer believes that its insurance coverage is adequate with
respect to costs that might be incurred in connection with any future release,
although there can be no assurance that Pioneer will not incur substantial
expenditures that are not covered by insurance if a major release does occur in
the future.

     Water Quality. Pioneer maintains waste water discharge permits for many of
its facilities pursuant to the U.S. Federal Water Pollution Control Act of 1972,
as amended, and comparable state laws. Where required, Pioneer has also applied
for permits to discharge stormwater under such laws. In order to meet the
discharge requirements applicable to stormwater, it will be necessary to modify
surface drainage or make other changes at certain plants. Pioneer has spent
approximately $2.6 million during the combined 1997 through 1999 period for
modifications to the stormwater system at the Henderson plant, and believes that
any additional costs associated with stormwater discharge at Henderson and its
other plants will not have a material adverse effect on Pioneer's financial
condition, liquidity or operating results. The various states in which Pioneer
operates also have water pollution control statutes and regulatory programs
which include groundwater and surface water protection provisions. The
requirements of these laws vary and are generally implemented through a state
regulatory agency. These water protection programs typically require site
discharge permits, spill notification and prevention and corrective action
plans. At several of Pioneer's facilities, investigations or remediations are
underway, and at some of these locations regulatory agencies are considering
whether additional actions are necessary to protect or remediate surface or
groundwater resources. Pioneer could be required to incur additional costs to
construct and operate remediation systems in the future. In addition, at several
of its facilities, Pioneer is in the process of replacing or closing ponds used
for the collection of wastewater. Pioneer plans to spend approximately $3.0
million during the next three years on improvements to discontinue the use of
three chlor-alkali waste water disposal ponds at its Henderson plant, replacing
them with systems to recycle wastewater.

     Hazardous and Solid Wastes. Pioneer's manufacturing facilities generate
hazardous and non-hazardous solid wastes which are subject to the requirements
of the federal Resource Conservation and Recovery Act ("RCRA") and comparable
state statutes. The EPA has adopted regulations banning the land disposal of
certain hazardous wastes unless the wastes meet defined treatment or disposal
standards, including certain mercury-containing wastes generated by Pioneer's
St. Gabriel plant. In response to these regulations, the St. Gabriel plant has
substantially reduced the quantity of wastes that are subject to the land ban
through the installation of an in-plant treatment system that reduces the level
of mercury in its wastes below the hazardous classification. In 1999, the
facility applied for and received a "Determination of Equivalency" from the EPA
for its mercury recovery/treatment process. Pioneer's disposal costs could
increase substantially if its present disposal sites become unavailable due to
capacity or regulatory restrictions. Pioneer presently believes, however, that
its current disposal arrangements, together with the mercury recovery/treatment
system and less

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<PAGE>   6

stringent land disposal restrictions resulting from the "Determination of
Equivalency", will allow Pioneer to continue to dispose of land-banned wastes
with no material adverse effect on it.

     Superfund. In the ordinary course of Pioneer's operations, substances are
generated that fall within the definition of "hazardous substances," and Pioneer
is the owner or operator of several sites at which hazardous substances have
been released into soil or groundwater. Under the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), also known as the
"Superfund" law, regulatory agencies or third parties may incur costs to
investigate or remediate such conditions and seek reimbursement from Pioneer for
such costs. However, no investigations or remedial activities are currently
being conducted under CERCLA by third parties at any of Pioneer's facilities.
Such activities are being carried out at certain facilities under the other
statutory authorities discussed above pursuant to provisions of indemnification
agreements protecting Pioneer from liability.

  Canadian Environmental Laws

     General. Pioneer's Canadian facilities are governed by federal
environmental laws adopted by the Canadian parliament and administered by
Environment Canada and by provincial environmental laws adopted by the
respective provincial legislatures and enforced by administrative agencies. Many
of these laws are comparable to the U.S. laws described above. In particular,
the Canadian environmental laws generally provide for control and/or prohibition
of pollution, for the issuance of certificates of authority or certificates of
authorization which permit the operation of regulated facilities and prescribe
limits on the discharge of pollutants, and for penalties for the failure to
comply with applicable laws. These laws include the substantive areas of air
pollution, water pollution, solid and hazardous waste generation and disposal,
toxic substances, petroleum storage tanks, protection of surface and subsurface
waters, and protection of other natural resources. However, there is no Canadian
law similar to CERCLA that would make a company liable for legal off-site
disposal.

     The Canadian Environmental Protection Act ("CEPA") is the primary federal
statute which governs environmental matters throughout the provinces. The
federal Fisheries Act is the principal federal water pollution control statute.
This law would apply in the event of a spill of caustic soda or another
deleterious substance that adversely impacts marine life in a waterway. The
Becancour, Dalhousie and Cornwall facilities are all located adjacent to major
waterways and are therefore subject to the requirements of this statute. The
Chlor-Alkali Mercury Release Regulations and the Chlor-Alkali Mercury Liquid
Effluent Regulations, adopted under the CEPA, regulate the operation of the
Dalhousie facility. In particular, these regulations provide for the quantity of
mercury a chlor-alkali plant may release into the ambient air and the quantity
of mercury that may be released with liquid effluent. Pioneer believes it has
operated and is currently operating in compliance with these statutes.

     The primary provincial environmental laws include the Environmental
Protection Act in the province of Ontario, the Quebec Environment Quality Act in
Quebec and the Clean Environment Act in New Brunswick. In general, each of these
acts regulates the discharge of a contaminant into the natural environment if
such discharge causes or is likely to cause an adverse effect.

INDEMNITIES

     ZENECA Indemnity. Pioneer's Henderson plant is located within what is known
as the "Basic Complex." Soil and groundwater contamination have been identified
within and adjoining the Basic Complex, including land owned by Pioneer. A
groundwater treatment system has been installed at the facility and, pursuant to
a consent agreement with the Nevada Division of Environmental Protection,
studies are being conducted to further evaluate soil and groundwater
contamination at the facility and other properties within the Basic Complex and
to determine whether additional remediation will be necessary with respect to
Pioneer's property.

     In connection with the 1988 acquisition of the St. Gabriel and Henderson
properties by the Predecessor Company, the sellers agreed to indemnify the
Predecessor Company with respect to, among other things, certain environmental
liabilities associated with historical operations at the Henderson site. ZENECA
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Delaware Holdings, Inc. and ZENECA, Inc. (collectively, the "ZENECA Companies")
have assumed the indemnity obligations. In general, PCA is indemnified against
environmental costs which arise from or relate to pre-closing actions which
involved disposal, discharge or release of materials resulting from the former
agricultural chemical and other non-chlor-alkali manufacturing operations at the
Henderson plant. The ZENECA Companies are also responsible for costs arising out
of the pre-closing actions at the Basic Complex. Under the ZENECA Indemnity, PCA
may only recover indemnified amounts for environmental work to the extent that
such work is required to comply with environmental laws or is reasonably
required to prevent an interruption in the production of chlor-alkali products.
PCA is responsible for environmental costs relating to the chlor-alkali
manufacturing operations at the Henderson plant, both pre- and post-acquisition,
for certain actions taken without ZENECA's consent and for certain operation and
maintenance costs of the groundwater treatment system at the facility.

     Payments for environmental liabilities under the ZENECA Indemnity, together
with other non-environmental liabilities for which the ZENECA Companies agreed
to indemnify PCA, cannot exceed approximately $65 million. To date, Pioneer has
been reimbursed for approximately $12 million of costs covered by the ZENECA
Indemnity, but the ZENECA Companies may have directly incurred additional costs
that would further reduce the total amount remaining under the ZENECA Indemnity.
In 1994, PCA recorded a $3.2 million environmental reserve related to
pre-closing actions at sites that are the responsibility of ZENECA. At the same
time a receivable was recorded from ZENECA for the same amount. It is the
Company's policy to record such amounts when a liability can be reasonably
estimated. No additional amounts were recorded in 1999 or 1998.

     The ZENECA Indemnity continues to cover claims after the April 20, 1999
expiration of the term of the indemnity to the extent that, prior to the
expiration of the indemnity, proper notice to the ZENECA Companies was given and
either the ZENECA Companies have assumed control of such claims or the Company
was contesting the legal requirements that gave rise to such claims, or had
commenced removal, remedial or maintenance work with respect to such claims, or
commenced an investigation which resulted in the commencement of such work
within ninety days. Management believes proper notice was provided to the ZENECA
Companies with respect to outstanding claims under the ZENECA Indemnity, but the
amount of such claims has not yet been determined given the ongoing nature of
the environmental work at Henderson. The Company believes that the ZENECA
Companies will continue to honor their obligations under the ZENECA Indemnity
for claims properly presented by the Company. It is possible, however, that
disputes could arise between the parties concerning the effect of contractual
language and that the Company would have to subject its claims for cleanup
expenses, which could be substantial, to the contractually-established
arbitration process.

     Sellers' Indemnity. In connection with the 1995 transaction pursuant to
which the Company acquired all of the outstanding common stock and other equity
interests of the Predecessor Company from the holders of those interests (the
"Sellers"), the Sellers agreed to indemnify the Company and its affiliates for
certain environmental liabilities that result from certain discharges of
hazardous materials or violations of environmental laws, arising prior to the
closing date from or relating to certain plant sites or arising before or after
the closing date with respect to certain environmental liabilities relating to
certain properties and interests (the "Contingent Payment Properties") held by
Pioneer for the benefit of the Sellers. Amounts payable pursuant to such
indemnity will generally be payable as follows: (i) out of certain reserves
established on PCA's balance sheet at December 31, 1994; (ii) either by offset
against the amounts payable under the $11.5 million in notes payable by the
Company to the Sellers or from amounts held in an account (the "Contingent
Payment Account") established for the deposit of proceeds from the Contingent
Payment Properties; and (iii) in certain circumstances and subject to specified
limitations, out of the personal assets of the Sellers. Pioneer is required to
reimburse the Sellers with amounts recovered under the ZENECA Indemnity or from
other third parties. To the extent that liabilities exceed proceeds from the
Contingent Payment Properties, the Company would be limited, for a ten-year
period, principally to its rights of offset against the Sellers' notes (and to
amounts available under the ZENECA Indemnity, to the extent then in effect) to
cover such liabilities.

     Pioneer will not receive any of the economic benefits from the Contingent
Payment Properties, except that certain environmental and other indemnification
obligations of the Sellers to Pioneer may be satisfied
                                        7
<PAGE>   8

from proceeds from such investments and except to the extent that such
investments are owned by Pioneer on April 20, 2015. As of December 31, 1999,
such proceeds, which are held by Pioneer in the Contingent Payment Account as
collateral for any indemnification obligations of the Sellers to Pioneer,
amounted to $6.7 million.

     During 1999, a dispute arose between the Sellers and Pioneer regarding the
extent of the Sellers' indemnity and the proper form of notice to the
indemnitors. Pioneer and the Sellers are in the process of seeking a negotiated
settlement of the dispute, and agreed that in the interim, Pioneer would be
reimbursed $250,000 from the Contingent Payment Account for environmental losses
incurred during the period from May 1, 1999, to September 30, 1999, and
thereafter Pioneer would be reimbursed for fifty percent of the amount of
environmental losses, other than losses incurred in connection with the closing
of Pioneer's facility in City of Industry, California. At December 31, 1999,
Pioneer had not been reimbursed for $1.1 million in losses it contends are
covered by the indemnity, pending resolution of the dispute.

     OCC Tacoma Indemnity. Pioneer acquired the chlor-alkali facility in Tacoma
from OCC Tacoma, Inc. ("OCC Tacoma"), a subsidiary of OxyChem, in June 1997. In
connection with the acquisition, OCC Tacoma agreed to indemnify Pioneer with
respect to certain environmental matters, which indemnity is guaranteed by
OxyChem. In general, Pioneer will be indemnified against damages incurred for
remediation of certain environmental conditions, for certain environmental
violations caused by pre-closing operations at the site and for certain common
law claims. The conditions subject to the indemnity are sites at which hazardous
materials have been released prior to closing as a result of pre-closing
operations at the site. In addition, OCC Tacoma will indemnify Pioneer for
certain costs relating to releases of hazardous materials from pre-closing
operations at the site into the Hylebos Waterway, site groundwater containing
certain volatile organic compounds that must be remediated under an RCRA permit,
and historical disposal areas on the embankment adjacent to the site for maximum
periods of 24 or 30 years, depending upon the particular condition, after which
Pioneer will have full responsibility for any remaining liabilities with respect
to such conditions. OCC Tacoma may obtain an early expiration date for certain
conditions by obtaining a discharge of liability or an approval letter from a
governmental authority. Although there can be no assurance that presently
anticipated remediation work will be completed prior to the expiration of the
indemnity, or that additional remedial requirements will not be imposed
thereafter, Pioneer believes that the residual liabilities, if any, can be
managed in a manner that will not have a material adverse effect on Pioneer.

     OCC Tacoma will also indemnify Pioneer against certain other environmental
conditions and environmental violations caused by pre-closing operations that
are identified after the closing. Environmental conditions that are subject to
formal agency action within five years after closing or to an administrative or
court order within ten years after closing, and environmental violations that
are subject to an administrative or court order within five years after closing,
will be covered by the indemnity up to certain dollar amounts and time limits.
Pioneer will indemnify OCC Tacoma for environmental conditions and environmental
violations identified after the closing if (i) an order or agency action is not
imposed within the relevant time frames or (ii) applicable expiration dates or
dollar limits are reached.

     Pioneer has reviewed the time frames currently estimated for remediation of
the known environmental conditions associated with the plant and adjacent areas
and Pioneer presently believes that it will have no material liability upon the
termination of OCC Tacoma's indemnity. However, the OCC Tacoma indemnity is
subject to limitations as to dollar amount and duration, as well as certain
other conditions, and there can be no assurance that such indemnity will be
adequate to protect Pioneer, that remediation will proceed on the present
schedule, that it will involve the presently anticipated remedial methods, or
that unanticipated conditions will not be identified. If these or other changes
occur, Pioneer could incur a material liability for which it is not insured or
indemnified.

     PCI Canada Acquisition Indemnity. In connection with the acquisition by
Pioneer of the assets of PCI Canada in 1997, Imperial Chemical Industrials PLC
("ICI") and its affiliates (together the "ICI Indemnitors") agreed to indemnify
Pioneer for certain liabilities associated with environmental matters arising
from pre-closing operations of the Canadian facilities. In particular, the ICI
Indemnitors will retain unlimited responsibility for environmental liabilities
associated with the Cornwall site, liabilities arising out of the

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discharge of contaminants into rivers and marine sediments and liabilities
arising out of off-site disposal sites. The ICI Indemnitors are also subject to
a general environmental indemnity for other pre-closing environmental matters.
This indemnity will terminate on October 31, 2007, and is subject to a limit of
$25 million (Cdn). Pioneer may not recover under the environmental indemnity
until it has incurred cumulative costs of $1 million (Cdn), at which point
Pioneer may recover costs in excess of $1 million (Cdn). As of December 31,
1999, Pioneer had incurred no cumulative costs towards the $25 million (Cdn)
indemnity.

     With respect to the Becancour and Dalhousie facilities, the ICI Indemnitors
will be responsible under the general environmental indemnity for 100% of the
costs incurred in the first five years after October 31, 1997 and for a
decreasing percentage of such costs incurred in the following five years.
Thereafter, Pioneer will be responsible for environmental liabilities at such
facilities (other than liabilities arising out of the discharge of contaminants
into rivers and marine sediments and liabilities arising out of off-site
disposal sites). Pioneer will indemnify ICI for environmental liabilities
arising out of post-closing operations and for liabilities arising out of
pre-closing operations that are not indemnified by the ICI Indemnitors.

     Pioneer believes that the indemnity provided by ICI will be adequate to
address the known environmental liabilities at the acquired facilities, and that
any residual liabilities incurred by Pioneer will not be material.

                                        9
<PAGE>   10

ITEM 2. PROPERTIES.

FACILITIES

     The following table sets forth certain information regarding Pioneer's
principal production, distribution and storage facilities as of March 1, 2000.
All property is owned by Pioneer unless otherwise indicated.

<TABLE>
<CAPTION>
LOCATION                                                         MANUFACTURED PRODUCTS
--------                                                         ---------------------
<S>                                                         <C>                             <C>
Becancour, Quebec.........................................  Chlorine and caustic soda
                                                            Hydrochloric acid
                                                            Bleach
                                                            Hydrogen
Tacoma, Washington........................................  Chlorine and caustic soda
                                                            Hydrochloric acid
                                                            Calcium chloride
                                                            Hydrogen
St. Gabriel, Louisiana....................................  Chlorine and caustic soda
                                                            Hydrogen
Henderson, Nevada.........................................  Chlorine and caustic soda
                                                            Hydrochloric acid
                                                            Bleach
                                                            Hydrogen
Dalhousie, New Brunswick..................................  Chlorine and caustic soda
                                                            Sodium chlorate
                                                            Hydrogen
Cornwall, Ontario*........................................  Bleach
                                                            Cereclor(R) chlorinated
                                                            paraffin
                                                            PSR 2000(R) pulping additive
                                                            IMPAQT(R) pulping additive
Tracy, California*........................................  Bleach
                                                            Chlorine repackaging
Santa Fe Springs, California*.............................  Bleach
                                                            Chlorine repackaging
Tacoma, Washington........................................  Bleach
                                                            Chlorine repackaging
Kemwater Facilities
Antioch, California.......................................  Aluminum sulfate
Spokane, Washington*......................................  Polyaluminum chlorides
                                                            Aluminum sulfate
Savannah, Georgia*........................................  Polyaluminum chlorides
                                                            Aluminum sulfate
                                                            Sodium aluminate
                                                            Ferric sulfate
Various*..................................................  Distribution
</TABLE>

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

*  Leased property

     Corporate headquarters for Pioneer is located in leased office space in
Houston, Texas under a lease terminating in 2006. Pioneer also leases office
space in Montreal, Quebec under a lease terminating in 2003 and owns a
technology center in Mississauga, located on 1.2 acres of land in the Sheridan
Park Research Center near Toronto, Ontario, which conducts applications
research, particularly with respect to pulp and paper process technology. KWT
has its corporate headquarters in leased office space in Savannah, Georgia under
a lease terminating in 2015.

                                       10
<PAGE>   11

     The acquisition of the chlor-alkali facility in Tacoma was financed with
the proceeds of a nine and one-half year $100 million term facility provided to
PCA (the "PCA Term Facility"), and with a portion of the proceeds of a $200
million offering of 9 1/4% Senior Secured Notes due 2007 issued by PCA (the
"Senior Notes"). The Senior Notes and obligations outstanding under the PCA Term
Facility are secured by first mortgages on PAI's Tacoma, St. Gabriel and
Henderson facilities. The acquisition of the PCI Canada facilities was financed
with the proceeds of a nine and one-quarter year $83 million term facility
provided to Pioneer Americas (the "PCI Canada Term Facility"), and with the
proceeds of a $175 million offering of 9 1/4% Senior Secured Notes due 2007
issued by PCI Canada (the "PCI Canada Senior Notes"). The PCI Canada Senior
Notes and obligations outstanding under the PCI Canada Term Facility are secured
by liens on and security interests in substantially all tangible and intangible
property and assets used in PCI Canada's business in Canada.

PRODUCTION FACILITIES

     Becancour, Quebec. The Becancour facility is located on a 100-acre site in
an industrial park on the deep-water St. Lawrence Seaway. The plant was
constructed in 1975, with additions in 1979 and 1997. Annual production capacity
is 340,000 tons of chlorine, 383,000 tons of caustic soda and 150,000 tons of
hydrochloric acid. In addition, the site has a bleach production facility.

     Tacoma, Washington. The Tacoma plant is located on a 31-acre site which is
part of an industrial complex on the Hylebos Waterway in Tacoma, Washington. The
plant was upgraded and expanded in the late 1970s and in 1988. The site has rail
facilities as well as docks capable of handling oceangoing vessels. Annual
capacity is 225,000 tons of chlorine, 247,500 tons of caustic soda, 44,000 tons
of hydrochloric acid and 8,800 tons of calcium chloride.

     St. Gabriel, Louisiana. The St. Gabriel plant is located on a 100-acre site
near Baton Rouge, Louisiana. Approximately 228 acres adjoining the site are
available to Pioneer for future industrial development. The plant was completed
in 1970 and is situated on the Mississippi River with river frontage and
deepwater docking, loading and unloading facilities. Annual production capacity
at St. Gabriel is 197,000 tons of chlorine and 216,700 tons of caustic soda.

     Henderson, Nevada. The Henderson plant is located on a 374-acre site near
Las Vegas, Nevada. Approximately 70 acres are developed and used for production
facilities. The original plant, which began operation in 1942, was upgraded and
rebuilt in 1976-1977. Annual production capacity at the plant is 152,000 tons of
chlorine, 167,200 tons of caustic soda and 130,000 tons of hydrochloric acid
(which uses chlorine as a raw material). In addition, the plant produces bleach.
The Henderson plant is part of an industrial complex shared with three other
manufacturing companies. Common facilities and property are owned and managed by
subsidiaries of Basic Management, Inc. ("BMI"), which provide common services to
the four site companies. BMI's facilities include extensive water and high
voltage power distribution systems and access roads.

     Dalhousie, New Brunswick. The Dalhousie facility is located on a 36-acre
site along the north shore of New Brunswick on the Restigouche River. The
facility consists of a chlor-alkali plant built in 1963 and expanded in 1971 and
a sodium chlorate plant built in 1992. Annual production capacity is 36,000 tons
of chlorine, 40,000 tons of caustic soda and 22,000 tons of sodium chlorate.

     Cornwall, Ontario. The Cornwall units are located on leased portions of a
36-acre site on the St. Lawrence River. The facilities consist of a hydrochloric
acid facility, Cereclor(R) chlorinated paraffin plant, a PSR 2000(R) pulping
additive plant and an IMPAQT(R) pulping additive plant.

     Tracy, California. The Tracy plant includes a bleach production facility
and a chlorine repackaging facility on a 15-acre tract. The land at the facility
is leased under a lease expiring in the year 2005, with two five-year renewal
options.

     Santa Fe Springs, California. The Santa Fe Springs plant includes a bleach
production plant and a chlorine repackaging facility on a 4.5-acre tract. The
land at the facility is leased under a lease expiring in 2008 with a five-year
renewal option.
                                       11
<PAGE>   12

     Tacoma, Washington. The Tacoma bleach plant serves the Pacific Northwest
market. The plant consists of a bleach production facility and a chlorine
repackaging facility on a five-acre company-owned site.

     Antioch, California. Production facilities at the Antioch facility include
an aluminum sulfate plant. Caustic soda and sulfuric acid are terminaled and
distributed from the location. The 22-acre company-owned site has deepwater
access as well as rail service. Pursuant to a pending agreement, operations at
the facility will be discontinued in the first quarter of 2000, and the property
will be held for disposition.

     Spokane, Washington. The Spokane facility has a polyaluminum chloride and
an aluminum sulfate plant located on 4 acres. Sulfuric acid purchased from third
parties is also distributed from the location, and the facility also terminals
sulfuric acid. The land at the site is leased under a lease expiring in 2003.

     Savannah, Georgia. Production facilities at Savannah include a polyaluminum
chloride plant, an aluminum sulfate plant, a sodium aluminate plant, and a
ferric sulfate granule dissolving plant. The two-acre site is leased under a
lease expiring in 2005, subject to options to extend the lease until 2015.

ITEM 3. LEGAL PROCEEDINGS.

     From time to time, Pioneer is involved in litigation relating to claims
arising out of its operations in the normal course of its business. Pioneer
maintains insurance coverage against potential claims in amounts which it
believes to be adequate. In the opinion of management, uninsured losses, if any,
resulting from these matters will not have a material adverse effect on
Pioneer's results of operations, cash flow or financial position.

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

     No matters were submitted during the fourth quarter of 1999 to a vote of
holders of Pioneer's Common Stock.

ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT.

     The names, ages and current offices of the executive officers of the
Company, who are to serve until the next annual meeting of the Board of
Directors to be held in 2000, are set forth below.

<TABLE>
<CAPTION>
NAME AND AGE                                                       OFFICE
------------                                                       ------
<S>                                             <C>
Michael J. Ferris (55).......................   President and Chief Executive Officer
Norman E. Thogersen (52).....................   Executive Vice President and Chief Operating
                                                  Officer
Philip J. Ablove (59)........................   Executive Vice President and Chief Financial
                                                  Officer
John R. Beaver (38)..........................   Vice President, Controller
Kent R. Stephenson (50)......................   Vice President, General Counsel and Secretary
</TABLE>

     Michael J. Ferris has served as President and Chief Executive Officer and a
director of the Company since January 1997. He was employed by Vulcan Materials
Company, a company engaged in the production of industrial materials and
commodities with significant positions in two industries, construction
aggregates and chemicals, in various capacities from March 1974 to January 1997.
His last position was Executive Vice President, Chemicals from 1996 to 1997.

     Norman E. Thogersen has served as Executive Vice President and Chief
Operating Officer of the Company since June 1999. He was President of PCI Canada
from October 1997 to June 1999. Mr. Thogersen served as Chairman, President and
Chief Executive Officer of ICI Canada, Inc. from 1995 to 1997, and as Vice
President and General Manager of the North American chlor-alkali operations of
Imperial Chemical Industries PLC from 1988 to 1995.

     Philip J. Ablove has served as Executive Vice President and Chief Financial
Officer of the Company since November 1999. He was Vice President and Chief
Financial Officer of the Company from March 1996 to November 1999. He was a
consultant and an officer and director specializing in high growth or
financially

                                       12
<PAGE>   13

distressed companies from 1983 to 1996. In a consulting role he served as Acting
Chief Financial Officer of Pioneer from October 1995 to March 1996. He has also
been a director of the Company since January 1991.

     John R. Beaver has served as Vice President, Controller of the Company
since November 1999. He was Controller of the Company from January 1997 to
November 1999. Mr. Beaver served as Controller of Borden Chemicals and Plastics
Limited Partnership from November 1995 to January 1997, and from 1987 to 1995 he
was employed by Sterling Chemicals, Inc.

     Kent R. Stephenson has served as Vice President, General Counsel and
Secretary of the Company since June 1995, and as Vice President, General Counsel
and Secretary of the Predecessor Company since 1993. Prior to joining the
Predecessor Company, he was employed by Zapata Corporation, then an oil and gas
services company.

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     On March 31, 1995, the Company's stockholders approved a one-for-four
reverse stock split which was effective on April 27, 1995 (the "Reverse Stock
Split"). The number of authorized shares remained at 46.0 million for Class A
Common Stock and 4.0 million for Class B Common Stock, and the par value of the
Common Stock was unchanged. Unless the context otherwise requires, all
references in this Report to Common Stock share and per share amounts reflect
the Reverse Stock Split.

     Pioneer's Class A Common Stock is traded on The Nasdaq SmallCap Market
under the symbol "PIONA". There is no established trading market for Pioneer's
Class B Common Stock. The price range for the Class A Common Stock, as adjusted
to reflect the Reverse Stock Split and stock dividends, for each quarterly
period for the last two fiscal years is shown in the following table:

<TABLE>
<CAPTION>
                                                               HIGH      LOW
                                                              ------    -----
<S>                                                           <C>       <C>
1999
  Fourth Quarter............................................  $ 7.13    $4.61
  Third Quarter.............................................    7.13     4.21
  Second Quarter............................................    5.61     3.97
  First Quarter.............................................    4.56     3.04
1998
  Fourth Quarter............................................  $ 7.65    $2.60
  Third Quarter.............................................    8.08     3.06
  Second Quarter............................................   10.71     6.77
  First Quarter.............................................   13.32     6.77
</TABLE>

     Prices set forth in the table are as reported in the consolidated
transaction reporting system.

     As of February 29, 2000, there were approximately 127 holders of record of
the Class A Common Stock and there were two holders of record of the Class B
Common Stock.

     No cash dividends have been declared or paid with respect to the Company's
Common Stock during the two most recent fiscal years. Pursuant to the terms of
certain debt instruments, there are restrictions on the ability of PCA to
transfer funds to the Company, resulting in limitations on the Company's ability
to declare dividends on its Common Stock. See Item 7 -- Management's Discussion
and Analysis of Financial Condition and Results of Operations, and Note 9 to the
Consolidated Financial Statements included in Item 8 -- Financial Statements and
Supplementary Data. The Company issued 7% stock dividends on the Class A and
Class B Common Stock in December 1999 and December 1998.

                                       13
<PAGE>   14

ITEM 6. SELECTED FINANCIAL DATA.

     The following table sets forth selected historical financial data of
Pioneer for the years ended December 31, 1999, 1998, 1997, 1996 and 1995. The
table also sets forth, for comparative purposes, selected historical financial
data of the Predecessor Company for the period from January 1, 1995 to April 20,
1995. Certain amounts have been reclassified in prior years to conform to the
current year presentation. Per share information for all periods presented
reflects 7% stock dividends on the Class A and Class B Common Stock in 1999,
1998, 1997 and 1996. The data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements and Notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
                                                                                          PREDECESSOR
                                                                                            COMPANY
                                                                                          -----------
                                                                                          PERIOD FROM
                                                                                          JANUARY 1,
                                                                                             1995
                                                 YEAR ENDED DECEMBER 31,                    THROUGH
                                   ----------------------------------------------------    APRIL 20,
                                     1999       1998     1997(1)      1996     1995(2)       1995
                                   --------   --------   --------   --------   --------   -----------
                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                <C>        <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues.........................  $296,642   $384,688   $270,341   $208,908   $142,908    $ 57,848
Cost of sales....................   285,909    301,793    207,906    150,464     98,175      37,400
                                   --------   --------   --------   --------   --------    --------
Gross profit.....................    10,733     82,895     62,435     58,444     44,733      20,448
Selling, general and
  administrative expenses........    49,580     50,162     36,192     29,860     20,765       7,047
Unusual charges..................        --      1,661      5,348         --         --          --
                                   --------   --------   --------   --------   --------    --------
Operating income (loss)..........   (38,847)    31,072     20,895     28,584     23,968      13,401
Interest expense, net............   (51,927)   (50,521)   (28,987)   (19,212)   (13,540)     (1,665)
Other income (expense), net(5)...    14,176      1,755      1,907        887        637        (115)
                                   --------   --------   --------   --------   --------    --------
Income (loss) before income taxes
  and extraordinary items........   (76,598)   (17,694)    (6,185)    10,259     11,065      11,621
Income tax provision (benefit)...   (26,214)    (4,677)      (289)     5,859      5,579       4,809
                                   --------   --------   --------   --------   --------    --------
Income (loss) before
  extraordinary item.............   (50,384)   (13,017)    (5,896)     4,400      5,486       6,812
Extraordinary item, net of
  tax(3).........................        --         --    (18,658)        --         --      (3,420)
                                   --------   --------   --------   --------   --------    --------
Net income (loss)................  $(50,384)  $(13,017)  $(24,554)  $  4,400   $  5,486    $  3,392
                                   ========   ========   ========   ========   ========    ========
Net income (loss) per
  share -- basic and diluted.....  $  (4.38)  $  (1.14)  $  (2.15)  $   0.39   $   0.61
                                   ========   ========   ========   ========   ========
OTHER FINANCIAL DATA:
Capital expenditures.............  $ 28,318   $ 34,759   $ 28,091   $ 17,839   $ 13,556    $  3,389
Depreciation and amortization....    54,713     50,316     27,655     18,213     12,274       4,490
Cash flows from operating
  activities.....................   (52,349)    39,337     27,320     29,234     27,014       2,611
Cash flows from investing
  activities.....................   (15,159)   (34,424)  (354,682)   (25,120)  (165,874)     (3,389)
Cash flows from financing
  activities.....................    17,658     (2,264)   363,495         72    147,036        (312)
BALANCE SHEET DATA:
Total assets.....................  $680,606   $731,442   $753,672   $301,568   $264,083    $165,329
Total long-term debt (exclusive
  of current maturities),
  redeemable preferred stock and
  redeemable stock put
  warrants.......................   600,223    589,668    592,366    161,103    146,463      57,677
Stockholders' equity (deficiency
  in assets).....................   (26,702)    23,553     36,221     59,901     44,475      26,370
ADDITIONAL DATA:
EBITDA(4)........................    31,583     86,649     55,805     47,684     36,879      17,776
</TABLE>

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

(1) The chlor-alkali facility in Tacoma was acquired in June 1997 and the
    business of PCI Canada was acquired on October 31, 1997. The results of
    operations for the year ended December 31, 1997 include results from the
    respective acquisition dates through December 31, 1997.

(2) The results of operations include the results of operations of PCA since its
    acquisition on April 20, 1995.

                                       14
<PAGE>   15

(3) An extraordinary item of $18.7 million in 1997, net of an income tax benefit
    of $12.4 million, consisted primarily of the 20% premium paid on the face
    value of notes and the write-off of debt placement fees pertaining to debt
    refinanced by Pioneer concurrent with the acquisition of the Tacoma
    chlor-alkali facility. An extraordinary item of $3.4 million in the period
    ended April 20, 1995, net of an income tax benefit of $2.1 million, was due
    to costs incurred and previously capitalized costs written off, pertaining
    to debt refinanced by the Predecessor Company prior to its acquisition.

(4) EBITDA is defined as earnings before interest, income taxes, depreciation
    and amortization, unusual charges and extraordinary items. It is presented
    because it is a widely accepted financial indicator of a company's ability
    to incur and service debt. EBITDA should not be considered in isolation or
    as a substitute for net income (loss), cash flows from operating activities
    and other combined income or cash flow statement data prepared in accordance
    with generally accepted accounting principles or as a measure of Pioneer's
    profitability or liquidity. Pioneer's calculation of EBITDA may not be
    consistent with similarly captioned amounts used by other companies.

(5) Other income in 1999 included a $12.0 million gain on the sale of Pioneer's
    15% partnership interest in Saguaro Power Company ("Saguaro").

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

OVERVIEW

     Pioneer manufactures and markets chlorine, caustic soda, hydrochloric acid
and related products used in a variety of applications, including water
treatment, plastics, pulp and paper, detergents, agricultural chemicals,
pharmaceuticals, and medical disinfectants.

     Chlorine and caustic soda are the seventh and sixth most commonly produced
chemicals, respectively, in the United States, based on volume, and are used in
a wide variety of applications and chemical processes. Caustic soda and chlorine
are co-products, concurrently produced in a ratio of approximately 1.1 to 1,
through the electrolysis of salt water. An electrochemical unit ("ECU") consists
of 1.1 tons of caustic soda and 1 ton of chlorine.

     Chlorine is used to manufacture over 15,000 products, including
approximately 60% of all commercial chemistry, 85% of all pharmaceutical
chemistry and 95% of all crop protection chemistry. Products manufactured with
chlorine as a raw material include water treatment chemicals, plastics,
detergents, pharmaceuticals, disinfectants and agricultural chemicals. Chlorine
is also used directly in water disinfection applications. In the United States
and Canada, virtually all public drinking water is made safe to drink by
chlorination, and a significant portion of industrial and municipal waste water
is treated with chlorine or chlorine derivatives to kill water-borne pathogens
and remove solids.

     Caustic soda is a versatile chemical alkali used in a diverse range of
manufacturing processes, including metal smelting, oil production and refining
and pulp and paper production. Caustic soda is combined with chlorine to produce
bleach. Caustic soda is also used as an active ingredient in a wide variety of
other end use products, including detergents, rayon and cellophane.

     The chlorine and caustic soda markets have been, and are likely to continue
to be, cyclical. Periods of high demand, high capacity utilization and
increasing operating margins tend to result in new plant investments and
increased production until supply exceeds demand, followed by a period of
declining prices and declining capacity utilization until the cycle is repeated.
Historically, chlorine demand has followed growth trends in polyvinyl chloride
("PVC"), non-vinyl polymers and water treatment markets, reduced by decreased
chlorine use in the pulp and paper industry and as a feedstock in the production
of chlorofluorocarbons ("CFCs") due to regulatory pressures.

     The markets for chlorine and caustic soda are affected by general economic
conditions, both in North America and elsewhere in the world. During 1998, with
the growing economic crisis in Asia, and subsequently South America, supply of
chlor-alkali products exceeded demand, resulting in reduced pricing. These
markets had experienced steady growth through early 1998. Chlorine prices were
approximately $195 at the end of 1997 and then, as a result of market pressures,
dropped to approximately $65 per ton at the end of 1998. The

                                       15
<PAGE>   16

decline in chlorine market pricing continued into early 1999, contributing to a
material adverse effect on Pioneer's operating results and cash flows during the
period. Chlorine demand has improved as the economies of Asia and South America
strengthened and the market has begun to absorb the output of industry capacity
increases, fueled by healthier end-use markets such as PVC resin. Chlorine
pricing improved significantly during the latter half of 1999 and early 2000 as
major price increases were announced, resulting in contract prices approaching
$180 per ton.

     Typically, as chlorine demand falls, the industry's operating rate
decreases. This results in demand for chlorine's co-product, caustic soda, to
exceed production, creating price increases for caustic soda. However, due to
the world-wide economic conditions, particularly in the pulp and paper markets,
demand for caustic soda fell in 1998, and continued to fall through some of 1999
due to low overall demand. In spite of short supply in some segments due to low
industry production rates, caustic prices declined before stabilization in pulp
and paper segments, low inventories and widespread regional supply shortages
began to have a favorable impact on pricing towards the end of the year. At the
end of 1999, caustic soda prices were approximately $135 per ton; however, spot
pricing was somewhat higher, indicative of positive pressure on prices.

     Large quantities of chlorine are not typically stored, and therefore
chlor-alkali production rates are based on short-term chlorine demand (typically
one month). However, chlor-alkali plants do not achieve optimum cost efficiency
if production rates are cycled. The maintenance of steady production rates is
made difficult by the cyclical nature of the chlor-alkali business, which is at
times exacerbated because the market demand for chlorine differs from that of
caustic soda. The chlor-alkali market has shifted from ECU buyers to independent
markets, unlinking the markets for these two products. Peak and trough demand
for chlorine and caustic soda rarely coincide and caustic soda demand, in the
past and as experienced during 1999, has tended to trail chlorine demand into
and out of economic growth cycles.

RESULTS OF OPERATIONS

     The following table sets forth certain operating data for the periods
indicated (dollars in thousands and percentages of revenues):

<TABLE>
<CAPTION>
                                                       YEAR ENDED DECEMBER 31,
                                        -----------------------------------------------------
                                             1999               1998              1997(1)
                                        ---------------    ---------------    ---------------
<S>                                     <C>         <C>    <C>         <C>    <C>         <C>
Revenues..............................  $296,642    100%   $384,688    100%   $270,341    100%
Cost of sales.........................   285,909     96     301,793     78     207,906     77
                                        --------    ---    --------    ---    --------    ---
Gross profit..........................    10,733      4      82,895     22      62,435     23
Selling, general and administrative
  expenses............................    49,580     17      50,162     13      36,192     13
Unusual charges.......................        --     --       1,661      1       5,348      2
                                        --------    ---    --------    ---    --------    ---
Operating income (loss)...............   (38,847)   (13)     31,072      8      20,895      8
Interest expense, net.................   (51,927)   (18)    (50,521)   (13)    (28,987)   (11)
Other income, net.....................    14,176      5       1,755      1       1,907      1
                                        --------    ---    --------    ---    --------    ---
Loss before income taxes and
  extraordinary item..................   (76,598)   (26)    (17,694)    (4)     (6,185)    (2)
Income tax benefit....................   (26,214)    (9)     (4,677)    (1)       (289)    --
                                        --------    ---    --------    ---    --------    ---
Loss before extraordinary item........   (50,384)   (17)    (13,017)    (3)     (5,896)    (2)
Extraordinary item, net of tax
  benefit.............................        --     --          --     --     (18,658)    (7)
                                        --------    ---    --------    ---    --------    ---
Net loss..............................  $(50,384)   (17)%  $(13,017)    (3)%  $(24,554)    (9)%
                                        ========    ===    ========    ===    ========    ===
</TABLE>

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

(1) The chlor-alkali facility in Tacoma was acquired on June 17, 1997 and the
    business of PCI Canada was acquired on October 31, 1997. The results of
    operations for the year ended December 31, 1997 include the results of
    operations from the respective acquisition dates through December 31, 1997.

                                       16
<PAGE>   17

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

  Revenues

     Revenues decreased by $88.0 million, or approximately 23%, to $296.6
million for the twelve months ended December 31, 1999, as compared to the same
period in 1998. The decrease in revenues was primarily due to lower ECU prices.
Pioneer's average ECU sales price for the year ended December 31, 1999 was $242,
a decrease of approximately 28% from the average 1998 sales price of $336.

     The remaining revenue decrease was primarily due to the disposal of
Pioneer's household bleach bottling business during the third quarter of 1998
and the disposal of the pool chemicals business in the fourth quarter of 1998.
These businesses were considered non-strategic, and Pioneer retained long-term
supply agreements with the purchasers.

  Cost of Sales

     Cost of sales decreased $15.9 million or approximately 5.3% in 1999, as
compared to 1998. $10.9 million of this decrease was due to the modification of
Pioneer's retiree health care benefits. Benefits to current retirees under the
plan were not impacted, but current employees will no longer receive benefits
under this plan following retirement. The remaining decrease in cost of sales
was principally as a result of disposed operations discussed above, offset by
sales volume increases for chlorine and caustic soda in 1999 as compared to
1998.

  Gross Profit

     Gross profit margin decreased to 4% in 1999 from 22% in 1998, primarily as
a result of lower average ECU sales prices.

  Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased $0.6 million in
1999. This reduction was due to a modification of Pioneer's retiree health care
benefits discussed above, the absence of incentive compensation accruals made in
1998 and various overhead expense reductions, partially offset by increases in
1999 due to asset impairments included in depreciation and amortization.

  Interest Expense, Net

     Interest expense, net increased $1.4 million to $51.9 million in 1999 as a
result of decreased interest income due to lower average cash balances and
interest expense incurred on revolving credit balances in 1999.

  Other Income

     Other income in 1999 included a $12.0 million gain on the sale of Pioneer's
15% partnership interest in Saguaro.

  Net Loss

     Net loss for the twelve months ended December 31, 1999 was $50.4 million,
compared to a net loss of $13.0 million for the same period in 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

  Revenues

     Revenues increased $114.3 million, or approximately 42% to $384.7 million
for the twelve months ended December 31, 1998, as compared to the same period in
1997. The acquisitions of the operations of PCI Canada in November 1997 and the
Tacoma chlor-alkali facility in June 1997 accounted for this increase. Partially
offsetting this increase were lower average ECU prices during the period, as
compared to 1997. Pioneer's average ECU sales price for the year ended December
31, 1998 was $336, a decrease of
                                       17
<PAGE>   18

approximately 9% from the average 1997 sales price of $370. Also, production
volumes were reduced by two factors. First, production and sales were hampered
as a result of a lack of railcar availability in the western United States due
to Union Pacific rail transportation problems. Second, production at Pioneer's
Henderson plant fell in early 1998 because of three failed transformers.
Revenues at Pioneer's downstream operations decreased as Pioneer disposed of its
packaged household bleach operations during the third quarter and its pool
chemicals business in the fourth quarter of 1998. Also, competitive conditions
and adverse weather conditions during the early portions of the year resulted in
revenue decreases in the downstream businesses.

  Cost of Sales

     Cost of sales increased $93.9 million, or 45% in 1998, as compared to 1997.
The primary reason for this increase was the additional sales volume from the
acquired operations. In addition, unit production costs were higher during 1998.
This was principally due to a 3% increase in per unit power price in 1998
compared to 1997. Partially offsetting these increases was lower cost of sales
at the downstream businesses due to lower sales volumes.

  Gross Profit

     Gross profit margin decreased slightly to approximately 22% in 1998 from
23% in 1997, primarily as a result of depressed ECU net sales prices, offset in
part by the operating efficiencies of the acquired businesses.

  Selling, General and Administrative Expense

     Selling, general and administrative expenses increased $14.0 million in
1998, primarily as a result of the acquisition of the business of PCI Canada.

  Unusual Charges

     Unusual charges in 1998 included approximately $1.0 million related to the
disposition of the pool chemicals business at City of Industry, California.
Also, a charge of approximately $0.7 million was taken for the consolidation and
downsizing of certain administrative functions.

  Interest Expense, Net

     Interest expense, net increased $21.5 million to $50.5 million in 1998 as a
result of the debt incurred for the acquisitions of the Tacoma facility and the
business of PCI Canada. Partially offsetting this increase was lower interest
expense from refinancing the $135.0 million of 13 3/8% First Mortgage Notes at
substantially lower interest rates in June 1997.

  Other Income, Net

     Other income, net in 1998 included the receipt of cash dividends of $1.0
million from Saguaro, a gain from the settlement of a lawsuit for approximately
$0.7 million, a gain from a business interruption insurance claim at the
Henderson plant related to the failed transformers and a state franchise tax
refund. Offsetting this was a $1.8 million loss on disposal of the pool
chemicals business.

  Extraordinary Item from Early Extinguishment of Debt

     During 1997, Pioneer recognized an $18.7 million extraordinary item (net of
tax benefit of $12.4 million) from early extinguishment of debt. The
extraordinary loss consisted primarily of the 20% premium paid on the face value
of the notes and the write-off of debt placement fees related to the notes.

  Net Loss

     Net loss for the twelve months ended December 31, 1998 was $13.0 million,
compared to a net loss of $24.6 million for the same period in 1997.

                                       18
<PAGE>   19

LIQUIDITY AND CAPITAL RESOURCES

     Financial Leverage and Covenants. As of December 31, 1999, Pioneer had
$605.3 million of long-term debt outstanding. While the majority of Pioneer's
debt is due in 2006 and 2007, Pioneer is required to make certain scheduled
payments each year. The degree to which Pioneer is indebted could have important
consequences including, but not limited to: (i) limitations on the ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes and other purposes, if
needed; (ii) the allocation of a substantial portion of cash flow from
operations to cover cash interest requirements, thereby limiting the funds
available for operations and any future business opportunities; and (iii)
increasing Pioneer's vulnerability to a downturn in its business or the economy.

     In September 1999, PCA entered into a $50.0 million three-year revolving
credit facility with Congress Financial Corporation (Southwest) (the "Revolving
Facility") that replaced an existing $50.0 million revolving facility (the "Bank
Credit Facility"). The Revolving Facility provides for revolving loans in an
aggregate amount up to $50.0 million, subject to borrowing base limitations
related to the level of accounts receivable and inventory, which, together with
certain other collateral, secure borrowings under the facility. The total
borrowing base at December 31, 1999 of $45.9 million was subject to a reserve of
$5.0 million until Pioneer's ratio of interest to fixed charges, as defined in
the Revolving Facility, exceeds 1.15:1 for a period of two consecutive quarters.
As of December 31, 1999, there were letters of credit outstanding of $5.2
million and loans outstanding of $21.2 million.

     Pioneer's cash requirements include payment of interest on the notes issued
in connection with the acquisition of the Predecessor Company. PCA is restricted
in paying dividends to the Company or funding cash to unrestricted subsidiaries,
as defined, to the sum of $5.0 million plus 50% of the cumulative consolidated
net income of PCA since June 1997. As of December 31, 1999, no distributions
were allowable under this covenant. However, management believes that the
existing cash balances at the Company and its unrestricted subsidiaries will be
sufficient to fund future required interest payments and other cash requirements
until such time that PCA's cumulative consolidated net income is positive.

     PCA's ability to enter into new debt agreements is restricted by a debt
covenant requiring a minimum interest coverage ratio (as defined) of at least
2.0 to 1.0 for the prior four fiscal quarters. Currently, PCA is unable to incur
additional indebtedness as a result of this covenant, other than borrowing
available under its revolving credit facility. Pioneer's debt agreements contain
other restrictions on PCA's subsidiaries, which, among other things, limit the
ability of PCA's subsidiaries to acquire or dispose of assets or operations.

     Annualized cash interest of approximately $55.3 million is payable on
Pioneer's long-term debt. To the extent that Pioneer draws additional funds
under the revolving credit facility, due to adverse business conditions or to
finance acquisitions or for other corporate purposes, Pioneer's aggregate
interest expense would be increased.

     Capital and Environmental Expenditures. Total capital expenditures were
approximately $28.3 million and $34.8 million for the years ended December 31,
1999 and 1998, respectively. Capital expenditures for environmental-related
matters at existing facilities were approximately $1.2 million and $2.5 million
for the years ended December 31, 1999 and 1998, respectively. Pioneer
anticipates that capital expenditures for 2000, excluding any acquisitions, will
be approximately $23.0 million, including $1.9 million for environmental
compliance matters.

     Pioneer routinely incurs operating expenditures associated with hazardous
substance management and environmental compliance matters in ongoing operations.
These operating expenses include items such as outside waste management, fuel,
electricity and salaries. The amounts of these operating expenses were
approximately $2.8 million and $3.4 million in 1999 and 1998, respectively.
Pioneer does not anticipate an increase in these types of expenses during 2000.
Pioneer classifies these types of environmental expenditures within cost of
sales.

     Net Operating Loss Carryforward. At December 31, 1999, Pioneer had, for
income tax purposes, approximately $149 million of U.S. net operating loss
carryforward ("NOL") which expires in 2009 through

                                       19
<PAGE>   20

2019, and $18 million of foreign NOL available (expiring beginning in 2013). The
NOL is available for offset against future taxable income generated during the
carryforward period.

     Foreign Operations and Exchange Rate Fluctuations. Pioneer, through PCI
Canada, has operating activities in Canada and Pioneer engages in export sales
to various countries. International operations and exports to foreign markets
are subject to a number of risks, including currency exchange rate fluctuations,
trade barriers, exchange controls, political risks and risks of increases in
duties, taxes and governmental royalties, as well as changes in laws and
policies governing foreign-based companies. In addition, earnings of foreign
subsidiaries and intracompany payments are subject to foreign taxation rules.

     A portion of Pioneer's sales and expenditures are denominated in Canadian
dollars, and accordingly, Pioneer's results of operations and cash flows may be
affected by fluctuations in the exchange rate between the U.S. dollar and the
Canadian dollar. In addition, because a portion of Pioneer's revenues, cost of
sales and other expenses are denominated in Canadian dollars, Pioneer has a
translation exposure to fluctuation in the Canadian dollar against the U.S.
dollar. Due to the significance of PCI Canada's U.S. dollar-denominated
long-term debt (and related accrued interest payable) and certain other U.S.
dollar-denominated assets and liabilities, the entity's functional accounting
currency is the U.S. dollar. Currently, Pioneer is not engaged in forward
foreign exchange contracts, but may enter into such hedging activities in the
future.

     Preferred Stock. During 1997, 55,000 shares of the Company's Convertible
Redeemable Preferred Stock, par value $0.01 per share, were issued in connection
with the acquisition of the Tacoma facility. Each share of preferred stock is
convertible at the option of the shareholder into 9.80 shares of the Company's
Class A Common Stock. In addition, the stock may be redeemed at varying premiums
either at the Company's option or upon the occurrence of certain designated
events.

     Working Capital. Working capital decreased in 1999, ending the year at
$10.7 million versus the December 1998 balance of $64.7 million. The decrease
was due primarily to a $48.3 million decrease in cash balances and a
reclassification of an $8.0 million promissory note from long-term to current
liabilities during 1999 as compared to December 31, 1998. The promissory note is
owed by KWT, Inc. The Company is currently negotiating either a sale or
restructuring of this business that would not require this note to be paid. This
note is not guaranteed by the Company or PCA. These decreases were partially
offset by an increase in accounts receivable due to increased sales revenues in
the fourth quarter of 1999 as compared to the same period in 1998, and the
timing of payments and a decrease in inventory balances created other offsetting
increases in working capital.

     Net Cash Flows from Operating Activities. While Pioneer incurred a loss of
$50.4 million during the year ended December 31, 1999, the year's results
included $54.7 million of non-cash depreciation and amortization expenses. Cash
outflow from operating activities was $52.3 million for the year ended December
31, 1999 versus cash generated from operating activities of $39.3 million in the
year ended December 31, 1998.

     Net Cash Flows used in Investing Activities. Net cash used in investing
activities was $15.2 million in 1999, as compared to $34.4 million in 1998. In
1999 investing activities consisted primarily of capital expenditures of $28.3
million and included a $12.0 million gain on the sale of Pioneer's 15%
partnership interests in Saguaro. In 1998 investing activities consisted
primarily of capital expenditures of $34.8 million.

     Net Cash Flows from Financing Activities. Cash inflows from financing
activities in 1999 was $17.7 million, versus cash used of $2.3 million in 1998.
The 1999 cash inflow was due primarily to net borrowings under revolving credit
arrangements, offset by scheduled debt repayments. In 1998, the cash usage was
due to scheduled debt repayments.

YEAR 2000 ISSUES

     The year 2000 did not have any impact on the processing of date-sensitive
data by the Company's computerized information systems. The costs incurred by
Pioneer for year 2000 conversion tasks did not exceed $1.0 million, and were
expensed as incurred unless new software was purchased, in which case certain
costs were capitalized.

                                       20
<PAGE>   21

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting
and reporting standards for derivative instruments and hedging activities.
Pioneer is required to adopt the provisions of SFAS No. 133 in the first quarter
of 2001. Management does not believe that adoption of SFAS No. 133 will have a
material effect on Pioneer's financial position or results of operations.

FORWARD LOOKING STATEMENTS

     Certain statements in this Form 10-K regarding future expectations of
Pioneer's business and Pioneer's results of operations may be regarded as
"forward looking statements" within the meaning of the Securities Litigation
Reform Act. Such statements are subject to various risks, including Pioneer's
high financial leverage, the cyclical nature of the markets for many of the
Pioneer's products and raw materials and other risks discussed in detail. Actual
outcomes may vary materially.

ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The table below provides information about our market-sensitive financial
instruments and constitutes a "forward-looking statement." Pioneer has certain
long-term debt instruments that are subject to market risk. An increase in the
market interest rates would increase Pioneer's interest expense and its cash
requirements for interest payments. For example, an average increase of 0.25% in
the variable interest rate would increase Pioneer's interest expense and
payments by approximately $0.5 million.

     All items described are non-trading and are stated in United States
dollars.

<TABLE>
<CAPTION>
                                                                                                            FAIR VALUE
                                                                                                           DECEMBER 31,
EXPECTED DEBT MATURITY DATES         2000      2001     2002      2003     2004    THEREAFTER    TOTAL         1999
----------------------------        -------   ------   -------   ------   ------   ----------   --------   ------------
<S>                                 <C>       <C>      <C>       <C>      <C>      <C>          <C>        <C>
U.S. $ denominated
  Average interest
    rates -- fixed(a).............  $   534   $2,869   $ 2,914   $2,964   $3,017    $379,363    $391,661     $309,411
  Average interest
    rates -- variable(b)..........  $10,092   $6,580   $15,834   $2,090   $2,095    $169,583    $206,274     $206,274
Canadian $ denominated(c).........  $    --   $   --   $ 7,414   $   --   $   --    $     --    $  7,414     $  7,414
        Total debt................  $10,626   $9,449   $26,162   $5,054   $5,112    $548,946    $605,349     $523,099
</TABLE>

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

(a)  Debt instruments at fixed interest rates ranging from 8.0% to 9.25%, with
     the majority at 9.25%

(b)  Debt instruments at variable interest rates, including LIBOR and U.S. prime
     rate based loans

(c)  Revolving credit facility based on Canadian prime rate plus 1 1/4%

     Pioneer, through PCI Canada, operates in Canada and is subject to foreign
currency exchange rate risk. Due to the significance of PCI Canada's U.S.
dollar-denominated long-term debt (and related accrued interest payable) and
certain other U.S. dollar-denominated assets and liabilities, the entity's
functional accounting currency is the U.S. dollar. Certain other items within
PCI Canada's working capital are denominated in Canadian dollars. An average
change of 1% in the currency exchange rate would change total assets by $0.5
million.

                                       21
<PAGE>   22

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     Index:

<TABLE>
<CAPTION>
                                                                   PAGE
                                                                   ----
<S>  <C>                                                           <C>
(1)  Consolidated financial statements, Pioneer Companies, Inc.
     and subsidiaries:
     Independent Auditors' Report................................   23
     Report of Management........................................   24
     Consolidated Balance Sheets as of December 31, 1999 and
     1998........................................................   25
     Consolidated Statements of Operations for the years ended
     December 31, 1999, 1998, and 1997...........................   26
     Consolidated Statements of Stockholders' Equity (Deficiency
     in Assets) for the years ended December 31, 1999, 1998, and
     1997........................................................   27
     Consolidated Statements of Cash Flows for the years ended
     December 31, 1999, 1998, and 1997...........................   28
     Notes to Consolidated Financial Statements..................   29
(2)  Supplemental Schedule:
     Schedule II -- Valuation and Qualifying Accounts............   53
</TABLE>

     All schedules, except the one listed above, have been omitted because they
are either not applicable, not required or the information called for therein
appears in the consolidated financial statements or notes thereto.

                                       22
<PAGE>   23

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders of
Pioneer Companies, Inc.

     We have audited the accompanying consolidated balance sheets of Pioneer
Companies, Inc. and subsidiaries (the "Company"), as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity (deficiency in assets), and cash flows for each of the three years in the
period ended December 31, 1999. Our audits also included the financial statement
schedule listed in the Index at Item 8. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements and schedule
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, such consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31,
1999 and 1998, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.

                                            DELOITTE & TOUCHE LLP

Houston, Texas
February 4, 2000

                                       23
<PAGE>   24

                              REPORT OF MANAGEMENT

     Management is responsible for the preparation and content of the financial
statements and other information included in this annual report. The financial
statements have been prepared in conformity with generally accepted accounting
principles appropriate under the circumstances to reflect, in all material
respects, the substance of events and transactions that should be included. The
financial statements reflect management's judgments and estimates as to the
effects of events and transactions that are accounted for or disclosed.

     Management maintains accounting systems which are supported by internal
accounting controls that provide reasonable assurance that assets are
safeguarded and that transactions are executed in accordance with management's
authorization and recorded properly to permit the preparation of financial
statements in accordance with generally accepted accounting principles. The
concept of reasonable assurance is based on the recognition that the cost of a
system of internal accounting controls should not exceed the benefits.

     An independent auditor performed an audit of Pioneer's financial statements
for the purpose of determining that the statements are presented fairly in
accordance with generally accepted accounting principles. The independent
auditor is appointed by the Board of Directors and meets regularly with the
Audit Committee of the Board. The Audit Committee of the Board of Directors is
composed solely of outside directors. The Audit Committee meets periodically
with Pioneer's senior officers and independent auditor to review the adequacy
and reliability of Pioneer's accounting, financial reporting and internal
controls.

                                            PHILIP J. ABLOVE
                                            Executive Vice President and Chief
                                            Financial Officer
                                            (Principal Financial Officer)

                                            JOHN R. BEAVER
                                            Vice President, Controller
                                            (Principal Accounting Officer)

February 4, 2000

                                       24
<PAGE>   25

                            PIONEER COMPANIES, INC.

                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              --------------------
                                                                1999        1998
                                                              --------    --------
<S>                                                           <C>         <C>
Current assets:
  Cash and cash equivalents.................................  $  5,510    $ 53,822
  Accounts receivable, less allowance for doubtful accounts:
     1999, $2,739; 1998, $3,122.............................    50,185      46,469
  Inventories...............................................    23,130      26,556
  Prepaid expenses and other current assets.................     7,468       6,311
                                                              --------    --------
          Total current assets..............................    86,293     133,158
Property, plant and equipment:
  Land......................................................    10,622      10,727
  Buildings and improvements................................    63,949      63,455
  Machinery and equipment...................................   338,851     312,736
  Construction in progress..................................    19,434      28,357
                                                              --------    --------
                                                               432,856     415,275
Less accumulated depreciation...............................  (107,315)    (76,268)
                                                              --------    --------
                                                               325,541     339,007
Other assets, net of accumulated amortization:
  1999, $12,052; 1998, $8,443...............................    76,308      57,392
Excess cost over the fair value of net assets acquired, net
  of accumulated amortization: 1999, $32,526; 1998,
  $23,271...................................................   192,464     201,885
                                                              --------    --------
          Total assets......................................  $680,606    $731,442
                                                              ========    ========

           LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)

Current liabilities:
  Accounts payable..........................................  $ 30,443    $ 32,288
  Accrued liabilities.......................................    34,517      33,483
  Current portion of long-term debt.........................    10,626       2,684
                                                              --------    --------
          Total current liabilities.........................  75,586..      68,455
Long-term debt, less current portion........................  594,723..    584,168
Accrued pension and other employee benefits.................  15,091..      25,836
Other long-term liabilities.................................  16,408..      23,930
Commitments and contingencies...............................
Redeemable preferred stock: $.01 par value, authorized
  10,000 shares, 55 issued and outstanding..................  5,500...       5,500
Stockholders' equity (deficiency in assets):
  Common stock:
  Class A, $.01 par value, authorized 46,000 shares; issued
     and outstanding: 1999, 10,656; 1998, 9,927.............  106.....          99
  Class B, $.01 par value, authorized 4,000 shares; issued
     and outstanding: 1999, 859; 1998, 803; convertible
     share-for-share into Class A shares....................  9.......           8
Additional paid-in capital..................................  55,176..      55,055
Retained deficit............................................   (81,993)    (31,609)
                                                              --------    --------
          Total stockholders' equity (deficiency in
            assets).........................................   (26,702)     23,553
                                                              --------    --------
          Total liabilities and stockholders' equity
            (deficiency in assets)..........................  $680,606    $731,442
                                                              ========    ========
</TABLE>

                See notes to consolidated financial statements.

                                       25
<PAGE>   26

                            PIONEER COMPANIES, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues....................................................  $296,642   $384,688   $270,341
Cost of sales...............................................   285,909    301,793    207,906
                                                              --------   --------   --------
Gross profit................................................    10,733     82,895     62,435
Selling, general and administrative expenses................    49,580     50,162     36,192
Unusual charges.............................................        --      1,661      5,348
                                                              --------   --------   --------
Operating income (loss).....................................   (38,847)    31,072     20,895
Interest expense, net.......................................   (51,927)   (50,521)   (28,987)
Other income, net...........................................    14,176      1,755      1,907
                                                              --------   --------   --------
Loss before income taxes and extraordinary item.............   (76,598)   (17,694)    (6,185)
Income tax benefit..........................................   (26,214)    (4,677)      (289)
                                                              --------   --------   --------
Loss before extraordinary item..............................   (50,384)   (13,017)    (5,896)
Extraordinary item, early extinguishment of debt (net of
  income tax benefit of $12,439)............................        --         --    (18,658)
                                                              --------   --------   --------
Net loss....................................................  $(50,384)  $(13,017)  $(24,554)
                                                              ========   ========   ========
Loss per common share -- basic and diluted:
  Loss before extraordinary item............................  $  (4.38)  $  (1.14)  $  (0.51)
  Extraordinary item, net of tax benefit....................        --         --      (1.64)
                                                              --------   --------   --------
  Net loss..................................................  $  (4.38)  $  (1.14)  $  (2.15)
                                                              ========   ========   ========
Weighted average number of shares outstanding:
  Basic and diluted.........................................    11,515     11,458     11,401
</TABLE>

                See notes to consolidated financial statements.

                                       26
<PAGE>   27

                            PIONEER COMPANIES, INC.

     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                               COMMON STOCK ISSUED AND OUTSTANDING
                                              --------------------------------------
                                                   CLASS A              CLASS B        ADDITIONAL   RETAINED
                                              -----------------    -----------------    PAID-IN     EARNINGS
                                              SHARES    AMOUNT     SHARES    AMOUNT     CAPITAL     (DEFICIT)    TOTAL
                                              -------   -------    -------   -------   ----------   ---------   --------
<S>                                           <C>       <C>        <C>       <C>       <C>          <C>         <C>
Balance at January 1, 1997..................   7,905     $ 79        655       $7       $53,853     $  5,962    $ 59,901
  Stock issued..............................     164        1         --       --           873           --         874
  Stock dividend issued.....................   1,158       12         95        1           (13)          --          --
  Net loss..................................      --       --         --       --            --      (24,554)    (24,554)
                                              ------     ----        ---       --       -------     --------    --------
Balance at December 31, 1997................   9,227       92        750        8        54,713      (18,592)     36,221
  Stock issued..............................      49       --         --       --           347           --         347
  Stock options exercised...................       2       --         --       --             2           --           2
  Stock dividend issued.....................     649        7         53       --            (7)          --          --
  Net loss..................................      --       --         --       --            --      (13,017)    (13,017)
                                              ------     ----        ---       --       -------     --------    --------
Balance at December 31, 1998................   9,927       99        803        8        55,055      (31,609)     23,553
  Stock issued..............................      32       --         --       --           129           --         129
  Stock dividend issued.....................     697        7         56        1            (8)          --          --
  Net loss..................................      --       --         --       --            --      (50,384)    (50,384)
                                              ------     ----        ---       --       -------     --------    --------
Balance at December 31, 1999................  10,656     $106        859       $9       $55,176     $(81,993)   $(26,702)
                                              ======     ====        ===       ==       =======     ========    ========
</TABLE>

                See notes to consolidated financial statements.

                                       27
<PAGE>   28

                            PIONEER COMPANIES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                              -------------------------------
                                                                1999       1998       1997
                                                              --------   --------   ---------
<S>                                                           <C>        <C>        <C>
OPERATING ACTIVITIES:
Net loss....................................................  $(50,384)  $(13,017)  $ (24,554)
Adjustments to reconcile net loss to net cash flows from
  operating activities:
  Reduction in post-retirement medical expense..............   (12,530)        --          --
  Extraordinary item, net of tax............................        --         --      18,658
  Depreciation and amortization.............................    54,713     50,316      27,655
  Deferred tax expense (benefit)............................   (26,181)    (4,677)      1,058
  Unusual charges...........................................        --      1,661       5,348
  Gain (loss) on disposal of assets.........................   (10,922)     1,845          --
  Gain (loss) from foreign exchange rate changes............    (1,025)        78         783
  Net effect of changes in operating assets and liabilities
     (net of acquisitions)..................................    (6,020)     3,131      (1,628)
                                                              --------   --------   ---------
          Net cash flows from (used in) operating
            activities......................................   (52,349)    39,337      27,320
                                                              --------   --------   ---------
INVESTING ACTIVITIES:
Acquisitions of businesses..................................        --         --    (332,571)
Capital expenditures........................................   (28,318)   (34,759)    (22,111)
Proceeds from disposal of assets............................    13,159        335          --
                                                              --------   --------   ---------
Net cash flows used in investing activities.................   (15,159)   (34,424)   (354,682)
                                                              --------   --------   ---------
FINANCING ACTIVITIES:
Net proceeds under revolving credit arrangements............    21,163         --          --
Proceeds from long-term debt................................        --         --     558,000
Repayments on long-term debt................................    (2,666)    (2,611)   (163,310)
Debt issuance and related costs.............................      (968)        --     (32,069)
Other.......................................................       129        347         874
                                                              --------   --------   ---------
Net cash flows from financing activities....................    17,658     (2,264)    363,495
                                                              --------   --------   ---------
Effect of exchange rate changes on cash.....................     1,538       (714)         --
                                                              --------   --------   ---------
Net increase (decrease) in cash.............................   (48,312)     1,935      36,133
Cash at beginning of period.................................    53,822     51,887      15,754
                                                              --------   --------   ---------
Cash at end of period.......................................  $  5,510   $ 53,822   $  51,887
                                                              ========   ========   =========
</TABLE>

                See notes to consolidated financial statements.

                                       28
<PAGE>   29

                            PIONEER COMPANIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Organization and Basis of Presentation

     The consolidated financial statements include the accounts of Pioneer
Companies, Inc. (the "Company") and its subsidiaries (collectively, "Pioneer"),
including Pioneer Corporation of America ("PCA"), Pioneer Americas, Inc.
("PAI"), PCI Chemicals Canada Inc. ("PCI Canada"), and Kemwater North America
Company and KWT, Inc. (together "Kemwater").

     All significant intercompany balances and transactions have been eliminated
in consolidation. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Dollar
amounts, other than per share amounts, in tabulations in the notes to the
consolidated financial statements are stated in thousands of dollars unless
otherwise indicated.

     Following the guidance of Statement of Financial Accounting Standards
("SFAS") No. 131, "Disclosure About Segments of an Enterprise and Related
Information," Pioneer operates in one industry segment, that being the
production, marketing and selling of chlor-alkali and related products. Pioneer
operates in two geographic areas, the United States and Canada.

  Cash and Cash Equivalents

     All highly liquid investments with a maturity of three months or less when
purchased are considered to be cash equivalents.

  Inventories

     Inventories are valued at the lower of cost or market. Finished goods and
work-in-process costs are recorded under the average cost method, which includes
appropriate elements of material, labor and manufacturing overhead costs, while
the first-in, first-out method is utilized for raw materials, supplies and
parts. Pioneer enters into agreements with other companies to exchange chemical
inventories in order to minimize working capital requirements and to facilitate
distribution logistics. Balances related to quantities due to or payable by
Pioneer are included in inventory.

  Property, Plant and Equipment

     Property, plant and equipment are recorded at cost. Disposals are removed
at carrying cost less accumulated depreciation with any resulting gain or loss
reflected in operations.

     Depreciation is computed primarily under the straight-line method over the
estimated remaining useful lives of the assets. Asset lives range from 5 to 15
years with a predominant life of 10 years, which include buildings and
improvements with an average life of 15 years and machinery and equipment with
an average life of 9 years.

  Other Assets

     Other assets include amounts for deferred financing costs, which are being
amortized on a straight-line basis over the term of the related debt.
Amortization of such costs using the interest method would not result in
material differences in the amounts amortized during the periods presented.
Amortization expense for other assets for the years ended December 31, 1999,
1998, and 1997 was approximately $6.7 million, $4.4 million, and $3.0 million,
respectively.

                                       29
<PAGE>   30
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Excess Cost Over The Fair Value of Net Assets Acquired

     Excess cost over the fair value of net assets acquired ("goodwill") of
approximately $225.0 million is amortized on a straight-line basis over 25
years. The carrying value of goodwill is reviewed annually and if this review
indicates that such excess cost will not be recoverable, as determined based on
the estimated future undiscounted cash flows of the entity acquired over the
remaining amortization period, Pioneer's carrying value of goodwill will be
reduced by the estimated deficit of discounted cash flows or the fair value of
the related entity. Amortization expense for excess cost over the fair value of
net assets acquired was approximately $9.3 million, $9.2 million and $6.0
million for the years ended December 31, 1999, 1998, and 1997, respectively.

  Environmental Expenditures

     Remediation costs are accrued based on estimates of known environmental
remediation exposure. Such accruals are based upon management's best estimate of
the ultimate cost. Ongoing environmental compliance costs, including maintenance
and monitoring costs, are charged to operations as incurred.

  Research and Development Expenditures

     Research and development expenditures are expensed as incurred. Such costs
totaled $1.5 million in 1999, $1.4 million in 1998 and zero in 1997.

  Per Share Information

     Per share information for all periods presented reflects 7% stock dividends
on the Class A and Class B Common Stock issued in December 1999, December 1998
and December 1997.

  Preferred Stock

     Each share of preferred stock is convertible at the option of the
shareholder into 9.80 shares of the Company's Class A Common Stock (which
reflects adjustment for subsequent stock dividends). In addition, the stock may
be redeemed at varying premiums either at the Company's option or upon the
occurrence of certain designated events. Because of the preferred stock's
mandatory redemption characteristics, the stock is excluded from stockholders'
equity.

  Foreign Currency Translation

     Following SFAS No. 52, "Foreign Currency Translation," the functional
accounting currency for Canadian operations is the U.S. dollar; accordingly,
gains and losses resulting from balance sheet translations are included in the
consolidated statement of operations.

  Reclassifications

     Certain amounts have been reclassified in prior years to conform to the
current year presentation. All reclassifications have been applied consistently
for the periods presented.

2. ACQUISITIONS

     In June 1997, Pioneer acquired a chlor-alkali production facility and
related business (the "Tacoma Facility") located in Tacoma, Washington (the
"Tacoma Acquisition"). Consideration given for the Tacoma Acquisition was $97.0
million, 55,000 shares of the Company's convertible redeemable preferred stock,
par value $.01 per share and the assumption of certain obligations related to
the acquired business. In November 1997, Pioneer acquired substantially all of
the assets and properties of the North American chlor-alkali

                                       30
<PAGE>   31
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

business of ICI Canada Inc. and ICI Americas Inc. (the "PCI Canada Acquisition")
for $235.6 million and the assumption of certain obligations related to the
acquired chlor-alkali business. Both of these acquisitions were accounted for
using the purchase method; accordingly, the purchase prices were allocated to
the assets acquired and liabilities assumed based upon their fair market value,
and the operations for the acquired companies were included in the consolidated
financial statements from the date acquired. The Tacoma Acquisition and the PCI
Canada Acquisition resulted in approximately $25.7 million and $79.1 million,
respectively, of goodwill which is being amortized on a straight-line basis over
25 years.

     The following presents the unaudited pro forma effect of the above
acquisitions and related financing transactions on the historical results of
operations for the year ended December 31, 1997.

<TABLE>
<CAPTION>
                                                                1997
                                                              --------
<S>                                                           <C>
Revenues....................................................  $442,451
Operating income............................................    61,784
Net loss....................................................   (11,982)
Loss per share -- Basic and diluted.........................     (1.05)
</TABLE>

3. CASH FLOW INFORMATION

     The net effect of changes in operating assets and liabilities (net of
acquisitions) are as follows:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                        -----------------------------
                                                         1999       1998       1997
                                                        -------   --------   --------
<S>                                                     <C>       <C>        <C>
Accounts receivable...................................  $(2,800)  $ 21,418   $(19,481)
Inventories...........................................    3,487     (3,139)    (1,281)
Prepaid expenses......................................      826     (1,590)       873
Other assets..........................................   (1,333)    (4,202)      (743)
Accounts payable......................................   (2,709)   (14,604)    11,744
Accrued liabilities...................................      189      1,707      7,924
Other long-term liabilities...........................   (5,229)        52     (1,316)
Accrued pension and other employee benefits...........    1,549      3,489        652
                                                        -------   --------   --------
Net change in operating accounts......................  $(6,020)  $  3,131   $ (1,628)
                                                        =======   ========   ========
</TABLE>

     Following is supplemental cash flow information:

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                         ----------------------------
                                                          1999      1998       1997
                                                         -------   -------   --------
<S>                                                      <C>       <C>       <C>
Cash payments for:
  Interest.............................................  $52,652   $50,651   $ 30,808
                                                         =======   =======   ========
  Income taxes.........................................  $   126   $   159   $    543
                                                         =======   =======   ========
Investing activities of acquisitions during the period:
  Cash paid for acquisitions...........................  $    --   $    --   $332,571
  Liabilities assumed..................................       --        --     21,519
  Preferred stock issued...............................       --        --      5,500
                                                         -------   -------   --------
  Fair value of assets acquired........................  $    --   $    --   $359,590
                                                         =======   =======   ========
</TABLE>

     Included in the above table are the PCI Canada Acquisition and the Tacoma
Acquisition in 1997.

                                       31
<PAGE>   32
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Non-cash investing and financing activities:

          In December 1997, Pioneer purchased a hydrochloric acid manufacturing
     facility that it previously had been leasing in Henderson, Nevada for $5.9
     million, which was financed with a mortgage note.

          Due to the retained deficit at the time of the 1999, 1998 and 1997 7%
     stock dividends, no accounting entry was made between retained deficit and
     additional paid-in capital for these events.

4. INVENTORIES

     Inventories consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                               1999      1998
                                                              -------   -------
<S>                                                           <C>       <C>
Raw materials, supplies and parts...........................  $16,822   $18,310
Finished goods and work-in-process..........................    5,350     7,945
Inventories under exchange agreements.......................      958       301
                                                              -------   -------
                                                              $23,130   $26,556
                                                              =======   =======
</TABLE>

5. INVESTMENTS IN BASIC MANAGEMENT, INC. AND THE LANDWELL COMPANY, L.P.

     Pioneer, through its subsidiary PAI, owns approximately 32% of the common
stock of Basic Management, Inc. ("BMI"), which owns and maintains the water and
power distribution network within a Henderson, Nevada industrial complex and
which is a large landowner in Clark County, Nevada. The remainder of the common
stock of BMI is owned by other companies located in the same industrial complex.

     PAI has an approximate 21% limited partnership interest in The Landwell
Company, L.P. ("Landwell"). The purpose of Landwell's business is to receive,
hold and develop the lands, water rights, and other assets contributed by the
partners for investment. A wholly-owned subsidiary of BMI, acting as general
partner with a 50% interest in Landwell, contributed all rights, title and
interest in and to certain land to Landwell. PAI also assigned certain water
rights to Landwell.

     Pioneer's interests in BMI and in Landwell (referred to as the "Basic
Ownership") constitute assets that are held for the economic benefit of the
previous owners of PAI through April 20, 2015. Dividends and distributions
received by Pioneer on account of the Basic Ownership (including amounts payable
as a result of sales of land or other assets owned by BMI or Landwell) are
deposited into a separate cash account and may be used to satisfy certain
obligations of the sellers under environmental and other obligations in favor of
Pioneer. After payment or provision for payment of such obligations, amounts
received by Pioneer subsequent to April 20, 1995 on account of the Basic
Ownership will be remitted to the sellers at the end of the 20-year period. The
sellers also have certain rights during such period with respect to
determinations affecting the Basic Ownership, including the right (subject to
certain limited conditions) to direct the sales or disposition of interests
constituting the Basic Ownership and the right (with certain limited exceptions)
to vote the interests constituting the Basic Ownership, notwithstanding the
ownership of such interests by Pioneer. Pioneer's investment in Basic Ownership,
following the equity method, is $18.0 million and $17.7 million at December 31,
1999 and 1998, respectively and the balance in the related separate cash account
is $6.7 million and $5.7 million at December 31, 1999 and 1998, respectively.
Within Pioneer's balance sheets, these assets are offset by liabilities of the
same amount because the right of setoff exists, as Pioneer and the sellers owe
determinable amounts, Pioneer has the right to set off the amount owed by the
sellers, the Company intends to set off the amount and the setoff is enforceable
by law.

                                       32
<PAGE>   33
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. OTHER ASSETS

     Other assets consist of the following at December 31:

<TABLE>
<CAPTION>
                                                               1999      1998
                                                              -------   -------
<S>                                                           <C>       <C>
Debt financing assets and organizational cost assets, net of
  accumulated amortization of $5,311 in 1999 and $3,083 in
  1998......................................................  $18,150   $19,775
Deferred tax asset..........................................   39,821    23,412
Patents, trademarks and other intangibles, net of
  accumulated amortization of $6,741 in 1999 and $5,360 in
  1998......................................................    6,797     7,718
Indemnification of environmental reserve....................    7,777     3,160
Other.......................................................    3,763     3,327
                                                              -------   -------
          Other assets, net.................................  $76,308   $57,392
                                                              =======   =======
</TABLE>

7. ACCRUED LIABILITIES

     Accrued liabilities consist of the following at December 31:

<TABLE>
<CAPTION>
                                                               1999      1998
                                                              -------   -------
<S>                                                           <C>       <C>
Payroll, benefits and pension...............................  $ 6,300   $ 7,862
Interest and bank fees......................................    6,671     6,170
Returnable deposits.........................................    1,914     2,531
Power.......................................................    1,836     1,928
Freight.....................................................    2,598     1,345
License royalties...........................................    2,219     1,179
Other accrued liabilities...................................   12,979    12,468
                                                              -------   -------
          Accrued liabilities...............................  $34,517   $33,483
                                                              =======   =======
</TABLE>

8. EMPLOYEE BENEFITS

  Pension Plans

     Pioneer sponsors various non-contributory, defined benefit plans covering
substantially all union and non-union employees of PAI and PCI Canada. Pension
plan benefits are based primarily on participants' compensation and years of
credited service. Annual pension costs and liabilities for Pioneer under its
defined benefit plans are determined by actuaries using various methods and
assumptions. Pioneer has agreed to contribute such amounts as are necessary to
provide assets sufficient to meet the benefits to be paid to its employees.
Pioneer's present intent is to make annual contributions, which are actuarially
computed, in amounts not more than the maximum nor less than the minimum
allowable under the Internal Revenue Code. Plan assets at December 31, 1999 and
1998 consist primarily of fixed income investments and equity investments.

                                       33
<PAGE>   34
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Information concerning the pension obligation, plan assets, amounts
recognized in Pioneer's financial statements and underlying actuarial
assumptions is stated below.

<TABLE>
<CAPTION>
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
CHANGE IN BENEFIT OBLIGATION:
Projected benefit obligation, beginning of year.............  $ 55,011   $ 44,299
Service cost................................................     3,042      2,278
Interest cost...............................................     3,850      3,232
Actuarial gains (losses)....................................    (3,672)     5,557
Benefits paid...............................................    (1,379)    (1,079)
Plan amendments.............................................        15        724
                                                              --------   --------
Projected benefit obligation, end of year...................  $ 56,867   $ 55,011
                                                              ========   ========
CHANGE IN PLAN ASSETS:
Market value of assets, beginning of year...................  $ 42,643   $ 38,617
Actual return on plan assets................................     2,489      3,268
Employer contributions......................................     2,600      1,863
Benefits paid...............................................    (1,407)    (1,105)
                                                              --------   --------
Market value of assets, end of year.........................  $ 46,325   $ 42,643
                                                              ========   ========
DEVELOPMENT OF NET AMOUNT RECOGNIZED:
Funded status...............................................  $(10,672)  $(12,368)
Actuarial loss..............................................     1,386      4,148
Unrecognized prior service cost.............................       666        778
                                                              --------   --------
Net amount recognized.......................................  $ (8,620)  $ (7,442)
                                                              ========   ========
AMOUNTS RECOGNIZED IN THE CONSOLIDATED
  BALANCE SHEETS:
Accrued pension cost........................................  $ (8,620)  $ (7,442)
                                                              --------   --------
Net amount recognized.......................................  $ (8,620)  $ (7,442)
                                                              ========   ========
</TABLE>

<TABLE>
<CAPTION>
                                                           1999      1998      1997
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost............................................  $ 3,042   $ 2,278   $   994
Interest cost...........................................    3,850     3,232     1,596
Expected return on plan assets..........................   (3,311)   (3,020)   (2,334)
Amortization of prior service cost......................      127        49        49
Amortization of net loss................................       --        --       895
                                                          -------   -------   -------
Net period benefit cost.................................  $ 3,708   $ 2,539   $ 1,200
                                                          =======   =======   =======
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
Discount rate...........................................     7.4%      6.8%      7.3%
Expected return on plan assets..........................     8.0%      8.0%      8.0%
Rate of compensation increase...........................     4.0%      4.0%      4.0%
</TABLE>

  Defined Contribution Plans

     Pioneer offers defined contribution plans under which employees generally
contribute from 1% to 15% of their compensation. Pioneer also contributes funds
to the plans in the amount of 50% of employee

                                       34
<PAGE>   35
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

contributions up to 4% to 6% of employee compensation, depending on the plan.
Aggregate expense of Pioneer with respect to such plans was $0.7 million, $0.7
million and $0.5 million in 1999, 1998 and 1997, respectively.

  Post-Retirement Benefits Other Than Pensions

     Effective January 1, 1999, Pioneer modified its retiree health care
benefits plan. Employees retiring on or after January 1, 1999 will not receive
company-paid retiree medical benefits. Eligible employees who retired prior to
January 1, 1999 will continue to receive certain company-paid health care
benefits. Pioneer provides certain life insurance benefits for qualifying
retired employees who reached normal retirement age while working for Pioneer.

     Information concerning the plan obligation, the funded status, amounts
recognized in Pioneer's financial statements and underlying actuarial
assumptions is stated below.

<TABLE>
<CAPTION>
                                                               1999       1998
                                                              -------   --------
<S>                                                           <C>       <C>
CHANGE IN BENEFIT OBLIGATION:
Accumulated post-retirement benefit obligation, beginning of
  year......................................................  $28,396   $ 20,532
Service cost................................................       99        535
Interest cost...............................................      499        776
Actuarial gains.............................................   (1,644)     6,828
Benefits paid...............................................     (325)      (275)
Plan curtailment............................................  (20,874)        --
                                                              -------   --------
Accumulated post-retirement benefit obligation, end of
  year......................................................  $ 6,151   $ 28,396
                                                              =======   ========
Funded status...............................................  $(6,151)  $(28,396)
Unrecognized net loss.......................................      146      8,718
                                                              -------   --------
Accrued benefit cost........................................  $(6,005)  $(19,678)
                                                              =======   ========
</TABLE>

<TABLE>
<CAPTION>
                                                              1999    1998     1997
                                                              ----   ------   ------
<S>                                                           <C>    <C>      <C>
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost................................................  $ 99   $  535   $  664
Interest cost...............................................   499      776    1,095
Amortization of net loss....................................    --      283      114
                                                              ----   ------   ------
Net period benefit cost.....................................  $598   $1,594   $1,873
                                                              ====   ======   ======
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31:
Discount rate...............................................   8.0%    6.8%      7.3%
</TABLE>

     The weighted-average annual assumed health care trend rate is assumed to be
7.6% for 1999. The rate is assumed to decrease gradually to 4.5% in 2013 and
remain level thereafter. Assumed health care cost trend rates have a significant
effect on the amounts reported for the health care plans. A one-percentage-point
change in assumed health care trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                             1-PERCENTAGE     1-PERCENTAGE
                                                            POINT INCREASE   POINT DECREASE
                                                            --------------   --------------
<S>                                                         <C>              <C>
Effect on total of service and interest cost components...      $  104          $   (84)
Effect on post-retirement benefit obligation..............       1,351           (1,097)
</TABLE>

                                       35
<PAGE>   36
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Stock Based Compensation

     Pioneer has two stock option plans which provide for the issuance of
options to key employees. The plans authorized the issuance of options to
purchase up to a total of 2.3 million shares of common stock, with vesting
periods of up to three years and maximum option terms of ten years. As of
December 31, 1999, options to purchase approximately 0.6 million shares were
available for issuance. In addition, options for the purchase of 0.3 million
shares have been issued outside the scope of the stock option plans.

     The following table summarizes the transactions with respect to the stock
options for the three year period ended December 31, 1999:

<TABLE>
<CAPTION>
                                                                      WEIGHTED
                                                                       AVERAGE
                                                        EXERCISE      EXERCISE
                                         NUMBER OF     PRICE PER      PRICE PER     OPTIONS
                                          SHARES         SHARE          SHARE     EXERCISABLE
                                         ---------   --------------   ---------   -----------
<S>                                      <C>         <C>              <C>         <C>
Outstanding at January 1, 1997.........      647     $4.29 - $5.52      $4.92          --
1997:
  Granted..............................      767     $4.07 - $11.12     $4.71
  Exercised............................       --           --              --
  Forfeited............................      (76)    $4.95 - $5.30      $4.96
                                           -----
Outstanding at December 31, 1997.......    1,338     $4.07 - $11.12     $4.79          --
1998:
  Granted..............................      179     $4.89 - $7.86      $7.35
  Exercised............................      (47)    $4.95 - $4.95      $4.95
  Forfeited............................       (1)    $4.95 - $4.95      $4.95
                                           -----
Outstanding at December 31, 1998.......    1,469     $4.08 - $11.12     $5.10         338
1999:
  Granted..............................      176     $4.09 - $6.53      $4.79
  Exercised............................       --           --              --
  Forfeited............................     (101)    $4.69 - $4.95      $4.90
                                           -----
Outstanding at December 31, 1999.......    1,544     $4.08 - $11.12     $5.08         520
</TABLE>

     The following table summarizes information about stock options outstanding
at December 31, 1999:

<TABLE>
<CAPTION>
                                         OPTIONS OUTSTANDING
                                -------------------------------------     OPTIONS EXERCISABLE
                                                WEIGHTED-               -----------------------
                                                 AVERAGE     WEIGHTED   EXERCISABLE    WEIGHTED
                                   AS OF        REMAINING    AVERAGE       AS OF       AVERAGE
                                DECEMBER 31,   CONTRACTUAL   EXERCISE   DECEMBER 31,   EXERCISE
RANGE OF EXERCISE PRICES            1999          LIFE        PRICE         1999        PRICE
------------------------        ------------   -----------   --------   ------------   --------
<S>                             <C>            <C>           <C>        <C>            <C>
$4.00 - $5.00.................     1,276        6.8 years     $ 4.51        501         $4.62
$5.01 - $6.00.................        50        7.8 years     $ 5.64         19         $5.52
$6.01 - $7.00.................        31        9.0 years     $ 6.53         --         $  --
$7.01 - $8.00.................       147        8.4 years     $ 7.86         --         $  --
$11.00 - $12.00...............        40        7.9 years     $11.12         --         $  --
                                   -----                      ------        ---
          Total...............     1,544        7.0 years     $ 5.08        520         $4.65
                                   =====                      ======        ===
</TABLE>

     All stock options are granted at fair market value of the common stock at
the grant date. The fair value of the stock options granted during 1999, 1998,
and 1997 was $0.6 million, $0.8 million, and $2.1 million, respectively. The
fair value of each stock option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for the grants: risk

                                       36
<PAGE>   37
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

free interest rate of 4.5% in 1999, 4.5% in 1998 and 6.7% in 1997; expected
dividend yield of 0.0%; expected life of six years. Expected volatility was 95%
in 1999, 95% in 1998, and 86% in 1997.

     Pioneer accounts for the stock option plans in accordance with Accounting
Principles Board Opinion No. 25, under which no compensation expense has been
recognized for stock option awards. Had compensation expense for the plans been
determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," Pioneer's pro forma net income and earnings per share for the
three years ended December 31, 1999 would have been as indicated below:

<TABLE>
<CAPTION>
                                                         1999       1998       1997
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Net loss:
  As reported........................................  $(50,384)  $(13,017)  $(24,554)
  Pro forma..........................................   (50,582)   (13,591)   (25,654)
Loss per share -- basic and diluted
  As reported........................................  $  (4.38)  $  (1.14)  $  (2.15)
  Pro forma..........................................     (4.39)     (1.19)     (2.25)
</TABLE>

9. LONG-TERM DEBT

     Long-term debt consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Revolving credit facility; variable interest rates based on
  U.S. prime rate plus 1 1/2% and Canadian prime rate plus
  1 1/4%....................................................  $ 21,163   $     --
9 1/4% Senior Secured Notes, due June 15, 2007..............   200,000    200,000
9 1/4% Senior Secured Notes, due October 15, 2007...........   175,000    175,000
June 1997 term facility, due in quarterly installments of
  $250 with the balance due 2006; variable interest rate
  based on LIBOR or base rate...............................    97,500     98,500
November 1997 term facility, due in quarterly installments
  of $250 with the balance due 2006; variable interest rate
  based on LIBOR or base rate...............................    80,750     81,750
Promissory note, interest at 8% per annum and payable
  quarterly, due in five annual installments beginning in
  2001......................................................    11,463     11,463
Promissory note to Kemira Kemi AB, principal payments due in
  four equal installments on March 31, 2000, 2001 and 2002
  and December 31, 2002, with a variable interest rate based
  on LIBOR plus 1.2%........................................     8,016      8,016
Other notes, maturing in various years through 2014, with
  various installments, at various interest rates...........    11,457     12,123
                                                              --------   --------
          Total.............................................   605,349    586,852
Current maturities of long-term debt........................   (10,626)    (2,684)
                                                              --------   --------
          Long-term debt, less current maturities...........  $594,723   $584,168
                                                              ========   ========
</TABLE>

     Long-term debt matures as follows: $10.6 million in 2000; $9.4 million in
2001; $26.2 million in 2002; $5.1 million in 2003; $5.1 million in 2004; and
$548.9 million thereafter.

     In September 1999, PCA entered into a $50.0 million three-year revolving
credit facility with Congress Financial Corporation (Southwest) (the "Revolving
Facility") that replaced an existing $50.0 million revolving facility (the "Bank
Credit Facility"). The Revolving Facility provides for revolving loans in an

                                       37
<PAGE>   38
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

aggregate amount up to $50.0 million, subject to borrowing base limitations
related to the level of accounts receivable and inventory, which, together with
certain other collateral, secure borrowings under the facility. The total
borrowing base at December 31, 1999 of $45.9 million was subject to a reserve of
$5.0 million until Pioneer's ratio of interest to fixed charges, as defined in
the Revolving Facility, exceeds 1.15:1 for a period of two consecutive quarters.
As of December 31, 1999, there were letters of credit outstanding of $5.2
million and loans outstanding of $21.2 million.

     As part of the Tacoma Acquisition in June 1997, Pioneer issued and sold
$200.0 million of 9 1/4% Senior Secured Notes due June 15, 2007, entered into a
nine and one-half year $100.0 million term facility and entered into a $35.0
million Revolving Facility (which was subsequently amended in connection with
the PCI Canada Acquisition). Concurrent with this, the Company purchased all of
its existing 13 3/8% First Mortgage Notes due 2005.

     As part of the PCI Canada Acquisition in November 1997, Pioneer issued and
sold $175.0 million of 9 1/4% Senior Secured Notes due October 15, 2007, entered
into a nine and one-quarter year $83.0 million term facility, and entered into
the Bank Credit Facility discussed above.

     The Senior Secured Notes due June 15, 2007, and the Senior Secured Notes
due October 15, 2007, are senior obligations of Pioneer, ranking pari passu with
all existing and future senior indebtedness of Pioneer. These notes and both
term facilities are fully and unconditionally guaranteed on a joint and several
basis by all of PCA's direct and indirect wholly-owned subsidiaries and are
secured by first mortgage liens on certain manufacturing facilities. Following
is a summary of selected financial information as of December 31, 1999 and 1998
for the direct and indirect subsidiaries which, as of December 31, 1999, were
not guarantors of the senior notes and term facilities.

<TABLE>
<CAPTION>
                                                               1999       1998
                                                              -------    -------
<S>                                                           <C>        <C>
BALANCE SHEET DATA:
Current assets..............................................  $ 1,148    $ 1,480
Non-current assets..........................................    7,628      9,401
Current liabilities.........................................   13,224      3,329
Non-current liabilities.....................................    9,959     19,363
OPERATING STATEMENT DATA:
Revenues....................................................   12,330     12,305
Gross margin................................................      602       (428)
Net loss....................................................   (2,596)    (3,812)
</TABLE>

     Pioneer is a holding company with no operating assets or operations.
Financial statements of Pioneer's direct and indirect wholly-owned subsidiaries
are not separately included herein because Pioneer's management does not believe
this information would be material to investors or lenders.

     The promissory note to Kemira Kemi AB, which is included in current portion
of long-term debt, is owed by KWT, Inc. The Company is currently negotiating
either a sale or restructuring of this business that would not require this note
to be paid. This note is not guaranteed by the Company or PCA.

     The senior notes are redeemable at a premium at Pioneer's option starting
in 2002. Before 2001, Pioneer may redeem a maximum of 35% of each series at
109.25% of the principal amount due with funds from a public offering of common
stock of Pioneer (to the extent such funds are contributed to the issuer). Upon
change of control, as defined in the agreement, Pioneer is required to offer to
purchase all the senior notes for 101% of the principal due.

     Pioneer may prepay the June 1997 term facility and the November 1997 term
facility. Any prepayment is subject to a premium of 1% to 3% during the first
three years of the facility.

                                       38
<PAGE>   39
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Pioneer's long-term debt agreements contain various restrictions on the
Company, which, among other things, limit the ability of Pioneer to incur
additional indebtedness and to acquire or dispose of assets or operations.

     PCA is restricted in paying dividends to Pioneer and providing cash to the
unrestricted subsidiaries, as defined, to the sum of $5.0 million plus 50% of
the cumulative consolidated net income of PCA since June 1997. As of December
31, 1999, no additional distributions were allowable under the debt covenants.
PCA's ability to incur additional new indebtedness is restricted by a covenant
requiring an interest coverage ratio of at least 2.0 to 1.0 for the prior four
fiscal quarters. As of December 31, 1999, PCA did not meet this requirement and
accordingly, additional new indebtedness, other than borrowing available under
the Revolving Facility, is not allowed.

10. FINANCIAL INSTRUMENTS

  Concentration of Credit Risk

     Pioneer manufactures and sells its products to companies in diverse
industries. The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral. The Company's
sales are primarily to customers throughout the United States and in eastern
Canada. Credit losses relating to these customers have been immaterial.

     Pioneer maintains cash deposits with major banks, which generally may
exceed federally insured limits. Pioneer periodically assesses the financial
condition of the institutions and believes that any risk of loss is minimal.

  Investments

     It is the policy of Pioneer to invest its excess cash in securities whose
value is not subject to market fluctuations such as master notes of issuers
rated at the time of such investment at least "A-2" or the equivalent thereof by
S&P or at least "P-2" or the equivalent thereof by Moody's or any bank or
financial institution party to the Revolving Facility.

  Fair Value of Financial Instruments

     In preparing disclosures about the fair value of financial instruments,
Pioneer has assumed that the carrying amount approximates fair value for cash
and cash equivalents, receivables, short-term borrowings, accounts payable and
certain accrued expenses because of the short maturities of those instruments.
The fair values of long-term debt instruments are estimated based upon quoted
market values (if applicable), or on the current interest rates available to
Pioneer for debt with similar terms and remaining maturities. Considerable
judgment is required in developing these estimates and, accordingly, no
assurance can be given that the estimated values presented herein are indicative
of the amounts that would be realized in a free market exchange. Pioneer held no
derivative financial instruments as of December 31, 1999 and 1998.

     At December 31, 1999, the fair market value of all of Pioneer's financial
instruments approximated the book value with the exceptions of the 9 1/4% Senior
Notes due June 15, 2007 and the 9 1/4% Senior Notes due October 15, 2007, which
had a book value of $200.0 million and $175.0 million, respectively and a fair
value, based upon quoted market prices, of $158.0 million and $134.8 million,
respectively.

                                       39
<PAGE>   40
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. GEOGRAPHIC INFORMATION

     Financial information relating to Pioneer by geographical area is as
follows. Revenues are attributed to countries based on destination.

<TABLE>
<CAPTION>
                                                       1999        1998        1997
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
REVENUES
United States......................................  $211,024    $291,460    $248,061
Canada.............................................    81,004      87,614      16,398
Other..............................................     4,614       5,614       5,882
                                                     --------    --------    --------
Consolidated.......................................  $296,642    $384,688    $270,341
                                                     ========    ========    ========
LONG-LIVED ASSETS
United States......................................  $345,573    $399,219    $395,759
Canada.............................................   186,514     175,655     187,009
</TABLE>

     During 1997, sales to an individual customer in the amount of $27.7 million
exceeded 10% of consolidated revenues. No individual customer constituted 10% or
more of the total revenues in 1998 or 1999.

12. UNUSUAL CHARGES AND EXTRAORDINARY LOSSES

     During 1998, the Company disposed if its pool chemicals business. This
disposal included the sale of certain packaging and transportation equipment for
bottled bleach and hydrochloric acid. Pioneer recognized a $1.8 million loss
from the disposal of assets plus an unusual charge of approximately $1.0 million
related to closing Pioneer's facility at City of Industry, California. Unusual
charges in 1998 also include approximately $0.7 million related to the
consolidation and downsizing of certain administrative functions.

     Unusual charges in 1997 include a $4.3 million charge to reduce the
carrying value of certain assets of Kemwater, based upon management's estimates
of net realizable value. An additional $1.0 million charge was related to the
closure of certain of PAI's plants and the consolidation of their operations to
other locations.

     Substantially all accrued unusual charges were expended by December 31,
1998.

     During the second quarter of 1997, Pioneer recognized an $18.7 million
extraordinary loss as a result of the early extinguishment of its then-existing
13 3/8% First Mortgage Notes. The extraordinary loss consisted primarily of the
20% premium paid on the face value of the notes and the write-off of debt
placement fees related to the notes (net of tax benefit of $12.4 million).

13. INTEREST EXPENSE, NET

     Interest expense, net consisted of the following for the indicated periods:

<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                                          ---------------------------
                                                           1999      1998      1997
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Interest expense........................................  $52,969   $52,006   $30,229
Interest income.........................................   (1,042)   (1,485)   (1,242)
                                                          -------   -------   -------
Interest expense, net...................................  $51,927   $50,521   $28,987
                                                          =======   =======   =======
</TABLE>

     Capitalized interest was $0.3 million in 1999. No interest was capitalized
in 1998 or 1997.

                                       40
<PAGE>   41
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. COMMITMENTS AND CONTINGENCIES

  Letters of Credit

     At December 31, 1999, Pioneer had letters of credit and performance bonds
outstanding of approximately $5.2 million and $3.4 million, respectively. These
letters of credit and performance bonds were issued for the benefit of customers
under sales agreements securing delivery of products sold and state
environmental agencies as required for manufacturers in the state. The letters
of credit expire at various dates in 2000. No amounts were drawn on the letters
of credit at December 31, 1999.

  Purchase Commitments

     Pioneer has various purchase commitments related to its operations. Pioneer
has committed to purchase salt used in its production processes under contracts
which continue through the year 2003 with rates similar to prevailing market
rates. Pioneer also has various commitments related to the purchase of
electricity, which continue through the year 2008 at rates similar to prevailing
market rates. Required purchase quantities of commitments in excess of one year
at December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                                                              SALT-TONS   ELECTRICITY-MWH
                                                              ---------   ---------------
<S>                                                           <C>         <C>
2000.......................................................       894          899,000
2001.......................................................       225          395,000
2002.......................................................       225          122,000
2003.......................................................       225          122,000
2004.......................................................        --          122,000
Thereafter.................................................        --        1,165,000
                                                                -----        ---------
          Total commitment quantities......................     1,569        2,825,000
                                                                =====        =========
</TABLE>

     During the years ended December 31, 1999, 1998, and 1997 all required
purchase quantities under the above commitments were consumed during normal
operations.

  Operating Leases

     Pioneer leases certain manufacturing and distribution facilities, computer
equipment, and administrative offices under non-cancelable leases. Minimum
future rental payments on such leases with terms in excess of one year in effect
at December 31, 1999 are as follows:

<TABLE>
<S>                                                            <C>
2000........................................................    15,269
2001........................................................    12,210
2002........................................................     8,088
2003........................................................     5,062
2004........................................................     2,681
Thereafter..................................................     1,836
                                                               -------
          Total minimum obligations.........................   $45,146
                                                               =======
</TABLE>

     Lease expense charged to operations for the years ended December 31, 1999,
1998, and 1997 was approximately $17.7 million, $19.2 million and $14.7 million,
respectively.

  Litigation

     Pioneer is party to various legal proceedings and potential claims arising
in the ordinary course of its businesses. In the opinion of management, Pioneer
has adequate legal defenses and/or insurance coverage

                                       41
<PAGE>   42
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

with respect to these matters and management does not believe that they will
materially affect Pioneer's operations or financial position.

15. INCOME TAXES

     For financial reporting purposes, deferred income taxes are determined
utilizing an asset and liability approach. This method gives consideration to
the future tax consequences associated with differences between the financial
accounting basis and tax basis of the assets and liabilities, and the ultimate
realization of any deferred tax asset resulting from such differences. Pioneer
considers all foreign earnings as being permanently invested in that country.

     Components of income (loss) before income taxes and extraordinary item and
income taxes are as follows:

<TABLE>
<CAPTION>
                                                          1999       1998      1997
                                                        --------   --------   -------
<S>                                                     <C>        <C>        <C>
Income (loss) before taxes and extraordinary item:
  U.S.................................................  $(55,924)  $(27,267)  $(9,660)
  Foreign.............................................   (20,674)     9,573     3,475
                                                        --------   --------   -------
          Total.......................................  $(76,598)  $(17,694)  $(6,185)
                                                        ========   ========   =======
Current income tax provision:
  U.S.................................................  $     --   $     --   $    --
  Foreign.............................................        --         --       617
  State...............................................        --         --        --
                                                        --------   --------   -------
          Total current...............................        --         --       617
                                                        --------   --------   -------
Deferred income tax provision (benefit):
  U.S.................................................  $(18,010)  $ (8,562)  $(1,614)
  Foreign.............................................    (6,973)     4,375       684
  State...............................................    (1,231)      (490)       24
                                                        --------   --------   -------
          Total deferred..............................   (26,214)    (4,677)     (906)
                                                        --------   --------   -------
          Total income tax............................  $(26,214)  $ (4,677)  $  (289)
                                                        ========   ========   =======
</TABLE>

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
deferred tax liabilities and assets are as follows at December 31:

<TABLE>
<CAPTION>
                                                                 1999       1998
                                                               --------   --------
<S>                                                            <C>        <C>
Deferred tax liabilities:
  Tax versus book basis -- property, plant and equipment....   $(32,987)  $(31,063)
  Other -- net..............................................         --     (1,586)
                                                               --------   --------
          Total deferred tax liabilities....................    (32,987)   (32,649)
                                                               --------   --------
Deferred tax assets:
  Post employment benefits..................................      3,972      7,200
  Environmental reserve.....................................      4,656      3,126
  Equity in partnership.....................................      4,082      4,082
  Alternative minimum tax credit carryover..................      1,956      1,806
</TABLE>

                                       42
<PAGE>   43
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<S>                                                            <C>        <C>
  Allowance for doubtful accounts...........................        890      1,035
  Net operating loss carryforward...........................     61,070     32,893
                                                               --------   --------
          Total deferred tax assets.........................     76,626     50,142
Valuation allowance for deferred tax assets.................         --         --
                                                               --------   --------
          Net deferred tax assets...........................     76,626     50,142
                                                               --------   --------
          Net deferred taxes................................   $ 43,639   $ 17,493
                                                               ========   ========
</TABLE>

     The reconciliation of income tax computed at the U.S. federal statutory tax
rates to income tax expense (benefit) for the periods presented is as follows:

<TABLE>
<CAPTION>
                                        1999                1998                1997
                                 ------------------   -----------------   -----------------
                                  AMOUNT    PERCENT   AMOUNT    PERCENT   AMOUNT    PERCENT
                                 --------   -------   -------   -------   -------   -------
<S>                              <C>        <C>       <C>       <C>       <C>       <C>
Tax at U.S. statutory rates....  $(26,809)    (35)%   $(6,193)    (35)%   $(2,165)    (35)%
State and foreign income taxes,
  net of federal tax benefit...    (1,186)     (1)       (142)     (1)       (119)     (2)
Amortization of non-deductible
  goodwill.....................     1,781       2       1,658       9       2,033      33
Other -- net...................        --      --          --      --         (38)     (1)
                                 --------     ---     -------     ---     -------     ---
                                 $(26,214)    (34)%   $(4,677)    (27)%   $  (289)     (5)%
                                 ========     ===     =======     ===     =======     ===
</TABLE>

     At December 31, 1999, Pioneer had approximately $149 million of available
net operating loss carryforward ("NOL") which expires in 2009 through 2019 and
$18 million of foreign NOL which expires in 2013 and 2014. The NOL is available
for offset against future taxable income generated during the carryforward
period.

16. OTHER LONG-TERM LIABILITIES -- ENVIRONMENTAL

     Pioneer's operations are subject to extensive environmental laws and
regulations related to protection of the environment, including those applicable
to waste management, discharge of materials into the air and water, clean-up
liability from historical waste disposal practices, and employee health and
safety. At several of Pioneer's facilities, investigations or remediation is
underway and at some of these locations regulatory agencies are considering
whether additional actions are necessary to protect or remediate surface or
groundwater resources. Pioneer could be required to incur additional costs to
construct and operate remediation systems in the future. In addition, at several
of its facilities Pioneer is in the process of replacing or closing ponds for
the collection of wastewater. Pioneer plans to spend approximately $3.0 million
during the next three years on improvements to discontinue the use of three
chlor-alkali waste water disposal ponds at the Henderson plant, replacing them
with systems to recycle wastewater. Pioneer believes that it is in substantial
compliance with existing governmental regulations.

     Pioneer's Henderson plant is located within what is known as the "Basic
Complex." Soil and groundwater contamination have been identified within and
adjoining the Basic Complex, including land owned by Pioneer. A groundwater
treatment system was installed at the facility in 1983 and, pursuant to a
Consent Agreement with the Nevada Division of Environmental Protection, studies
are being conducted to further evaluate soil and groundwater contamination at
the facility and other properties within the Basic Complex and to determine
whether additional remediation will be necessary with respect to Pioneer's
property.

     In connection with the October 1988 acquisition of the chlor-alkali
business by PCA's predecessor (the "Predecessor Company"), ICI Delaware
Holdings, Inc. and ICI Americas, Inc. (such companies or their

                                       43
<PAGE>   44
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

successors, the "ZENECA Companies") agreed to indemnify the Predecessor Company
for certain environmental liabilities (the "ZENECA Indemnity"), including
liabilities associated with operations at Pioneer's plant located in Henderson,
Nevada (the "Henderson Plant"). In general, the ZENECA Companies agreed to
indemnify the Predecessor Company for environmental costs which arise from or
relate to pre-acquisition actions which involved disposal, discharge, or release
of materials resulting from non-chlor-alkali manufacturing operations at the
Henderson Plant and at other properties within the same industrial complex.
Payments under the indemnity cannot exceed approximately $65 million.

     Due to the change in ownership resulting from the acquisition of the
Predecessor Company by PCA (the "Pioneer Acquisition"), the ZENECA Indemnity
terminated on April 20, 1999. The ZENECA Indemnity continues to cover those
claims as to which proper notice was given to the ZENECA Companies and certain
other conditions had been satisfied. Management believes that proper notice was
provided to the ZENECA Companies with respect to outstanding claims under the
ZENECA Indemnity, but the amount of such claims has not yet been determined
given the ongoing nature of the environmental work at Henderson. Pioneer
believes that the ZENECA Companies will continue to honor their obligations
under the ZENECA Indemnity for claims properly presented by Pioneer. It is
possible, however, that disputes could arise between the parties and that
Pioneer would have to subject its claims for clean-up expenses, which could be
substantial, to the contractually established arbitration process. In the
opinion of management, any environmental liability in excess of the amount
indemnified and accrued on the consolidated balance sheet would not have a
material adverse affect on the consolidated financial statements.

     In the agreement relating to the Pioneer Acquisition, the sellers agreed to
indemnify Pioneer for certain environmental liabilities that result from certain
discharges of hazardous materials, or violations of environmental laws, arising
prior to April 20, 1995 (the "Closing Date") from or relating to the PCA plant
sites or arising before or after the Closing Date with respect to certain
environmental liabilities relating to assets held by Pioneer for the benefit of
the sellers (the "Sellers' Indemnity"). Amounts payable pursuant to the Sellers'
Indemnity will generally be payable as follows: (i) out of certain reserves
established on the Predecessor Company's balance sheet at December 31, 1994;
(ii) either by offset against the amounts payable under the notes issued to the
sellers or from deposit account balances held by Pioneer (see Note 5); and (iii)
in certain circumstances and subject to specified limitations, out of the
personal assets of the sellers. Subject to certain exceptions and limitations
set forth in the Pioneer Acquisition agreement, a claim notice with respect to
amounts payable pursuant to the Sellers' Indemnity must generally be given
within 15 years of the Closing Date. Pioneer is required to reimburse the
sellers for amounts paid under the Sellers' Indemnity with amounts recovered
under the ZENECA Indemnity or from other third parties.

     Remediation costs are accrued based on estimates of known environmental
remediation exposure. Such accruals are based upon management's best estimate of
the ultimate cost and are recorded even if significant uncertainties exist over
the ultimate cost of the remediation. Ongoing environmental compliance cost,
including maintenance and monitoring costs, are charged to operations as
incurred. The liabilities are based upon all available facts, existing
technology, past experience and cost-sharing arrangements, including the
viability of other parties. Charges made against income for recurring
environmental matters, included in "cost of sales" on the statements of
operations, totaled approximately $2.8 million, $3.4 million and $2.1 million
for the year ended December 31, 1999, 1998, and 1997, respectively. Capital
expenditures for environmental-related matters at existing facilities
approximated $1.2 million, $2.5 million and $4.1 million for the year ended
December 31, 1999, 1998, and 1997, respectively. Future environmental-related
capital expenditures will depend upon regulatory requirements, as well as timing
related to obtaining necessary permits and approvals.

     Estimates of future environmental restoration and remediation costs are
inherently imprecise due to currently unknown factors such as the magnitude of
possible contamination, the timing and extent of such restoration and
remediation, the extent to which such costs are recoverable from third parties,
and the extent to which environmental laws and regulations may change in the
future. The Predecessor Company established

                                       44
<PAGE>   45
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

a reserve at the time of its acquisition of the Henderson, Nevada and St.
Gabriel, Louisiana facilities with respect to potential remediation costs
relating to matters not covered by the ZENECA Indemnity, consisting primarily of
remediation costs that may be incurred by Pioneer for chlor-alkali-related
remediation of the Henderson and St. Gabriel facilities. The recorded accrual
included certain amounts related to anticipated closure and post-closure actions
that may be required in the event that operation of the present chlor-alkali
plants ceases. Such accrual, in the amount of $5.2 million, is recorded in
Pioneer's consolidated balance sheets at December 31, 1999. However, complete
analysis and study has not been completed, and therefore, additional charges may
be recorded in the event a decision for closure is made.

     In 1994, the Predecessor Company recorded an additional $3.2 million
environmental reserve related to pre-closing actions at sites that are the
responsibility of the ZENECA Companies. Such accrual is recorded in Pioneer's
consolidated balance sheets at December 31, 1999 and 1998. Other assets include
an account receivable of the same amount from the ZENECA Companies. Pioneer
believes it will be reimbursed by the ZENECA Companies for substantially all of
such costs that are incurred at the Henderson Plant and other properties within
the same industrial complex. Additionally, certain other environmental matters
exist which have been assumed directly by the ZENECA Companies. No assurance can
be given that actual costs will not exceed accrued amounts. The imposition of
more stringent standards or requirements under environmental laws or
regulations, new developments or changes respecting site cleanup costs, or a
determination that Pioneer is potentially responsible for the release of
hazardous substances at other sites could result in expenditures in excess of
amounts currently estimated by Pioneer to be required for such matters. Further,
there can be no assurance that additional environmental matters will not arise
in the future.

17. RELATED PARTY TRANSACTIONS

     On December 28, 1999, Pioneer sold its 15% partnership interest in Saguaro
Power Company ("Saguaro"), which owns a cogeneration plant located in Henderson,
Nevada. Pioneer's interest in Saguaro was accounted for using the cost method of
accounting. Pioneer sells certain products and services to and purchases steam
from Saguaro at market prices. Transactions with Saguaro were as follows:

<TABLE>
<CAPTION>
                                                              1999     1998     1997
                                                             ------   ------   ------
<S>                                                          <C>      <C>      <C>
Sales to Saguaro...........................................  $  874   $  778   $  856
Purchases from Saguaro.....................................   1,585    1,284    1,352
Partnership cash distribution from Saguaro (included in
  other income)............................................   1,020      975    1,033
</TABLE>

     Accounts receivable from and accounts payable to Saguaro are not
significant to Pioneer's consolidated balance sheet.

     Pioneer is a party to an agreement with BMI for the delivery of Pioneer's
water to the Henderson production facility. The agreement provides for the
delivery of a minimum of eight million gallons of water per day. The agreement
expires on December 31, 2014, unless terminated earlier in accordance with the
provisions of the agreement. In addition, BMI owns the power facilities which
transmit electricity to the Henderson facility. For the year ended December 31,
1999, 1998 and 1997, for its services BMI charged operating expenses to Pioneer
of approximately $1.6 million, $1.3 million and $1.1 million, respectively.

     Interlaken Capital, Inc., an entity controlled by William R. Berkley,
Chairman of the Board of Pioneer, was paid a fee of approximately $1.3 million,
plus reimbursement of reasonable out-of-pocket expenses, for services rendered
in connection with the acquisition of the Tacoma Facility in 1997. The firm was
paid a fee of approximately $2.4 million, plus reimbursement of reasonable
out-of-pocket expenses, for services rendered in connection with the PCI Canada
Acquisition in 1997.

                                       45
<PAGE>   46
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     During 1999, Pioneer entered into agreements with an affiliate of Strategic
Distribution, Inc. ("Strategic") pursuant to which Strategic's affiliate
provides procurement, handling and date management of maintenance, repair and
operating supplies at Pioneer's facilities in Henderson, Nevada and St. Gabriel,
Louisiana. William R. Berkley, Chairman of the Board of Pioneer, owns
approximately twenty-five percent of Strategic's common stock, and serves as a
director of the company. Andrew R. Bursky, a Pioneer director, is a director and
chairman of the board of Strategic, and Jack Nusbaum, a Pioneer director, is
also a director of Strategic. During 1999, the Strategic affiliate was paid a
total of $2.5 million for services rendered to Pioneer under the agreement

18. LOSS PER SHARE

     Per share information for all periods presented reflects 7% stock dividends
on the Class A and Class B Common Stock issued in 1999, 1998 and 1997.
Computational amounts for loss per share are as follows:

<TABLE>
<CAPTION>
                                                          1999       1998      1997
                                                        --------   --------   -------
<S>                                                     <C>        <C>        <C>
Loss before extraordinary item........................  $(50,384)  $(13,017)  $(5,896)
                                                        ========   ========   =======
Basic Earnings Per Share:
  Weighted average number of common shares
     outstanding......................................    11,515     11,458    11,401
                                                        ========   ========   =======
  Loss before extraordinary item per share............  $  (4.38)  $  (1.14)  $ (0.51)
                                                        ========   ========   =======
Diluted Earnings Per Share:
  Weighted average number of common shares
     outstanding......................................    11,515     11,458    11,401
  Effect of dilutive stock options....................        --         --        --
                                                        --------   --------   -------
  Weighted average number of common shares
     outstanding, including dilutive securities.......    11,515     11,458    11,401
                                                        ========   ========   =======
  Loss before extraordinary item per share............  $  (4.38)  $  (1.14)  $ (0.51)
                                                        ========   ========   =======
</TABLE>

19. RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting
and reporting standards for derivative instruments and for hedging activities.
Pioneer is required to adopt the provisions of SFAS No. 133 in the first quarter
of 2001. Management does not believe that adoption of SFAS No. 133 will have a
material effect on Pioneer's financial position or results of operations.

                                       46
<PAGE>   47
                            PIONEER COMPANIES, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                            FIRST      SECOND       THIRD      FOURTH
                                           QUARTER     QUARTER     QUARTER    QUARTER
                                          ---------   ---------   ---------   --------
<S>                                       <C>         <C>         <C>         <C>
Year ended December 31, 1999
  Revenues..............................  $  70,949   $  69,030   $  74,872   $ 81,791
  Operating income (loss)...............      4,768     (14,622)    (12,599)   (16,394)
  Loss before taxes and extraordinary
     item...............................     (8,553)    (27,247)    (23,201)   (17,597)
  Net loss..............................     (6,033)    (18,348)    (14,567)   (11,436)
  Per share data(1) --
     Basic net income (loss)............  $   (0.52)  $   (1.59)  $   (1.26)  $  (0.99)
                                          =========   =========   =========   ========
     Diluted net income (loss)..........  $   (0.52)  $   (1.59)  $   (1.26)  $  (0.99)
                                          =========   =========   =========   ========
Year ended December 31, 1998
  Revenues..............................  $ 101,325   $ 102,939   $ 100,356   $ 80,068
  Operating income (loss)...............     15,265      10,550       7,748     (2,491)
  Income (loss) before taxes and
     extraordinary item.................      5,439      (1,970)     (5,492)   (15,671)
  Net income (loss).....................      2,776        (938)     (4,284)   (10,571)
  Per share data(1) --
     Basic net income (loss)............  $    0.24   $   (0.08)  $   (0.37)  $  (0.93)
                                          =========   =========   =========   ========
     Diluted net income (loss)..........  $    0.21   $   (0.08)  $   (0.37)  $  (0.93)
                                          =========   =========   =========   ========
</TABLE>

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

No cash dividends were declared or paid by the Company in 1999, 1998 or 1997.

(1) Per share information for all periods presented reflects 7% stock dividends
    on the Class A and Class B Common Stock in December 1999 and December 1998.

                                       47
<PAGE>   48

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Pursuant to General Instruction G of Form 10-K, the information called for
by Item 10 of Part III of Form 10-K is incorporated by reference to the
information set forth in Pioneer's definitive proxy statement relating to the
2000 Annual Meeting of Stockholders of Pioneer (the "2000 Proxy Statement") to
be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in response to Items 401 and 405 of Regulation
S-K under the Securities Act of 1933, as amended, and the Exchange Act
("Regulation S-K"), or if the 2000 Proxy Statement is not so filed within 120
days after December 31, 1999, such information will be included in an amendment
to this report filed not later than the end of such period. Reference is also
made to the information appearing in Item 4.a of Part I of this report under the
caption "Executive Officers of the Registrant."

ITEM 11. EXECUTIVE COMPENSATION.

     Pursuant to General Instruction G of Form 10-K, the information called for
by Item 11 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2000 Proxy Statement in response to Item 402 of
Regulation S-K, or if the 2000 Proxy Statement is not so filed within 120 days
after December 31, 1999, such information will be included in an amendment to
this report filed not later than the end of such period.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     Pursuant to General Instruction G of Form 10-K, the information called for
by Item 12 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2000 Proxy Statement in response to Item 403 of
Regulation S-K, or if the 2000 Proxy Statement is not so filed within 120 days
after December 31, 1999, such information will be included in an amendment to
this report filed not later than the end of such period.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Pursuant to General Instruction G of Form 10-K, the information called for
by Item 13 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2000 Proxy Statement in response to Item 404 of
Regulation S-K, or if the 2000 Proxy Statement is not so filed within 120 days
after December 31, 1999, such information will be included in an amendment to
this report filed not later than the end of such period.

                                       48
<PAGE>   49

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a) List of Documents Filed.

          (1) The financial statements filed as part of this report are listed
     in the Index to Financial Statements under Item 8 on page 22 hereof.

          (2) Additional financial information and schedules included pursuant
     to the requirements of Form 10-K are listed in the Index to Financial
     Statements under Item 8 on page 22 hereof.

        (3) Exhibits

     The exhibits indicated by an asterisk (*) are incorporated by reference.
The exhibits indicated by a plus sign (+) each constitute a management contract
or compensatory plan or arrangement required to be filed as an exhibit pursuant
to the requirements of Item 14(c) of Form 10-K.

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
          2.1*           -- Stock Purchase Agreement, dated as of March 24, 1995, by
                            and among the Company, PCA and the Sellers parties
                            thereto (incorporated by reference to Exhibit 2 to the
                            Company's Current Report on Form 8-K filed on May 5,
                            1995).
          2.2*           -- Asset Purchase Agreement, dated as of May 14, 1997, by
                            and between OCC Tacoma, Inc. and the Company
                            (incorporated by reference to Exhibit 2 to Pioneer's
                            Current Report on Form 8-K filed on July 1, 1997).
          2.3(a)*        -- Asset Purchase Agreement, dated as of September 22, 1997,
                            between PCI Chemicals Canada Inc. ("PCICC"), PCI
                            Carolina, Inc. and the Company and ICI Canada Inc., ICI
                            Americas, Inc. and Imperial Chemical Industries plc
                            (incorporated by reference to Exhibit 2 to the Company's
                            Quarterly Report on Form 10-Q for the quarter ended
                            September 30, 1997).
          2.3(b)*        -- First Amendment to Asset Purchase Agreement, dated as of
                            October 31, 1997, between PCICC, PCI Carolina, Inc. and
                            the Company and ICI Canada Inc., ICI Americas, Inc. and
                            Imperial Chemical Industries plc (incorporated by
                            reference to Exhibit 2 to Pioneer's Current Report on
                            Form 8-K filed on November 17, 1997).
          3.1(a)*        -- Third Restated Certificate of Incorporation of the
                            Company filed with Secretary of State of Delaware on May
                            21, 1993 (incorporated by Reference to Exhibit 3.1 to the
                            Company's Annual Report on Form 10-K for the year ended
                            December 31, 1993).
          3.1(b)*        -- First Amendment to Third Restated Certificate of
                            Incorporation of the Company filed with Secretary of
                            State of Delaware on April 20, 1995 (incorporated by
                            reference to Exhibit 3.1(b) to Pioneer's Annual Report on
                            Form 10-K for the year ended December 31, 1995).
          3.1(c)*        -- Second Amendment to Third Restated Certificate of
                            Incorporation of the Company filed with Secretary of
                            State of Delaware on April 27, 1995 (incorporated by
                            reference to Exhibit 3.1(c) to the Company's Annual
                            Report on Form 10-K for the year ended December 31,
                            1995).
          3.2*           -- By-laws of the Company (incorporated by reference to
                            Exhibit 3.2 to the Company's Annual Report on Form 10-K
                            for the year ended December 31, 1998).
          4.1*           -- Certificate of Designations of Series A Preferred Stock
                            of the Company (incorporated by reference to Exhibit 4 to
                            the Company's Current Report on Form 8-K filed on July 1,
                            1997).
</TABLE>

                                       49
<PAGE>   50

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
          4.2*           -- Indenture, dated as of June 17, 1997, by and among PCA,
                            the Subsidiary Guarantors defined therein and United
                            States Trust Company of New York, as Trustee, relating to
                            $200,000,000 principal amount of 9 1/4% Series A Senior
                            Notes due 2007, including form of Note and Guarantees
                            (incorporated by reference to Exhibit 2 to the Company's
                            Current Report on Form 8-K filed on July 1, 1997).
          4.3(a)*        -- Deed of Trust, Assignment of Leases and Rents, Security
                            Agreement, Fixture Filing and Financing Statement by PAI
                            (Tacoma, Washington) (incorporated by reference to
                            Exhibit 4.2(a) to PCA's Registration Statement on Form
                            S-4, as amended (file no. 333-30683)).
          4.3(b)*        -- Mortgage, Assignment of Leases and Rents, Security
                            Agreement, Fixture Filing and Financing Statement by PAI
                            (St. Gabriel, Louisiana) (incorporated by reference to
                            Exhibit 4.2(b) to PCA's Registration Statement on Form
                            S-4, as amended (file no. 333-30683)).
          4.3(c)*        -- Mortgage, Assignment of Leases and Rents, Security
                            Agreement, Fixture Filing and Financing Statement by PAI
                            (Henderson, Nevada) (incorporated by reference to Exhibit
                            4.2(c) to PCA's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.4(a)*        -- Term Loan Agreement, dated as of June 17, 1997, among
                            PAI, various financial institutions as Lenders, DLJ
                            Capital Funding, inc., as the Syndication Agent, Salomon
                            Brothers Holding Company Inc, as the Agent (the "PAI Term
                            Loan Agreement") (incorporated by reference to Exhibit
                            4.3(a) to PCA's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.4(b)*        -- Subsidiary Guaranty, dated June 17, 1997, executed by
                            each of the Subsidiaries party thereto, as guarantor,
                            respectively, in favor of the Lenders, guaranteeing the
                            obligations of one another under the PCA Term Loan
                            Agreement (incorporated by reference to Exhibit 4.3(b) to
                            PCA's Registration Statement on Form S-4, as amended
                            (file no. 333-30683)).
          4.5*           -- Security Agreement, dated as of June 17, 1997, among PAI
                            and United States Trust Company of New York, as
                            Collateral Agent (incorporated by reference to Exhibit
                            4.4 to PCA's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.6*           -- Stock Pledge Agreement, dated as of June 17, 1997, among
                            PCA and United States Trust Company of New York, as
                            Collateral Agent (incorporated by reference to Exhibit
                            4.5 to PAI's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.7*           -- Intercreditor and Collateral Agency Agreement, dated as
                            of June 17, and Collateral Agent, Bank of America
                            Illinois, as Agent, PCA and PAI (incorporated by
                            reference to Exhibit 4.7 to PCA's Registration Statement
                            on Form S-4, as amended (file no. 333-30683)).
          4.8*           -- Indenture, dated as of October 30, 1997, by and among
                            PCICC, the as Trustee, relating to $175,000,000 principal
                            amount of 9 1/4% Series A Senior Notes due 2007,
                            including form of Note and Guarantees (incorporated by
                            reference to Exhibit 4.1 to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
          4.9*           -- Deed of Hypothec, dated as of October 30, 1997, by PCICC
                            in favor of United States Trust Company of New York, as
                            Collateral Agent (incorporated by reference to Exhibit
                            4.2 to PCICC's Registration Statement on Form S-4, as
                            amended (file no. 333-41221)).
</TABLE>

                                       50
<PAGE>   51

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
          4.10*          -- Affiliate Security Agreement, dated as of October 30,
                            1997, among PCICC, Pioneer Licensing, Inc. and United
                            States Trust Company of New York, as Collateral Agent
                            (incorporated by reference to Exhibit 4.3 to PCICC's
                            Registration Statement on Form S-4, as amended (file no.
                            333-41221)).
          4.11*          -- Borrower (Canadian) Security Agreement, dated as of
                            October 30, 1997, between PCICC and United States Trust
                            Company of New York, as Collateral Agent (incorporated by
                            reference to Exhibit 4.4 to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
          4.12(a)*       -- Demand Debenture (Ontario), dated as of October 30, 1997,
                            by PCICC in favor of United States Trust Company of New
                            York, as Collateral Agent (incorporated by reference to
                            Exhibit 4.5(a) to PCICC's Registration Statement on Form
                            S-4, as amended (file no. 333-41221)).
          4.12(b)*       -- Demand Debenture (Quebec), dated as of October 30, 1997,
                            by PCICC in favor of United States Trust Company of New
                            York, as Collateral Agent (incorporated by reference to
                            Exhibit 4.5(b) to PCICC's Registration Statement on Form
                            S-4, as amended (file no. 333-41221)).
          4.12(c)*       -- Demand Debenture (New Brunswick), dated as of October 30,
                            1997, by PCICC in favor of United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.5(c) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.13(a)*       -- Demand Pledge Agreement (Ontario), dated as of October
                            30, 1997, by Collateral Agent (incorporated by reference
                            to Exhibit 4.6(a) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.13(b)*       -- Demand Pledge Agreement (Quebec), dated as of October 30,
                            1997, by PCICC in favor of United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.6(b) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.13(c)*       -- Demand Pledge Agreement (New Brunswick), dated as of
                            October 30, Collateral Agent (incorporated by reference
                            to Exhibit 4.6(c) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.14*          -- Subsidiary Security Agreement, dated as of October 30,
                            1997, by PCICC in favor of United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.7 to PCICC's Registration Statement on Form
                            S-4, as amended (file no. 333-41221)).
          4.15(a)*       -- Term Loan Agreement, dated as of October 30, 1997, among
                            PCA, PAI, various financial institutions, as Lenders, DLJ
                            Capital Funding, Inc., Documentation Agent, Bank of
                            America National Trust and Savings Association, as the
                            Administrative Agent and United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.8(a) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 33-41221)).
          4.15(b)*       -- Affiliate Guaranty, dated as of October 30, 1997, by and
                            among PCICC, the Guarantors identified therein and the
                            Initial Purchasers identified therein (incorporated by
                            reference to Exhibit 4.8(b) to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
</TABLE>

                                       51
<PAGE>   52

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
          4.16*          -- Amended and Restated Loan and Security Agreement by and
                            among Congress Financial Corporation (Southwest) as U.S.
                            Lender, Congress Financial Corporation (Canada) as
                            Canadian Lender, and Congress Financial Corporation
                            (Southwest) as Agent for Lenders and Pioneer Chlor Alkali
                            Company, Inc., All-Pure Chemical Co., Kemwater North
                            America Company, PCI Chemicals Canada Inc./PCI Chimie
                            Canada Inc., PCI Carolina, Inc. and T.C. Products, Inc.,
                            as Borrowers and Pioneer Americas, Inc., Imperial West
                            Chemical Co., Black Mountain Power Company, T.C.
                            Holdings, Inc., Pioneer Licensing, Inc. and Pioneer
                            (East), Inc., as Guarantors dated as of September 24,
                            1999 (incorporated by reference to Exhibit 10 to the
                            Company's Quarterly Report on Form 10-Q for the quarter
                            ended September 30, 1999).
         10.1*           -- Contingent Payment Agreement, dated as of April 20, 1995,
                            by and among the Company, PCA and the Sellers party
                            thereto (incorporated by Reference to Exhibit 10.2 to the
                            Company's Current Report on Form 8-K filed on May 5,
                            1995).
         10.2*           -- Tax Sharing Agreement, dated as of April 20, 1995, by and
                            among the Company, PCA and the Subsidiary Guarantors
                            (incorporated by reference to Exhibit 10.3 to PCA's
                            Registration Statement on Form S-4, as amended (file no.
                            33-98828)).
         10.3*+          -- Pioneer Companies, Inc. 1995 Stock Incentive Plan
                            (incorporated by reference to Exhibit 10.4 to PCA's
                            Registration Statement on Form S-4, as amended (file no.
                            33-98828)).
         10.4*+          -- Employment Agreement, dated April 20, 1995, between the
                            Company and Richard C. Kellogg, Jr. (incorporated by
                            reference to Exhibit 10.1 to the Company's Quarterly
                            Report on Form 10-Q for the quarter ended June 30,1995).
         10.5*+          -- Executive Employment Agreement, dated January 4, 1997,
                            between the Company and Michael J. Ferris (incorporated
                            by reference to Exhibit 10.10 to the Company's Annual
                            Report on Form 10-K for the year ended December 31,
                            1996).
         10.6*+          -- Non-Qualified Stock Option Agreement, dated January 4,
                            1997, between Pioneer and Michael J. Ferris (incorporated
                            by reference to Exhibit 10.15 to the Company's Annual
                            Report on Form 10-K for the year ended December 31,
                            1996).
         10.7*+          -- Non-Qualified Stock Option Agreement, dated May 15, 1997,
                            between the Company and Andrew M. Bursky (incorporated by
                            reference to Exhibit 10.11 to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
         21              -- Subsidiaries of the Company.
         23              -- Independent Auditors' Consent.
         27              -- Financial Data Schedule.
</TABLE>

(b) Reports on Form 8-K.

     The Company did not file any reports on Form 8-K during the quarter ended
December 31, 1998.

(c) Financial Statement Schedule.

     Filed herewith as a financial statement schedule is Schedule II with
respect to Valuation and Qualifying Accounts for Pioneer. All other schedules
have been omitted because they are not applicable, not required or the required
information is included in the financial statements or notes thereto.

                                       52
<PAGE>   53

                                                                     SCHEDULE II
                            PIONEER COMPANIES, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                         BALANCE AT   CHARGED TO                              BALANCE AT
                                         BEGINNING    COSTS AND                                 END OF
DESCRIPTION                              OF PERIOD     EXPENSE     ADDITIONS    DEDUCTIONS      PERIOD
-----------                              ----------   ----------   ---------    ----------    ----------
<S>                                      <C>          <C>          <C>          <C>           <C>
Year Ended December 31, 1999:
  Allowance for doubtful accounts......    $3,122       $  405       $ --         $(788)(A)     $2,739
Year Ended December 31, 1998:
  Allowance for doubtful accounts......     3,602          205         --         $(685)(A)     $3,122
Year Ended December 31, 1997:
  Allowance for doubtful accounts......     1,311        1,887        604(B)       (200)(A)      3,602
</TABLE>

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

(A) Uncollectable accounts written off, net of recoveries.

(B) Allowance balance established in 1997 in connection with the acquisition of
    PCI Canada.

                                       53
<PAGE>   54

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                            By:    /s/ MICHAEL J. FERRIS
                                              ----------------------------------
                                                      Michael J. Ferris
                                                President and Chief Executive
                                                            Officer

March 23, 2000

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                     DATE
                      ---------                                    -----                     ----
<C>                                                    <S>                              <C>

                /s/ MICHAEL J. FERRIS                  President and Chief Executive    March 23, 2000
-----------------------------------------------------    Officer and Director
                 (Michael J. Ferris)

                /s/ PHILIP J. ABLOVE                   Executive Vice President and     March 23, 2000
-----------------------------------------------------    Chief Financial Officer and
                 (Philip J. Ablove)                      Director (Principal
                                                         Financial Officer)

                 /s/ JOHN R. BEAVER                    Vice President, Controller       March 23, 2000
-----------------------------------------------------    (Principal Accounting
                  (John R. Beaver)                       Officer)

               /s/ WILLIAM R. BERKLEY                  Chairman of the Board            March 23, 2000
-----------------------------------------------------
                (William R. Berkley)

                /s/ ANDREW M. BURSKY                   Director                         March 23, 2000
-----------------------------------------------------
                 (Andrew M. Bursky)

                /s/ DONALD J. DONAHUE                  Director                         March 23, 2000
-----------------------------------------------------
                 (Donald J. Donahue)

             /s/ RICHARD C. KELLOGG, JR                Director                         March 23, 2000
-----------------------------------------------------
              (Richard C. Kellogg, Jr.)

                 /s/ JOHN R. KENNEDY                   Director                         March 23, 2000
-----------------------------------------------------
                  (John R. Kennedy)

                 /s/ JACK H. NUSBAUM                   Director                         March 23, 2000
-----------------------------------------------------
                  (Jack H. Nusbaum)

              /s/ THOMAS H. SCHNITZIUS                 Director                         March 23, 2000
-----------------------------------------------------
               (Thomas H. Schnitzius)
</TABLE>

                                       54
<PAGE>   55

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
          2.1*           -- Stock Purchase Agreement, dated as of March 24, 1995, by
                            and among the Company, PCA and the Sellers parties
                            thereto (incorporated by reference to Exhibit 2 to the
                            Company's Current Report on Form 8-K filed on May 5,
                            1995).
          2.2*           -- Asset Purchase Agreement, dated as of May 14, 1997, by
                            and between OCC Tacoma, Inc. and the Company
                            (incorporated by reference to Exhibit 2 to Pioneer's
                            Current Report on Form 8-K filed on July 1, 1997).
          2.3(a)*        -- Asset Purchase Agreement, dated as of September 22, 1997,
                            between PCI Chemicals Canada Inc. ("PCICC"), PCI
                            Carolina, Inc. and the Company and ICI Canada Inc., ICI
                            Americas, Inc. and Imperial Chemical Industries plc
                            (incorporated by reference to Exhibit 2 to the Company's
                            Quarterly Report on Form 10-Q for the quarter ended
                            September 30, 1997).
          2.3(b)*        -- First Amendment to Asset Purchase Agreement, dated as of
                            October 31, 1997, between PCICC, PCI Carolina, Inc. and
                            the Company and ICI Canada Inc., ICI Americas, Inc. and
                            Imperial Chemical Industries plc (incorporated by
                            reference to Exhibit 2 to Pioneer's Current Report on
                            Form 8-K filed on November 17, 1997).
          3.1(a)*        -- Third Restated Certificate of Incorporation of the
                            Company filed with Secretary of State of Delaware on May
                            21, 1993 (incorporated by Reference to Exhibit 3.1 to the
                            Company's Annual Report on Form 10-K for the year ended
                            December 31, 1993).
          3.1(b)*        -- First Amendment to Third Restated Certificate of
                            Incorporation of the Company filed with Secretary of
                            State of Delaware on April 20, 1995 (incorporated by
                            reference to Exhibit 3.1(b) to Pioneer's Annual Report on
                            Form 10-K for the year ended December 31, 1995).
          3.1(c)*        -- Second Amendment to Third Restated Certificate of
                            Incorporation of the Company filed with Secretary of
                            State of Delaware on April 27, 1995 (incorporated by
                            reference to Exhibit 3.1(c) to the Company's Annual
                            Report on Form 10-K for the year ended December 31,
                            1995).
          3.2*           -- By-laws of the Company (incorporated by reference to
                            Exhibit 3.2 to the Company's Annual Report on Form 10-K
                            for the year ended December 31, 1998).
          4.1*           -- Certificate of Designations of Series A Preferred Stock
                            of the Company (incorporated by reference to Exhibit 4 to
                            the Company's Current Report on Form 8-K filed on July 1,
                            1997).
          4.2*           -- Indenture, dated as of June 17, 1997, by and among PCA,
                            the Subsidiary Guarantors defined therein and United
                            States Trust Company of New York, as Trustee, relating to
                            $200,000,000 principal amount of 9 1/4% Series A Senior
                            Notes due 2007, including form of Note and Guarantees
                            (incorporated by reference to Exhibit 2 to the Company's
                            Current Report on Form 8-K filed on July 1, 1997).
          4.3(a)*        -- Deed of Trust, Assignment of Leases and Rents, Security
                            Agreement, Fixture Filing and Financing Statement by PAI
                            (Tacoma, Washington) (incorporated by reference to
                            Exhibit 4.2(a) to PCA's Registration Statement on Form
                            S-4, as amended (file no. 333-30683)).
          4.3(b)*        -- Mortgage, Assignment of Leases and Rents, Security
                            Agreement, Fixture Filing and Financing Statement by PAI
                            (St. Gabriel, Louisiana) (incorporated by reference to
                            Exhibit 4.2(b) to PCA's Registration Statement on Form
                            S-4, as amended (file no. 333-30683)).
</TABLE>
<PAGE>   56

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
          4.3(c)*        -- Mortgage, Assignment of Leases and Rents, Security
                            Agreement, Fixture Filing and Financing Statement by PAI
                            (Henderson, Nevada) (incorporated by reference to Exhibit
                            4.2(c) to PCA's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.4(a)*        -- Term Loan Agreement, dated as of June 17, 1997, among
                            PAI, various financial institutions as Lenders, DLJ
                            Capital Funding, inc., as the Syndication Agent, Salomon
                            Brothers Holding Company Inc, as the Agent (the "PAI Term
                            Loan Agreement") (incorporated by reference to Exhibit
                            4.3(a) to PCA's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.4(b)*        -- Subsidiary Guaranty, dated June 17, 1997, executed by
                            each of the Subsidiaries party thereto, as guarantor,
                            respectively, in favor of the Lenders, guaranteeing the
                            obligations of one another under the PCA Term Loan
                            Agreement (incorporated by reference to Exhibit 4.3(b) to
                            PCA's Registration Statement on Form S-4, as amended
                            (file no. 333-30683)).
          4.5*           -- Security Agreement, dated as of June 17, 1997, among PAI
                            and United States Trust Company of New York, as
                            Collateral Agent (incorporated by reference to Exhibit
                            4.4 to PCA's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.6*           -- Stock Pledge Agreement, dated as of June 17, 1997, among
                            PCA and United States Trust Company of New York, as
                            Collateral Agent (incorporated by reference to Exhibit
                            4.5 to PAI's Registration Statement on Form S-4, as
                            amended (file no. 333-30683)).
          4.7*           -- Intercreditor and Collateral Agency Agreement, dated as
                            of June 17, and Collateral Agent, Bank of America
                            Illinois, as Agent, PCA and PAI (incorporated by
                            reference to Exhibit 4.7 to PCA's Registration Statement
                            on Form S-4, as amended (file no. 333-30683)).
          4.8*           -- Indenture, dated as of October 30, 1997, by and among
                            PCICC, the as Trustee, relating to $175,000,000 principal
                            amount of 9 1/4% Series A Senior Notes due 2007,
                            including form of Note and Guarantees (incorporated by
                            reference to Exhibit 4.1 to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
          4.9*           -- Deed of Hypothec, dated as of October 30, 1997, by PCICC
                            in favor of United States Trust Company of New York, as
                            Collateral Agent (incorporated by reference to Exhibit
                            4.2 to PCICC's Registration Statement on Form S-4, as
                            amended (file no. 333-41221)).
          4.10*          -- Affiliate Security Agreement, dated as of October 30,
                            1997, among PCICC, Pioneer Licensing, Inc. and United
                            States Trust Company of New York, as Collateral Agent
                            (incorporated by reference to Exhibit 4.3 to PCICC's
                            Registration Statement on Form S-4, as amended (file no.
                            333-41221)).
          4.11*          -- Borrower (Canadian) Security Agreement, dated as of
                            October 30, 1997, between PCICC and United States Trust
                            Company of New York, as Collateral Agent (incorporated by
                            reference to Exhibit 4.4 to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
          4.12(a)*       -- Demand Debenture (Ontario), dated as of October 30, 1997,
                            by PCICC in favor of United States Trust Company of New
                            York, as Collateral Agent (incorporated by reference to
                            Exhibit 4.5(a) to PCICC's Registration Statement on Form
                            S-4, as amended (file no. 333-41221)).
</TABLE>
<PAGE>   57

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
          4.12(b)*       -- Demand Debenture (Quebec), dated as of October 30, 1997,
                            by PCICC in favor of United States Trust Company of New
                            York, as Collateral Agent (incorporated by reference to
                            Exhibit 4.5(b) to PCICC's Registration Statement on Form
                            S-4, as amended (file no. 333-41221)).
          4.12(c)*       -- Demand Debenture (New Brunswick), dated as of October 30,
                            1997, by PCICC in favor of United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.5(c) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.13(a)*       -- Demand Pledge Agreement (Ontario), dated as of October
                            30, 1997, by Collateral Agent (incorporated by reference
                            to Exhibit 4.6(a) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.13(b)*       -- Demand Pledge Agreement (Quebec), dated as of October 30,
                            1997, by PCICC in favor of United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.6(b) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.13(c)*       -- Demand Pledge Agreement (New Brunswick), dated as of
                            October 30, Collateral Agent (incorporated by reference
                            to Exhibit 4.6(c) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 333-41221)).
          4.14*          -- Subsidiary Security Agreement, dated as of October 30,
                            1997, by PCICC in favor of United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.7 to PCICC's Registration Statement on Form
                            S-4, as amended (file no. 333-41221)).
          4.15(a)*       -- Term Loan Agreement, dated as of October 30, 1997, among
                            PCA, PAI, various financial institutions, as Lenders, DLJ
                            Capital Funding, Inc., Documentation Agent, Bank of
                            America National Trust and Savings Association, as the
                            Administrative Agent and United States Trust Company of
                            New York, as Collateral Agent (incorporated by reference
                            to Exhibit 4.8(a) to PCICC's Registration Statement on
                            Form S-4, as amended (file no. 33-41221)).
          4.15(b)*       -- Affiliate Guaranty, dated as of October 30, 1997, by and
                            among PCICC, the Guarantors identified therein and the
                            Initial Purchasers identified therein (incorporated by
                            reference to Exhibit 4.8(b) to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
          4.16*          -- Amended and Restated Loan and Security Agreement by and
                            among Congress Financial Corporation (Southwest) as U.S.
                            Lender, Congress Financial Corporation (Canada) as
                            Canadian Lender, and Congress Financial Corporation
                            (Southwest) as Agent for Lenders and Pioneer Chlor Alkali
                            Company, Inc., All-Pure Chemical Co., Kemwater North
                            America Company, PCI Chemicals Canada Inc./PCI Chimie
                            Canada Inc., PCI Carolina, Inc. and T.C. Products, Inc.,
                            as Borrowers and Pioneer Americas, Inc., Imperial West
                            Chemical Co., Black Mountain Power Company, T.C.
                            Holdings, Inc., Pioneer Licensing, Inc. and Pioneer
                            (East), Inc., as Guarantors dated as of September 24,
                            1999 (incorporated by reference to Exhibit 10 to the
                            Company's Quarterly Report on Form 10-Q for the quarter
                            ended September 30, 1999).
         10.1*           -- Contingent Payment Agreement, dated as of April 20, 1995,
                            by and among the Company, PCA and the Sellers party
                            thereto (incorporated by Reference to Exhibit 10.2 to the
                            Company's Current Report on Form 8-K filed on May 5,
                            1995).
</TABLE>
<PAGE>   58

<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                            DESCRIPTION OF EXHIBITS
        -------                            -----------------------
<C>                      <S>
         10.2*           -- Tax Sharing Agreement, dated as of April 20, 1995, by and
                            among the Company, PCA and the Subsidiary Guarantors
                            (incorporated by reference to Exhibit 10.3 to PCA's
                            Registration Statement on Form S-4, as amended (file no.
                            33-98828)).
         10.3*+          -- Pioneer Companies, Inc. 1995 Stock Incentive Plan
                            (incorporated by reference to Exhibit 10.4 to PCA's
                            Registration Statement on Form S-4, as amended (file no.
                            33-98828)).
         10.4*+          -- Employment Agreement, dated April 20, 1995, between the
                            Company and Richard C. Kellogg, Jr. (incorporated by
                            reference to Exhibit 10.1 to the Company's Quarterly
                            Report on Form 10-Q for the quarter ended June 30,1995).
         10.5*+          -- Executive Employment Agreement, dated January 4, 1997,
                            between the Company and Michael J. Ferris (incorporated
                            by reference to Exhibit 10.10 to the Company's Annual
                            Report on Form 10-K for the year ended December 31,
                            1996).
         10.6*+          -- Non-Qualified Stock Option Agreement, dated January 4,
                            1997, between Pioneer and Michael J. Ferris (incorporated
                            by reference to Exhibit 10.15 to the Company's Annual
                            Report on Form 10-K for the year ended December 31,
                            1996).
         10.7*+          -- Non-Qualified Stock Option Agreement, dated May 15, 1997,
                            between the Company and Andrew M. Bursky (incorporated by
                            reference to Exhibit 10.11 to PCICC's Registration
                            Statement on Form S-4, as amended (file no. 333-41221)).
         21              -- Subsidiaries of the Company.
         23              -- Independent Auditors' Consent.
         27              -- Financial Data Schedule.
</TABLE>