<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                    FORM 10-K

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                     FOR FISCAL YEAR ENDED DECEMBER 31, 2002

                        COMMISSION FILE NUMBER: 333-10611

                               UNIFRAX CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                                       34-1535916
(STATE OR OTHER JURISDICTION                (I.R.S. EMPLOYER IDENTIFICATION NO.)
       OF INCORPORATION)

                    2351 WHIRLPOOL STREET, NIAGARA FALLS, NY
                                   14305-2413
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)
                    REGISTRANT'S TELEPHONE NUMBER, INCLUDING
                            AREA CODE: (716) 278-3800

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

                    SECURITIES REGISTERED PURSUANT TO SECTION
                             12(g) OF THE ACT: NONE

                    SECURITIES REGISTERED PURSUANT TO SECTION
                             12(b) OF THE ACT: NONE

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES |X| NO | |

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of the 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|

      Aggregate market value of voting and non-voting common equity held by
non-affiliates of the registrant: None

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). YES | | NO |X|

DOCUMENTS INCORPORATED BY REFERENCE: NONE.

<PAGE>

                                     PART I

ITEM 1. BUSINESS

      Unifrax Corporation ("Unifrax" or "Company") manufactures heat resistant
ceramic fiber products for automotive, commercial, and industrial customers
throughout the world. Developed by the Company in 1942, ceramic fiber is a
white, glassy material belonging to a class of materials known as man-made
vitreous fibers (a class which also includes fiberglass and mineral wool).
Ceramic fiber possesses several commercially attractive performance properties
including stability at very high temperatures, extremely low heat transmission
and retention, light weight compared to other heat-resistant materials, chemical
stability and corrosion resistance. These properties make ceramic fiber a
superior insulating material in high temperature applications.

      Ceramic fiber's most common application has been to line industrial
furnaces, where high temperatures demand its heat-resistant characteristics.
Historically, the industrial furnace-related market has represented the largest
percentage of the Company's sales. Increasingly, the Company has applied its
expertise to more rapidly-growing, high value-added markets, including
automotive and fire protection.

      On October 4, 2000, the Company acquired the capital stock of certain
companies and certain assets of other companies that comprised the high
performance insulating ceramic fibers business (the "Ceramic Fiber Business") of
Compagnie de Saint-Gobain ("Saint-Gobain"), a societe anonyme based in Paris,
France (the "Acquisition"). The Ceramic Fiber Business was contained in legal
entities which were owned ultimately by Saint-Gobain in France, the United
Kingdom, Brazil, Germany, Australia, Venezuela, India, Belgium and Italy.

MARKETS

      Furnace-Related Markets. Ceramic fiber for furnace-related applications is
generally sold to the metal production, petrochemical, and ceramic and glass
industries.

      Automotive Market. Three product types account for substantially all of
the fiber consumed by the automotive industry: paper, catalytic converter gasket
material, and heat shield materials.

      Other Markets. Ceramic fiber is being used in several newer applications
in markets such as fire protection, power generation, appliances, and commercial
insulation. In these industries, products are often customized to meet special
customer needs.

MANUFACTURING AND OPERATIONS

      Ceramic fiber is produced by melting a combination of alumina, silica, and
other additives in either a submerged electrode furnace (SEF) or in an electric
arc furnace. The molten mixture is made into fiber either by blowing an air
stream on the molten material flowing from the furnace (blowing process) or by
directing the molten material onto a series of spinning wheels (spinning
process). The blowing and spinning processes produce fiber with different
characteristics, dimensions, and process yields.

      The Company also employs advanced manufacturing processes associated with
the "wet" manufacture of papers and felts, boards, and other products. These
processes use bulk ceramic fiber as a feedstock in combination with binders or
other liquids.

      The Company's operations in Tonawanda, New York are certified under the
International Quality Standard, ISO 9000, and the rigorous U.S. automotive
standard, QS 9000. The Company's operations in New Carlisle, Indiana and in
Amherst, New York are certified under ISO 9000, as are the Company's operations
in Brazil.


                                                                               2
<PAGE>

      The Company's operations in Australia, France, India, and the U.K. are
certified under ISO9002 and the Company's operations in Germany are certified
under TS16949.

RAW MATERIALS

      Although the Company purchases some of its raw materials from sole
suppliers, substitute materials are available from other suppliers on similar
terms. Supplier changes would require some level of product and process
qualification, but there are no technical barriers identified. The exception is
vermiculite, a mineral which is an important raw material in the manufacture of
XPE(TM) which is used in automotive catalytic converter gaskets. The Company
currently purchases the majority of its requirements of vermiculite from an
overseas source and the balance from a U.S. supplier. Because vermiculite from
the overseas source has superior performance qualities, the Company believes
that over the next two to three years, both it and its competitors will continue
to rely on the overseas source.

RESEARCH AND DEVELOPMENT

      The research and development group, located at the Company's headquarters,
operates in a 9,500 square foot laboratory, including facilities for pilot plant
development and traditional research and development activities. Some limited
additional research and development expenditure is incurred in the Company's
overseas operations.

      The Company has maintained a strong financial commitment to its research
and development program. Research and development expense totaled $2,905,000,
$4,094,000 and $3,022,000, or approximately 2.6%, 2.6% and 2.0% of net sales
during the years 2000, 2001 and 2002, respectively.

COMPETITION

      The ceramic fiber industry is highly competitive, and some of the
Company's competitors are larger and have greater resources than the Company. In
the furnace-related markets, competition is based primarily on product quality,
price, and service. In the new higher growth markets, competition is based
primarily on product technology, technical specifications, manufacturing process
capabilities, quality assurance and price.

      The Company has significant competitors in its markets, some of which
manufacture ceramic fiber while others purchase ceramic fiber and then reprocess
it into products which compete with the Company's products. In the
furnace-related markets, the Company's major competitors are the Thermal
Ceramics business unit of Morgan Crucible, the Vesuvius USA Corporation, a
business unit of Cookson Group plc., and the A.P. Green business unit of RHI AG.
In the automotive market, the Company's significant competitors include Thermal
Ceramics, Minnesota Mining & Manufacturing Company ("3M") and Lydall. Both
Lydall and 3M are reprocessors of ceramic fiber.

      The Company's significant competitors in its other markets include Lydall
and Thermal Ceramics. In some instances, ceramic fiber competes with a limited
number of non-ceramic fiber products such as hard brick refractories and mineral
wool.

CYCLICALITY AND SEASONALITY

      The Company's products are generally used in industries subject to supply
and demand cycles which reflect general economic activity. In the
furnace-related market, supply and demand cycles reflect the timing of new
capacity additions and repair and maintenance of existing furnaces. In the
Automotive markets, demand reflects the increasing use of catalytic converters
and their advancing technology worldwide.


                                                                               3
<PAGE>

BACKLOG

      The Company does not consider its backlog significant because it fills
most of its orders within one month and substantially all of its orders within
three months.

PRODUCT AND HEALTH SAFETY ISSUES

      Manufacturers of man-made vitreous fibers ("MMVF") such as fiberglass,
mineral wool and ceramic fiber have investigated the potential for adverse
health effects associated with the inhalation of airborne fiber. Independent
animal studies have indicated that ceramic fiber inhaled by test animals, in
large quantities during the course of their lifetimes, can cause fibrosis, lung
cancer and mesothelioma, a malignant tumor of the lining of the lungs and chest
cavity. Company and industry-sponsored studies of workers with occupational
exposure to airborne ceramic fiber, however, to date have found no statistically
significant relationship between ceramic fiber exposure and respiratory disease
in humans.

      The Company has established organization and management systems for the
purpose of ensuring that health and safety matters are properly identified,
evaluated and addressed throughout the Company's operations. The Company
utilizes the knowledge, skills and expertise of a number of external
consultants, including an independent advisory board. Comprised of an
internationally recognized group of experts in the fields of medicine, pulmonary
science, veterinary pathology, toxicology and legislative, regulatory and legal
affairs, the Ceramic Fiber Advisory Board ("CFAB") provides advice to the
Company regarding proper handling practices for ceramic fiber and other related
product management issues.

      The Company developed and implemented a comprehensive Product Stewardship
Program ("PSP") as one of its management systems. A key element of the PSP is
research focused on identifying and evaluating the potential health effects
associated with the inhalation of respirable fibers. These studies have taken
two forms: human studies, known as epidemiological investigations, and
toxicological research, which is generally conducted with test animals. Many of
these research activities have been conducted with the participation of other
members of the ceramic fiber industry.

      The Company's PSP also includes elements designed to identify exposed
populations, monitor employee and customer exposures and pursue exposure
reductions. Initial assessments in the United States indicate that most ceramic
fiber exposure is confined to the workplace and to a limited population of about
30,000 persons. In the United States, employee and customer exposure monitoring
has been conducted by the Company under a rigorous protocol, jointly adopted
pursuant to a voluntary consent agreement by the U.S. Environmental Protection
Agency ("EPA") and the Refractory Ceramic Fiber Coalition ("RCFC"), the ceramic
fiber industry trade association. Under the terms of this agreement, industry
and customer workplace monitoring samples were taken for a period of five years
concluding in mid-1998. The EPA elected to take no immediate action.

      As part of the industry's ongoing effort to prudently manage the
refractory ceramic fiber ("RCF") exposures, on February 11, 2002 the RCFC (of
which Unifrax is a member) initiated and signed a voluntary worker protection
program with the U.S. Federal Occupational Safety and Health Administration
(OSHA). This program, entitled PSP 2002, was developed to assist those workers
who use RCF containing products with management of potential health risks
associated with inhalation of respirable fiber.

      In the absence of a specific U.S. government standard regulating ceramic
fiber exposure, several participants in the industry, including the Company,
based on prudence and not significant risk, adopted a recommended exposure
guideline ("REG") of one half fiber per cubic centimeter of air. Scientific data
available to date has been regarded as insufficient for the purpose of
determining a specific broadly-acceptable, science-based RCF exposure threshold.
Nonetheless, the industry's recommended exposure guideline provides a
quantitative


                                                                               4
<PAGE>

basis to measure progress in implementing PSP objectives to seek continuous
reduction in fiber exposure through initiatives that are technically and
economically feasible.

      Over time, health research data have been used by various organizations to
classify certain man-made fibers. For example, classification terms, such as
"possible" (International Agency for Research on Cancer, "IARC"), "probable"
(EPA and Health Canada, "HC"), "reasonably anticipated" (National Toxicology
Program, "NTP"), and "suspected" (American Conference of Governmental Industrial
Hygienists, "ACGIH") reflect the view of each organization as to the potential
carcinogenicity of ceramic fiber and/or other MMVFs. Each of these
classifications reflect concern for human health and uncertainty regarding the
potential for airborne ceramic fiber to affect occupational health adversely.
These classification determinations have not been followed by regulatory
exposure standards in the U.S.

      Some regulators in other countries have adopted a variety of regulatory
thresholds. Member States of the European Union have classified ceramic fiber as
"Category 2: Substances which should be regarded as if they are carcinogenic to
man" on the basis of animal studies, although refractory ceramic fiber exposure
has not been associated with any respiratory disease in humans. If the United
States, United Kingdom, France, Brazil or other major industrialized countries
were to adopt legislative or regulatory standards severely restricting the use
of ceramic fiber or severely limiting fiber exposure, a material adverse effect
on the Company's business could result.

ENVIRONMENTAL REGULATION

      The Company's operations and properties are subject to a wide variety of
foreign, federal, state and local laws and regulations, including those
governing the use, storage, handling, generation, treatment, emission, release,
discharge and disposal of certain materials, substances and wastes, the
remediation of contamination in the environment, and the health and safety of
employees and other persons. As such, the nature of the Company's operations
exposes it to the risk of claims with respect to environmental protection and
health and safety matters, and there can be no assurance that material costs or
liabilities will not be incurred in connection with such claims. To the
information included in Note 13 to the consolidated financial statements under
Item 8 is incorporated herein by reference.

PATENTS AND TRADEMARKS

      Although the Company obtains patent protection for certain product
innovations, the Company believes that its success depends more heavily on the
technical expertise and innovative abilities of its personnel than on its patent
protection. The Company believes its trademarks are important in order to
develop and support brand image and to differentiate itself from competitors.

EMPLOYEES

      As of December 31, 2002, the Company employed approximately 1,044
employees, of which approximately 358 are represented by ten separate unions
(called work councils outside the United States). A collective bargaining
agreement in the United States, representing 21% of the Company's U.S.
employees, expires in 2004. Outside the U.S., labor agreements are either
state-mandated or Company negotiated with various expiration dates.


                                                                               5
<PAGE>

SEGMENT AND GEOGRAPHIC INFORMATION

      Reference is made to the information contained in Note 16 to the
consolidated financial statements included under Item 8 of this Form 10-K, which
is hereby incorporated herein by reference.

ITEM 2. PROPERTIES

The following table provides a description of the Company's principal
facilities.

<TABLE>
<CAPTION>
                                           APPROXIMATE
PLANT SITE                                 SQUARE FEET        STATUS             USE
----------                                 -----------        ------             ---
<S>                                        <C>                <C>                <C>
New Carlisle, IN                             275,000          Owned              Manufacturing
Tonawanda, NY                                186,000          Leased             Manufacturing
Amherst, NY                                   42,000          Leased             Manufacturing
Sanborn, NY                                   10,000          Leased             Manufacturing
Niagara Falls, NY                             33,000          Owned              Headquarters, research laboratory
Vinhedo, S.P., Brazil                         74,000          Owned              Manufacturing
Vinhedo, S.P., Brazil                         17,000          Leased             Warehousing
Dusseldorf, Germany                           49,000          Owned              Processing, distribution
Valencia, Venezuela                           12,000          Leased             Manufacturing
Lomas de Zamora, B.A., Argentina              11,000          Leased             Distribution
Thomastown, Australia                         75,000          Owned              Manufacturing
Lorette, France                               87,000          Owned              Manufacturing
Ambert, France                                54,000          Owned              Manufacturing
Rainford, England                            130,000          Owned              Manufacturing
Lakhtar, India                                37,000          Owned              Manufacturing
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

      Reference is made to the information included in Note 13 to the
consolidated financial statements of the Company included under Item 8 in this
Form 10-K, which is hereby incorporated herein by reference.

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

      None.


                                                                               6
<PAGE>

                                     PART II

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

      There is no established public trading market for the Company's stock.
There are three holders of the Company's common stock.

      On October 4, 2000, the Company and its subsidiaries acquired the
insulating ceramic fiber business owned by Compagnie de Saint-Gobain
("Saint-Gobain"). Under the terms of the negotiated transaction, the Company
issued $9,500,000 of subordinated notes to Societe Europeenne des Produits
Refractaires ("SEPR"), a wholly owned subsidiary of Saint-Gobain, and the
Company issued $20,500,000 of its Series A preferred stock to its parent holding
company, Unifrax Holding Co., which then pledged the preferred stock to
Saint-Gobain as security for subordinated notes issued by the holding company.
The securities issued by the Company in the transaction were exempt from
registration under the Securities Act of 1933 by the exemption provided by
Section 4(2) of the act.

      One June 11, 2001, the Company repaid, as required, $1,500,000 of the
$9,500,000 subordinated notes to SEPR, thereby reducing those subordinated notes
to $8,000,000.

      On October 4, 2001 the Company increased its subordinated promissory note
to SEPR from $8,000,000 to $12,000,000. The securities issued by the Company in
the transaction were exempt from registration under the Securities Act of 1933
by the exemption provided by Section 4(2) of the act. On the same date, the
subordinated notes issued by the Company's parent holding company, Unifrax
Holding Co., to SEPR were reduced by $4,000,000, from $20,500,000 to
$16,500,000. The liquidation preference value of the Series A preferred stock
issued by Unifrax Corporation to Unifrax Holding Co. and pledged to Saint-Gobain
as security for the subordinated notes, was also reduced by $4,000,000.

      On October 4, 2002, the Company increased its subordinated promissory note
to SEPR from $12,000,000 to $16,000,000. The securities issued by the Company in
the transaction were exempt from registration under the Securities Act of 1933
by the exemption provided by Section 4(2) of the act. On the same date, the
subordinated notes issued by the Company's parent holding company, Unifrax
Holding Co., to SEPR were reduced by $4,000,000 from $16,500,000 to $12,500,000.
The liquidation preference value of the Series A preferred stock issued by
Unifrax Corporation to Unifrax Holding Co. and pledged to Saint-Gobain as
security for the subordinated notes was also reduced by $4,000,000.

      On January 20, 2001, the Company declared and paid a dividend on its
redeemable cumulative Series A preferred stock of $22.822 per share on 20,500
shares, for a total of $467,849. On December 18, 2001, the Company declared a
dividend on its redeemable cumulative Series A preferred stock of $66.572 per
share on 20,500 shares, for a total of $1,364,733. Unifrax Holding Co. then used
the proceeds of their dividend from Unifrax Corporation to pay the interest due
to SEPR on the outstanding subordinated notes. On December 17, 2002, the Company
declared a dividend on its redeemable cumulative Series A preferred stock of
$63.784 per share on 20,500 shares, for a total of $1,307,575. This dividend was
paid on February 26, 2003.

      During the second quarter of 2002, options to purchase 32 shares of the
Company's Common Stock at $1,500 per share were exercised. Subsequently,
approximately 7 of these shares were redeemed by the Company. This resulted in
an increase of additional paid-in capital of approximately $46,000, including
related income tax benefits of approximately $22,000. The securities issued by
the Company in the transaction were exempt from registration under the
Securities Act of 1933 by the exemption provided by Section 4(2) of the act.



                                                                               7
<PAGE>

         The Company did not pay dividends on its common stock during 2000, 2001
or 2002 and does not currently intend to pay dividends on its common stock in
the foreseeable future. Future decisions as to the payment of dividends will be
at the discretion of the Company's Board of Directors, subject to applicable
law. The Company's ability to pay dividends on its common stock is also subject
to the covenants contained in its Credit Agreement and the Indenture for the
Company's 10.5% Senior Notes. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."

                      EQUITY COMPENSATION PLAN INFORMATION

         The following table shows information as of December 31, 2002
concerning compensation plans (including individual compensation arrangements)
under which equity securities of the Company are authorized to be issued.

<TABLE>
<CAPTION>
                                   NUMBER OF SECURITIES TO BE                                        NUMBER OF SECURITIES
                                     ISSUED UPON EXERCISE OF       WEIGHTED AVERAGE EXERCISE        REMAINING AVAILABLE FOR
                                      OUTSTANDING OPTIONS,       PRICE OF OUTSTANDING OPTIONS,          FUTURE ISSUANCE
         PLAN CATEGORY                 WARRANTS AND RIGHTS            WARRANTS AND RIGHTS             UNDER EQUITY PLANS
-------------------------------    ---------------------------   -----------------------------      -----------------------
<S>                                <C>                           <C>                                <C>
Equity compensation plans
approved by security holders                  2,293                          $2,875                           35

Equity compensation plans not
approved by security holders                     -0-                            n/a                           -0-

Total                                         2,293                          $2,875                           35
</TABLE>

ITEM 6. SELECTED FINANCIAL DATA

      The following table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
with the Company's consolidated financial statements and related notes in Item 8
of this Form 10-K.

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31
                                                   1998            1999            2000            2001            2002
                                              ---------       ---------       ---------       ---------       ---------
<S>                                           <C>             <C>             <C>             <C>             <C>
STATEMENT OF INCOME DATA:
Net Sales                                     $  85,499       $  85,089       $ 111,982       $ 158,439       $ 153,959
Income before interest, income taxes and
     minority interest                           18,338          19,101          23,082          25,511          25,774
Interest expense                                 11,988          11,335          11,692          12,626          12,221
Provision for income taxes                        2,305           2,792           4,241          (2,264)          4,393
Minority interest                                    --              --              52             187             234
                                              ---------       ---------       ---------       ---------       ---------
Net Income                                    $   4,045       $   4,974       $   7,097       $  14,962       $   8,926
                                              =========       =========       =========       =========       =========

OTHER DATA:
EBITDA (a)                                    $  23,980       $  24,831       $  29,913       $  36,208       $  35,977
Depreciation and amortization                     5,649           5,420           6,725          10,724          10,148
Cash Flows From Operating Activities              9,243          12,684          23,368          29,821          19,385
Cash Flows From Investing Activities             (3,759)         (3,177)        (57,615)         (7,395)         (5,309)
Cash Flows From Financing Activities             (5,800)         (9,550)         36,845         (21,708)        (11,326)

</TABLE>


                                                                               8
<PAGE>

<TABLE>
<CAPTION>
                                                                       YEAR ENDED DECEMBER 31
                                                   1998            1999            2000            2001            2002
                                              ---------       ---------       ---------       ---------       ---------
<S>                                           <C>             <C>             <C>             <C>             <C>

BALANCE SHEET DATA (AT PERIOD END):
Working capital                               $   4,858       $   9,447       $  31,370       $  17,060       $ (60,320)
Long Term Debt                                  105,950         100,900         126,023         106,095          16,057
Total assets                                     88,654          84,578         162,532         146,835         148,502
Total liabilities                               130,778         122,009         170,701         148,123         143,992
Stockholders' Deficit                           (44,810)        (40,267)        (32,888)        (21,715)        (12,272)
</TABLE>


(a) "EBITDA" means earnings from operations before interest expense, taxes,
profits or losses on sales or disposals of fixed assets, depreciation, and
amortization. EBITDA is included because management believes that it is an
indicator used by investors to gauge a company's ability to service its interest
and long term debt principal obligations. EBITDA should not be considered in
isolation from, as a substitute for, or as being more meaningful than net
income, cash flows from operating, investing and financing activities or other
income or cash flow statement data prepared in accordance with accounting
principles generally accepted in the United States and should not be construed
as an indication of the Company's operating performance or as a measure of
liquidity. EBITDA, as presented herein, may be calculated differently by other
companies and, as such, EBITDA amounts presented herein may not be comparable to
other similarly titled measures of other companies.

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

FORWARD LOOKING STATEMENTS

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

GENERAL

      The following section should be read in conjunction with the other
information set forth in this document, including the financial statements and
the notes thereto.


                                                                               9
<PAGE>

RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31
                                           2000         2001         2002
                                         ------       ------       ------
<S>                                      <C>          <C>          <C>
Net sales                                 100.0%       100.0%       100.0%
Cost of goods sold                         50.5         53.5         53.7
                                         ------       ------       ------
Gross profit                               49.5         46.5         46.3
Selling, general and administrative        28.8         30.6         30.4
                                         ------       ------       ------
Operating income                           20.7%        15.9%        15.9%
</TABLE>

YEAR ENDED DECEMBER 31, 2002 COMPARED WITH YEAR ENDED DECEMBER 31, 2001

      Net Sales decreased by $4.4 million or 2.8% from $158.4 million in 2001 to
$154.0 million in 2002. Lower sales reflect the weaker demand year-over-year in
North America, particularly in traditional markets, including primary metals,
petrochemical, power, glass and ceramics, offset somewhat by higher North
American sales in Automotive and Fire Protection Products, increased Automotive
exports, and the favorable effects of a stronger Euro.

      Gross Profit decreased by $2.4 million or 3.2% from $73.7 million in 2001
to $71.3 million in 2002. Gross Profit as a percentage of net sales decreased
from 46.5% in 2001 to 46.3% in 2002. The decrease in gross profit was due to
lower sales volume. The lower overall gross profit percentage of net sales
reflects the effect of continued price competition and lower plant utilization,
offset somewhat by the favorable currency effect of a stronger Euro and cost
reduction programs.

      Selling, general, and administrative expenses decreased by $1.7 million or
3.7% from $48.5 million in 2001 to $46.8 million in 2002. The decrease in SG&A
expenses in 2002, compared to 2001, was due principally to reduced volume
related expenses in 2002, lower spending particularly in R&D, and certain
integration costs in 2001 related to the acquisition which did not re-occur in
2002. SG&A expenses as a percentage of net sales reduced from 30.6% in 2001 to
30.4% in 2002.

      Operating income decreased by $0.6 million or 2.3% from $25.1 million in
2001 to $24.5 million in 2002, as a result of the factors previously indicated.

      Other income decreased by $0.2 million from $0.2 million in 2001 to zero
in 2002 due primarily to a one-time gain, realized in 2001, on the sale of a
small product line.

      Income on foreign exchange increased by $1.0 million or 569.6% from $0.2
million in 2001 to $1.2 million in 2002 due primarily to the strengthening of
the Euro in the last quarter of 2002.

      Interest expense decreased by $0.4 million or 3.2% from $12.6 million in
2001 to $12.2 million in 2002 due to lower interest rates on certain
variable-rate borrowings, lower levels of bank borrowings and redemption of
Senior Notes. Interest expense decreased as a percentage of net sales from 8.0%
in 2001 to 7.9% in 2002.

      The provision for income taxes changed by $6.7 million from a benefit of
$2.3 million in 2001 to an expense of $4.4 million in 2002. During 2001, the
Company reversed the remaining deferred tax asset valuation allowance that was
established in connection with the Recapitalization, resulting in a one-time,
non-cash benefit of $7.3 million. The effective tax rate in 2001, excluding this
one-time, non-cash benefit was 38.7%. In 2002, the effective rate reduced to
32.4% primarily due to lower effective income tax rates for certain of the
Company's foreign subsidiaries and the recognition of refundable investment tax
credits in the United States.


                                                                              10
<PAGE>

      Net income decreased by $6.1 million or 40.3% from $15.0 million in 2001
to $8.9 million in 2002, as a result of the factors previously indicated. Net
income as a percentage of net sales decreased from 9.4% in 2001 to 5.8% in 2002.

      EBITDA decreased by $0.2 million or 0.6% from $36.2 million in 2001 to
$36.0 million in 2002. The decrease in EBITDA is principally attributable to the
factors affecting operating income which were discussed above. EBITDA as a
percent of net sales increased from 22.9% in 2001 to 23.4% in 2002.

      Capital expenditures decreased by $2.1 million or 30.2% from $7.1 million
in 2001 to $5.0 million in 2002.

      Working capital changed by $77.4 million from $17.1 million in 2001 to
$(60.3) million in 2002 primarily as a result of the reclassification of the
Company's 10.5% Senior Notes from long-term debt at December 31, 2001, to
current portion of long-term debt at December 31, 2002, offset partially by
higher inventories and accounts receivable as a result of the stronger Euro. The
Company's Senior Notes are classified as current at December 31, 2002 because
they mature November 1, 2003.

      Cash flows from operating activities decreased by $10.4 million or 35.0%
from $29.8 million in 2001 to $19.4 million in 2002, principally due to the
lower net income and higher receivables. Cash outflows from investing activities
decreased by $2.1 million or 28.2% from $7.4 million in 2001 to $5.3 million in
2002 due to lower capital expenditures. Cash outflows from financing activities
reduced by $10.4 million or 47.8% from $21.7 in 2001 to $11.3 million in 2002
primarily as a result of lower repayments of bank debt in 2002.

YEAR ENDED DECEMBER 31, 2001 COMPARED WITH YEAR ENDED DECEMBER 31, 2000

      Net Sales increased by $46.4 million or 41.5% from $112.0 million in 2000
to $158.4 million in 2001. Sales for 2001 included the benefit of an additional
9 months of sales of the ceramic fiber business acquired by Unifrax from
Saint-Gobain in October 2000, which totaled approximately $55 million, offset by
the overall weakness in the North American market in the second half of the
year, particularly in furnace related markets, including primary metals,
petrochemical, power, glass and ceramics. Automotive catalytic converter support
systems and porosity-controlled products showed some growth.

      Gross Profit increased by $18.3 million or 32.9% from $55.4 million in
2000 to $73.7 million in 2001. Gross Profit as a percentage of net sales
decreased from 49.5% in 2000 to 46.5% in 2001. The increase in gross profit was
due to higher sales volume as a result of the acquisition from Saint-Gobain. The
lower overall gross profit percentage of net sales reflects the effect of lower
gross margins in some of the recently-acquired businesses, more severe price
competition, and the effect of lower plant utilization in North American
operations.

      Selling, general, and administrative expenses increased by $16.3 million
or 50.6% from $32.2 million in 2000 to $48.5 million in 2001. SG&A expenses in
2001 included an additional 9 months of costs relating to the ceramic fiber
business acquired in October 2000, which totaled approximately $17 million, and
one-time costs associated with the consolidation of the acquired businesses.

      Operating income increased by $1.9 million or 8.2% from $23.2 million in
2000 to $25.1 million in 2001, as a result of the factors previously indicated.

      Other (expense) income changed by $0.8 million from an expense of $0.4
million in 2000 to an income of $0.4 million in 2001 due primarily to a gain on
the sale of a small product line during 2001, realized gains from sales of
investments, income from the redemption of senior notes, and gains on foreign
exchange in various currencies.


                                                                              11
<PAGE>

      Interest expense increased by $0.9 million or 8.0% from $11.7 million in
2000 to $12.6 million in 2001 due to the additional debt associated with the
acquisition of the Saint-Gobain ceramic fiber business offset by lower interest
rates on certain variable-rate borrowings. Interest expense decreased as a
percentage of net sales from 10.4% in 2000 to 8.0% in 2001.

      The provision for income taxes changed by $6.5 million from an expense of
$4.2 million in 2000 to a benefit of $2.3 million in 2001. During 2001, the
Company reversed the remaining deferred tax asset valuation allowance that was
established in connection with the Recapitalization, resulting in a one-time,
non-cash benefit of $7.3 million. Excluding this one-time, non-cash benefit, the
effective income tax rate increased from 37.2% in 2000 to 38.7% in 2001.

      Net income increased by $7.9 million or 110.8% from $7.1 million in 2000
to $15.0 million in 2001, as a result of the factors previously indicated. Net
income as a percentage of net sales increased from 6.3% in 2000 to 9.4% in 2001.

      EBITDA increased by $6.3 million or 21.0% from $29.9 million in 2000 to
$36.2 million in 2001. The increase in EBITDA is principally attributable to the
factors affecting operating income which were discussed above. EBITDA as a
percent of net sales decreased from 26.7% in 2000 to 22.9% in 2001.

      Capital expenditures increased by $1.0 million or 15.4% from $6.1 million
in 2000 to $7.1 million in 2001.

      Working capital decreased from $31.4 million in 2000 to $17.1 million in
2001. The decrease is due primarily to lower trade receivables and inventories
and the receipt, during 2001, of the reimbursement from Saint-Gobain for certain
liabilities assumed in connection with the Acquisition, amounting to $8.3
million plus associated interest, which was primarily used to repay long term
debt.

      Cash flows from operating activities increased by $6.5 million or 27.6%
from $23.3 million in 2000 to $29.8 million in 2001, principally due to the
receipt of the reimbursement from Saint-Gobain for certain liabilities assumed
in connection with the Acquisition. Cash outflows from investing activities
decreased by $50.2 million from $57.6 million in 2000 to $7.4 million in 2001
due to the acquisition of the Saint-Gobain ceramic fiber business in October
2000 partially offset by higher capital expenditures, as discussed previously.
Cash inflows from financing activities changed by $58.5 million from an inflow
of $36.8 million in 2000 to an outflow of $21.7 million in 2001 as a consequence
of the receipt of proceeds from the issuances of long term debt, preferred stock
and revolving loans in 2000, and repayments of revolving loans and long term
borrowings in 2001.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's Credit Agreement provides for up to $25.0 million in term
loans and $25.0 million in revolving credit facilities. The revolving credit
facilities are available for working capital and other corporate purposes. Loans
under the Credit Agreement bear interest at a rate based upon LIBOR or the
lender's base rate plus a margin as defined in the Credit Agreement. The Credit
Agreement and the Indenture for the Company's 10.5% Senior Notes contain certain
restrictive covenants including requirements that the Company meet certain
financial ratio tests and limitations on the ability of the Company to incur
additional indebtedness.

      On October 4, 2000, the Company and its subsidiaries acquired the
insulating ceramic fiber business owned by Compagnie de Saint-Gobain
("Saint-Gobain")(the "Acquisition"). Under the terms of the Acquisition, the
Company issued $9,500,000 of subordinated notes to a wholly owned subsidiary of
Saint-Gobain of which $1,500,000 was repaid during 2001, and the Company issued
$20,500,000 of its Series A preferred stock to its parent holding company,
Unifrax Holding Co., which then pledged the preferred stock to Saint-Gobain as
security for subordinated notes issued by the holding company.


                                                                              12
<PAGE>

         The Saint-Gobain notes mature June 30, 2004, are subordinate to all
currently outstanding debt, and bear interest at 8.5% through December 31, 2002
and 10.0% thereafter. On October 4, 2002, in accordance with the terms of the
subordinated promissory note, the note payable to SEPR was increased by an
additional $4,000,000 to $16,000,000. On the same date the subordinated notes
issued by Unifrax Holding Co. to SEPR were reduced by a further $4,000,000 from
$16,500,000 to $12,500,000. The liquidation preference value of the Series A
preferred stock issued by Unifrax Corporation to Unifrax Holding Co. and pledged
to Saint-Gobain as security for the subordinated notes, was also reduced by
$4,000,000.

      At December 31, 2002, the Company had outstanding borrowings of $3.8
million on its term loan facilities and $0.6 million on its revolving credit
facilities.

      On December 17, 2002, the Company declared a dividend on its redeemable
cumulative Series A preferred stock of $63.784 per share on 20,500 shares, for a
total of $1,307,575. This dividend was paid to Unifrax Holding Co. on February
26, 2003.

      The Credit Agreement contains various restrictive covenants which include,
but are not limited to, a minimum fixed charge coverage ratio, a maximum funded
debt to EBITDA ratio, a minimum interest coverage ratio, and restrictions on
capital expenditures, distributions, restricted investments, and additional
debt, as defined. In addition, the Indenture for the Company's 10.5% Senior
Notes contains certain restrictive covenants including requirements that the
Company meet certain financial ratio tests and limitations on the ability of the
Company to incur additional indebtedness. To the best of its knowledge and
belief, the Company has continued to be in compliance with all restrictive
covenants, as of December 31, 2002, the latest measurement date. The occurrence
of any default of these covenants could result in acceleration of the Company's
obligations under the Credit Agreement and the Indenture for the Company's 10.5%
Senior Notes and foreclosure on the collateral securing such obligations.

      Disclosures about contractual obligations and commercial commitments are
included in various parts of this report on Form 10-K, including Note 5 - Long
Term Debt and Seller Note, Note 6 - Fair Value of Financial Instruments and Note
12 - Lease Commitments and Rentals to the Company's consolidated financial
statements. A summary of significant contractual obligations is as follows:

<TABLE>
<CAPTION>
                                                      OPERATING
                                       DEBT            LEASE
                                    MATURITIES       COMMITMENTS        TOTAL
                                    ----------       -----------      ----------
<S>                                 <C>              <C>              <C>
 2003                               $   92,679       $    1,673       $   94,352
 2004                                   16,028            1,255           17,283
 2005                                       29            1,030            1,059
 2006                                       --              912              912
 2007                                       --              848              848
 Therafter                                  --            5,609            5,609
                                    ----------       ----------       ----------
                                    $  108,736       $   11,327       $  120,063
                                    ==========       ==========       ==========
</TABLE>

      The Company's Credit Agreement matures on August 1, 2003, and its 10.5%
Senior Notes mature November 1, 2003. Also, the subordinated promissory notes
payable to SEPR mature on June 30, 2004. During the fourth quarter of 2002 the
Company began discussions with several banking and other lending institutions
regarding the refinancing of all or a significant portion of its indebtedness.
Based on the preliminary discussions with these banks and other lending
institutions, management believes that all indebtedness maturing in 2003 can be
refinanced prior to its maturity date. Furthermore, management believes that
cash flows from operations and borrowings under the available credit facility
will be adequate to meet the Company's operating requirements and planned
capital expenditures over the next 12 months. See "Forward Looking Statements."


                                                                              13

<PAGE>

      The Company has entered into a tax sharing agreement with Holding. The
results of its operations are included in the consolidated U. S. corporate
income tax return of Holding. The Company's provision for income taxes is
computed as if the Company filed its annual tax returns on a separate company
basis. The current portion of the income tax provision will be satisfied by a
payment to or from Holding.

      At December 31, 2002, the Company had U.S. Federal and state net operating
loss carryforwards totaling approximately $16 million which will be available to
offset future taxable income. These net operating loss carryforwards expire in
2012 through 2023.

LEGAL PROCEEDINGS

      Reference is made to the information included in Note 13 to the
consolidated financial statements of the Company included under Item 8 in this
Form 10-K, which is hereby incorporated herein by reference.

DISCLOSURES ABOUT CRITICAL ACCOUNTING POLICIES

      On December 12, 2001, the SEC issued a financial reporting release, FR-60,
Cautionary Advice Regarding Disclosure About Critical Accounting Policies
("FR-60"). The SEC's Cautionary Advice alerts public companies to the need for
improved disclosures about critical accounting policies. FR-60 defines "critical
accounting policies" as those most important to the financial statement
presentation and that require the most difficult, subjective, complex judgments.
FR-60 calls for MD&A discussion of critical accounting policies, the related
judgments and uncertainties associated with the application of those accounting
policies, and the sensitivity of the amounts reported in the financial
statements to material changes were different conditions and assumptions to
apply.

      The Company's accounting policies are disclosed in Note 1 - Significant
Accounting Policies to the Company's consolidated financial statements under
Item 8 of this report and incorporated herein by reference. The more critical of
the Company's accounting policies are described below.

      Accounts Receivable - Foreign Currency: The Company generates a
significant portion of its revenues and corresponding accounts receivable from
sales denominated in currencies other than the U.S. dollar. As of December 31,
2002, approximately $21 million ($20 million at December 31, 2001) of the
Company's accounts receivable were denominated in approximately 10 foreign
currencies, of which $14.9 million ($13.3 million at December 31, 2001) are
denominated in Euros. Historically, the foreign currency gains and losses on
these receivables have not been significant, and the Company has determined that
foreign currency derivative products are generally not required to hedge its
exposure. During 2002, the Euro appreciated approximately 18.4% against the U.S.
Dollar and 5.9% against the U.K. Pound. The foreign currency gain on receivables
and other net assets favorably affected income by $1.2 million in 2002. If there
were a significant decline in the Euro exchange rate, the U.S. dollar
equivalents the Company would receive from its customers could be materially
less than the reported amount. A decline in the exchange rate of the Euro to the
U.S. dollar of approximately 10% from the rate as of December 31, 2002 would
result in an exchange loss of approximately $1.5 million ($1.3 million at
December 31, 2001)

      Ceramic Fiber Contingencies - From time to time Unifrax and other
manufacturers of ceramic fibers have been named as defendants in lawsuits
alleging death or personal injury or worker's compensation claims as a result of
exposure in the manufacture and handling of ceramic fiber and other products.
The Company believes the lawsuits brought against it have been without merit and
the litigation currently pending, or to its knowledge threatened, will not have
a material adverse effect on the financial condition or results of operations of
the Company. The Company's belief is based on the fact that, although animal
studies have indicated that ceramic fiber inhaled by test animals at elevated
doses can cause disease, there is no evidence that exposure to refractory
ceramic


                                                                              14
<PAGE>

fiber has resulted in disease in humans. In addition, BP America and SEPR have
agreed to indemnify the Company, subject to certain limitations, against certain
losses resulting from alleged or actual exposure to ceramic fibers. However, in
the case of BP America, this indemnity is dependent upon the Company maintaining
its Product Stewardship Program consistent with the program maintained by the
Company prior to the BP Closing, as modified in a commercially reasonable manner
in accordance with changing regulatory, scientific and technical factors. In the
Company's opinion, the Product Stewardship Program has been maintained in a
manner consistent with these requirements. It is possible, however, that future
results of operations for any particular quarterly or annual period could be
materially affected should assumptions with respect to ceramic fiber claims
change.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

      In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.

      The Company has applied the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. The application of the
non-amortization provisions of the statement has not had any impact on the net
income of the Company.

      In August 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 144, Accounting for the Impairment of
Disposal of Long-Lived Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, the criteria for classifying an asset as
held-for-sale are significantly changed from prior treatment. Assets which are
to be disposed of are stated at the lower of their fair values or carrying
amounts and depreciation is no longer recognized.

      The Company has applied this new rule beginning in the first quarter of
2002. The implementation of this new rule has not had a material impact on the
financial position of the Company in 2002.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES AND MARKET RISK

      The Company is exposed to certain market risks, principally changes in
interest rates and foreign currency exchange. Market risk is the potential loss
arising from adverse changes in market rates and prices, such as interest rates
and foreign currency exchange. The Company does not enter into derivatives or
other financial instruments for trading or speculative purposes.

      The Company had various long-term indebtedness outstanding at December 31,
2001 and 2002. In addition, the Company had certain variable rate indebtedness
outstanding at December 31, 2001 and 2002. The interest impact of an increase in
interest rates of 100 basis points (1%) would be as follows.


                                                                              15
<PAGE>

<TABLE>
<CAPTION>
Instrument                                     Interest Rate                              Impact on Earnings
----------                                     -------------                              ------------------

                                                                                               December 31
                                                                                         2001                  2002
                                                                                  ------------          ------------
                                                                                               (In thousands)
<S>                                         <C>                                   <C>                   <C>
Credit Agreement                            Variable, based on LIBOR              $        (31)         $         (6)
Credit Agreement                            Variable, based on CDI                         (61)                  (37)

Senior Notes                                Fixed                                           --                     -
Subordinated Promissory Notes               Fixed                                           --                     -
                                                                                  ------------          ------------
                                                                                           (92)                  (43)

Less tax benefit                                                                            12                     2
                                                                                  ------------          ------------

Net income reduction                                                              $        (80)         $        (41)
                                                                                  ============          ============
</TABLE>

      On January 30, 2002, the Company entered into an interest rate swap
agreement with Bank of America N.A. to mature November 1, 2003, effectively
converting fixed-rate debt with a notional principal amount of $25,000,000 to
variable-rate debt. Under the terms of the agreement, Unifrax received 10.50%
and paid 3 month LIBOR plus 7.30%, compounded quarterly and paid semi-annually
on the interest payment dates associated with the Senior Notes. Bank of America
N.A., in accordance with the terms of the agreement, exercised their right to
terminate the agreement effective November 1, 2002. At the termination date the
Company received $127,375 which was recorded as a reduction of interest expense
for 2002.

      A portion of the Company's operations consists of manufacturing and sales
activities in foreign jurisdictions. The Company manufactures its products in
the United States, the United Kingdom, France, Germany, Brazil, Venezuela,
Australia, and India using materials purchased internationally, and sells into
those and other worldwide markets. Additionally, the Company operates a branch
sales office in Argentina. The Company and its subsidiaries invoice their
products both in local and foreign currencies. As a result, the Company's
financial results could be significantly affected by factors such as changes in
foreign currency exchange rates or weak economic conditions in the foreign
markets into which the Company sells its products. For example, when the U.K.
Pound Sterling strengthens relative to the Euro, the value of sales from the
U.K. which are denominated in Euros decreases when translated back to Sterling.
When the U.S. Dollar strengthens against other currencies, the price of
competitive imports into the U.S. from those other countries often decreases. To
mitigate the short-term effect of exchange rate changes on the Company's
purchases, sales and financial results in its various locations, the Company may
from time to time hedge its exposure to certain currencies by entering into
foreign exchange contracts. During 2002, the Company did not enter into any
foreign exchange contracts. The significant devaluation of the Argentinean peso
in January 2002 did not have a material impact on the Company's results of
operations. In addition, the Company has a small facility in Venezuela. The
political and economic issues in that country during 2002 had an adverse impact
on the Company's local operations. However, these local adverse issues did not
have a material impact on the Company's overall results.


                                                                              16
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

<TABLE>
<CAPTION>
                                                                                    PAGE IN
                                                                                   FORM 10-K
                                                                                   ---------
<S>                                                                                <C>
Report of Independent Auditors................................................         18
Consolidated Balance Sheets as of December 31, 2001 and 2002..................         19
Consolidated Statements of Income for the Years Ended
     December 31, 2000, 2001 and 2002.........................................         20
Consolidated Statements of Stockholders' Deficit for the Years Ended
     December 31, 2000, 2001 and 2002.........................................         21
Consolidated Statements of Cash Flows for the Years Ended
     December 31, 2000, 2001 and 2002.........................................         22
Notes to Consolidated Financial Statements ...................................         23
</TABLE>


                                                                              17
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors
Unifrax Corporation

We have audited the accompanying consolidated balance sheets of Unifrax
Corporation as of December 31, 2001 and 2002, and the related consolidated
statements of income, stockholders' deficit and cash flows for each of the three
years in the period ended December 31, 2002. Our audits also included the
financial statement schedule listed in the index at Item 15(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Unifrax
Corporation at December 31, 2001 and 2002 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting principles generally accepted
in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

The accompanying financial statements have been prepared assuming that Unifrax
Corporation will continue as a going concern. As more fully described in Note
5, the senior subordinated debt is due in the fourth quarter of 2003. The
inability of the Company to refinance this debt on a timely basis could raise
substantial doubt about the company's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.


                                                  /s/ Ernst & Young LLP




Buffalo, New York
February 27, 2003



                                                                              18
<PAGE>

                               UNIFRAX CORPORATION
                           CONSOLIDATED BALANCE SHEETS
               (In Thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31
                                                                                              2001            2002
                                                                                         ---------       ---------
<S>                                                                                      <C>             <C>
ASSETS
Current assets:
   Cash                                                                                  $   3,219       $   5,962
   Marketable securities and investments                                                       253             218
   Accounts receivable, trade, less allowance of $2,062 and $1,916, respectively            28,533          33,089
   Inventories                                                                              16,305          17,307
   Deferred income taxes                                                                     1,602           1,530
   Prepaid expenses and other current assets                                                 3,019           2,153
                                                                                         ---------       ---------
Total current assets                                                                        52,931          60,259
Property, plant and equipment, net                                                          69,109          65,466
Deferred income taxes                                                                       21,323          19,784
Financing costs, net of accumulated amortization of $3,606 and $4,683, respectively          1,933             856
Marketable securities and investments                                                        1,211           1,876
Other assets                                                                                   328             261
                                                                                         ---------       ---------
                                                                                         $ 146,835       $ 148,502
                                                                                         =========       =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Current portion of long-term debt                                                     $   9,169       $  92,679
   Accounts payable                                                                          9,793          11,410
   Accounts payable, related parties                                                         2,054           1,217
   Accrued expenses                                                                         14,855          15,273
                                                                                         ---------       ---------
Total current liabilities                                                                   35,871         120,579

Long-term debt                                                                             106,095          16,057
Accrued postretirement benefit cost                                                          3,578           3,659
Other long-term obligations                                                                    909           1,623
Deferred income taxes                                                                        1,670           2,074

Minority interest                                                                              910           1,102

Redeemable cumulative Series A preferred stock--$0.01 par value; non-voting;
   30,000 shares authorized; 20,500 shares issued and
   outstanding, at liquidation preference value                                             16,381          12,394
Redeemable convertible cumulative Series B preferred stock--$0.01
   par value; voting; 10,000 shares authorized; 1,667 shares issued
   and outstanding, at liquidation preference value                                          3,136           3,286

STOCKHOLDERS' DEFICIT
Common stock--$0.01 par value; 40,000 shares authorized;
   20,000 and 20,025 shares issued and outstanding at
   December 31, 2001 and 2002 respectively                                                      --              --
Additional paid-in capital                                                                  37,670          36,246
Accumulated deficit                                                                        (57,328)        (48,402)
Accumulated other comprehensive (loss)                                                      (2,057)           (116)
                                                                                         ---------       ---------

                                                                                           (21,715)        (12,272)
                                                                                         ---------       ---------
                                                                                         $ 146,835       $ 148,502
                                                                                         =========       =========
</TABLE>

See accompanying notes to consolidated financial statements


                                                                              19
<PAGE>

                               UNIFRAX CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                DECEMBER 31
                                                                     2000            2001            2002
                                                                ---------       ---------       ---------
<S>                                                             <C>             <C>             <C>
Net sales                                                       $ 111,982       $ 158,439       $ 153,959

Cost of goods sold                                                 56,530          84,765          82,651
                                                                ---------       ---------       ---------
Gross profit                                                       55,452          73,674          71,308

Selling, general and administrative expenses                       32,240          48,548          46,766
                                                                ---------       ---------       ---------
Operating income                                                   23,212          25,126          24,542

Royalty income, net of related expenses                               245              --              29
Other (expense) income                                               (151)            204              (9)
Foreign exchange (expense) income                                    (224)            181           1,212
                                                                ---------       ---------       ---------
Income before interest, income taxes and minority interest         23,082          25,511          25,774

Interest expense                                                  (11,692)        (12,626)        (12,221)
                                                                ---------       ---------       ---------
Income before income taxes and minority interest                   11,390          12,885          13,553

Provision for income taxes                                          4,241          (2,264)          4,393
                                                                ---------       ---------       ---------
Income before minority interest                                     7,149          15,149           9,160

Minority interest                                                      52             187             234
                                                                ---------       ---------       ---------
Net income                                                      $   7,097       $  14,962       $   8,926
                                                                =========       =========       =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                                                              20
<PAGE>

                               UNIFRAX CORPORATION
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
               (In Thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                                 Accumulated
                                                                               Additional           Other              Total
                                            Common           Paid-In          Accumulated        Comprehensive      Stockholders'
                                            Stock            Capital            Deficit          Income (Loss)        Deficit
                                         ------------      ------------       ------------       -------------      ------------
<S>                                      <C>               <C>                <C>                <C>                <C>
 Balance at January 1, 2000              $         --      $     39,684       $    (79,387)      $       (564)      $    (40,267)

 Net income                                        --                --              7,097                 --              7,097
 Foreign currency translation
   adjustment                                      --                --                 --                778                778
                                                                                                                    ------------
 Comprehensive income                                                                                                      7,875
 Accumulated Series A preferred
   stock dividends ($17 per share)                 --              (346)                --                 --               (346)
 Accumulated Series B preferred
   stock dividends ($90 per share)                 --              (150)                --                 --               (150)
                                         ---------------------------------------------------------------------------------------

 Balance at December 31, 2000                      --            39,188            (72,290)               214            (32,888)

 Net income                                        --                --             14,962                 --             14,962
 Foreign currency translation
   adjustment                                      --                --                 --             (2,248)            (2,248)
 Minimum pension liability
   adjustment, net of taxes of $53                 --                --                 --                (87)               (87)
 Unrealized gain on marketable
   equity securities                               --                --                 --                 64                 64
                                                                                                                    ------------
 Comprehensive income                                                                                                     12,691
 Accumulated Series A preferred
   stock dividends ($67 per share)                 --            (1,368)                --                 --             (1,368)
 Accumulated Series B preferred
   stock dividends ($90 per share)                 --              (150)                --                 --               (150)
                                         ---------------------------------------------------------------------------------------

 Balance at December 31, 2001                      --            37,670            (57,328)            (2,057)           (21,715)

 Net Income                                        --                --              8,926                 --              8,926
 Foreign currency translation
   adjustment                                      --                --                 --              2,068              2,068
 Minimum pension liability
   adjustment, net of taxes of $136                --                --                 --               (222)              (222)
 Unrealized gain on marketable
   equity securities                               --                --                 --                 95                 95
                                                                                                                    ------------
 Comprehensive income                                                                                                     10,867
 Proceeds of issue of additional
   common stock                                    --                46                 --                 --                 46
 Accumulated Series A preferred
   stock dividends ($64 per share)                 --            (1,320)                --                 --             (1,320)
 Accumulated Series B preferred
   stock dividends ($90 per share)                 --              (150)                --                 --               (150)
                                         ---------------------------------------------------------------------------------------

Balance at December 31, 2002             $         --      $     36,246       $    (48,402)      $       (116)      $    (12,272)
                                         =======================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                                                              21
<PAGE>

                               UNIFRAX CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                         DECEMBER 31
                                                                2000           2001           2002
                                                            --------       --------       --------
<S>                                                         <C>            <C>            <C>
OPERATING ACTIVITIES
Net income                                                  $  7,097       $ 14,962       $  8,926
Adjustments to reconcile net income to cash
     provided by operating activities:
       Depreciation and amortization                           6,725         10,724         10,148
       Provision for deferred income taxes                     3,182         (5,304)         1,649
       Minority interest                                          52             23            192
       Other adjustments                                         194            (83)           629
       Changes in operating assets and liabilities
          net of businesses acquired:
          Accounts receivable                                   (572)        14,878         (3,442)
          Inventories                                            700            266           (492)
          Prepaid expenses and other current assets               38         (2,347)           929
          Accounts payable and accrued expenses                6,104         (3,505)           947
          Accrued postretirement benefit cost                     73             87             81
          Other long-term liabilities                           (225)           120           (182)
                                                            --------       --------       --------
Cash provided by operating activities                         23,368         29,821         19,385

INVESTING ACTIVITIES
Payments for businesses acquired, net of cash acquired       (51,383)            --             --
Capital expenditures                                          (6,144)        (7,092)        (4,952)
Proceeds from sales of marketable securities                      --          1,016          1,209
Purchases of marketable securities                                --         (1,538)        (1,666)
Other                                                            (88)           219            100
                                                            --------       --------       --------
Cash used in investing activities                            (57,615)        (7,395)        (5,309)

FINANCING ACTIVITIES
Dividends paid                                                    --           (468)        (1,365)
Borrowings under revolving loans                              39,555         19,581         39,666
Proceeds from long-term debt                                  23,554             --             --
Proceeds from issuance of preferred stock                     20,500             --             --
Proceeds from issuance of common stock                            --             --             46
Repayments of revolving loan                                 (38,833)       (22,856)       (41,468)
Repayments of long-term borrowings                            (6,431)       (17,965)        (8,205)
Deferred financing fees                                       (1,500)            --             --
                                                            --------       --------       --------
Cash provided by (used in) financing activities               36,845        (21,708)       (11,326)
Net effect of exchange rate changes on cash                       51           (148)            (7)
                                                            --------       --------       --------
Net increase (decrease) in cash                                2,649            570          2,743
Cash at beginning of year                                         --          2,649          3,219
                                                            --------       --------       --------
Cash at end of year                                         $  2,649       $  3,219       $  5,962
                                                            ========       ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
   CASH PAID DURING THE YEAR FOR:
     Interest                                               $ 11,263       $ 12,985       $ 13,672
     Income taxes                                                365          3,574            609
</TABLE>

See accompanying notes to consolidated financial statements


                                                                              22
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                                DECEMBER 31, 2002

1. SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

      Prior to October 30, 1996, the date on which Unifrax Corporation
("Unifrax" or "Company") completed a comprehensive recapitalization (the
"Recapitalization"), Unifrax and its predecessor, the North American Fibers
Division of The Carborundum Company ("Carborundum") was an indirect wholly-owned
subsidiary of The British Petroleum Company p.l.c. ("BP"). As a result of the
Recapitalization, Unifrax Holding Co. ("Holding") and BP own approximately 90%
and 10%, respectively, of the Company. Pursuant to the Recapitalization, BP
America Inc. ("BP America") a subsidiary of BP, agreed to indemnify the Company,
subject to certain limitations, against all liabilities, if any, that might
result from any claims for wrongful death or personal injury caused by exposure
to refractory ceramic fiber products manufactured by Unifrax prior to the
consummation of the Recapitalization, and against certain environmental
liabilities arising prior to consummation of the Recapitalization.

      On October 4, 2000, Unifrax Corporation and its subsidiaries acquired the
insulating ceramic fiber business owned by Compagnie de Saint-Gobain
("Saint-Gobain"), a societe anonyme based in Paris, France (the "Acquisition").
As part of the Stock and Asset Purchase Agreement and the Warranty Agreement
executed between Saint-Gobain and Unifrax Corporation, Saint-Gobain assumed
responsibility for certain pre-Closing liabilities and agreed to compensate or
indemnify Unifrax for other pre-Closing liabilities, subject to certain time
limitations and maximums.

CERTAIN RISKS AND UNCERTAINTIES

      The Company manufactures heat resistant ceramic fiber products for sale
generally to automotive, commercial, and industrial customers throughout the
world. The Company maintains adequate allowances for potential credit losses,
performs ongoing credit evaluations, and generally does not require collateral.

      As of December 31, 2002, the Company employed approximately 1,044
employees, of which approximately 358 are represented by ten separate unions
(called work councils outside the United States). A collective bargaining
agreement in the United States, representing 21% of the Company's U.S.
employees, expires in 2004. Outside the U.S., labor agreements are either
state-mandated or Company negotiated with various expiration dates.

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of revenue, expenses,
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements. Actual results could differ from those
estimates.

PRINCIPLES OF CONSOLIDATION

      The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany transactions, balances and
profits are eliminated upon consolidation.

TRANSLATION OF FOREIGN COMPANY FINANCIAL STATEMENTS

      The financial statements of the Company's foreign subsidiaries, excluding
the Company's legal branch in Argentina, are translated into U.S. dollars
assuming the functional currency of the foreign subsidiaries is the


                                                                              23
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

applicable local currency. Accordingly, income and expense items are translated
using weighted average exchange rates during the period and assets and
liabilities are translated using period-end exchange rates. Equity is translated
using historical exchange rates. Gains or losses on translations are accumulated
in other comprehensive income (loss) in the stockholders' deficit section of the
balance sheet.

      The Company has determined that the Brazilian real is the functional
currency of its Argentinean branch, which is owned by the Company's Brazilian
subsidiary. A combination of current and historical rates is used to determine
foreign currency gains and losses from financial statements translation.
Translation gains and losses for the Argentinean branch are reported directly in
the consolidated statements of income.

TRANSACTIONS IN FOREIGN CURRENCIES

      Revenue and expense transactions in foreign currencies are recorded at the
local currency equivalent at the date of the transaction. Receivables, payables
and bank balances denominated in currencies other than the respective functional
currencies are translated at the closing rate and the related exchange gains and
losses are recorded in the statement of income.

REVENUE RECOGNITION

      Revenue from sales of products is recognized, net of sales discounts, when
the risk of loss has been transferred to the buyer, which is generally upon
shipment. Provisions are recorded for probable future returns and uncollectible
accounts as revenue is recognized.

SHIPPING AND HANDLING COSTS

      Freight costs incurred in connection with shipping products to customers,
a portion of which may be billed to the customers, are included in selling,
general and administrative expenses in the accompanying statements of income.
Such costs totaled $2,387,000, $5,002,000, and $5,088,000 for the years ended
December 31, 2000, 2001 and 2002, respectively.

INVENTORIES

      Inventories are valued at the lower of cost or net realizable value. The
cost of approximately 50% of inventories at December 31, 2001 and 2002,
comprising substantially all inventories in the U.S., is determined by the
last-in, first-out method (LIFO). Cost for the non-U.S. entities is principally
determined using the weighted-average method or, in some cases, the
first-in-first-out (FIFO) method.

MARKETABLE SECURITIES AND INVESTMENTS

      The Company's Indian subsidiary invests in marketable securities,
consisting principally of open-ended investment funds and unit trusts. The
Company has classified all marketable securities that do not quality as cash
equivalents as available-for-sale. Accordingly, marketable securities are
carried at market value, with unrealized gains and losses being recorded
directly to accumulated other comprehensive income (loss).

PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment is stated at cost. Depreciation is computed
principally using the straight-line method over the estimated useful lives of
the assets which range from 3 years to 20 years for machinery and equipment, and
15 years to 45 years for land improvements and buildings. Expenditures for
renewals and


                                                                              24
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

improvements that extend the useful life of an asset are capitalized.
Expenditures for routine repairs and maintenance are generally charged to
operations when incurred.

FINANCING COSTS

      Financing costs are being amortized on a straight line basis over periods
ranging from 3 to 7 years.

IMPAIRMENT OF LONG LIVED ASSETS

      The Company evaluates the carrying value of long-lived assets whenever
events or circumstances indicate that such carrying value may not be
recoverable. The carrying value of a long-lived asset is considered impaired
when the anticipated undiscounted cash flow from such an asset is less than its
carrying value. In that event, a loss is recognized based on the amount by which
the carrying value exceeds the fair value of the long-lived asset. Fair value is
determined primarily using anticipated cash flows discounted at a rate
commensurate with the risk involved.

ENVIRONMENTAL LIABILITIES

      Environmental expenditures that relate to current or future revenues are
expensed or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations and that are not allocable to current or
future earnings are expensed. Liabilities for environmental costs are recognized
when environmental assessments or clean-ups are probable and the associated
costs can be reasonably estimated.

INCOME TAXES

      The Company has entered into a tax sharing agreement with Holding. The
results of the Company's U.S. operations are currently included in the
consolidated U.S. corporate income tax return of Holding. The Company's
provision for income taxes is computed as if the Company filed its annual tax
returns on a separate company basis. The current portion of the income tax
provision is satisfied by a payment to or from Holding.

      Income taxes are accounted for under the liability method. Under this
method, deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rate and laws that apply in the periods in which
the deferred tax asset or liability is expected to be realized or settled. The
Company has not recognized a deferred tax liability for the undistributed
earnings of its foreign subsidiaries, totaling approximately $10.2 million at
December 31, 2002 ($4.5 million at December 31, 2001), as the Company does not
currently expect those unremitted earnings to reverse and become taxable in the
foreseeable future. A deferred tax liability will be recognized when the Company
expects that it will recover those undistributed earnings in a taxable manner.

      A valuation allowance is recorded against deferred tax assets resulting
from net operating losses and deductible temporary differences when it is more
likely than not that the deferred tax asset will not be realized. There were no
valuation allowances recorded as of December 31, 2001, and 2002.

      Investment tax credits are accounted for using the flow-through method.

ACCOUNTING FOR STOCK BASED COMPENSATION

      In accordance with the provisions of SFAS No 123 the Company has elected
to continue applying the provisions of Accounting Principles Board Opinion No 25
and related interpretations in accounting for its stock-based compensation
plans. Accordingly, the Company does not recognize compensation expense for
stock options when the


                                                                              25
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

stock option price at the grant date is equal to or greater than the fair market
value of the stock at that date. The fair value of each option on the date of
grant was estimated at the date of grant using the minimum value method and the
following weighted-average assumptions.

<TABLE>
<CAPTION>
                                                                 2001           2002
                                                             --------       --------
<S>                                                          <C>            <C>
Risk free interest rate                                             4%           n/a
Dividend yield                                                      0%           n/a
Weighted-average expected life of the option (in years)             4            n/a
</TABLE>

      The following illustrates the pro forma effect on net income if the
Company had applied the fair value recognition provisions of SFAS No 123:

<TABLE>
<CAPTION>
                                                          PRO FORMA
                                             ------------------------------------
                                               2000          2001          2002
                                             -------       --------       -------
                                                        (In Thousands)
<S>                                          <C>           <C>            <C>
Net income as reported                       $ 7,097       $ 14,962       $ 8,926
Deduct: Total stock-based employee
     compensation expense determined
     under fair value method for all
     awards, net of related tax effects          (82)          (124)         (117)
                                             -------       --------       -------
Pro forma net income                         $ 7,015       $ 14,838       $ 8,809
                                             =======       ========       =======
</TABLE>

ADVERTISING COSTS

      Advertising costs, which consist principally of advertisements in trade
journals, brochures, and attendance at trade shows, are expensed as incurred.
Advertising costs totaled $791,000, $998,000 and $980,000 for the years ended
December 31, 2000, 2001 and 2002, respectively.

RESEARCH AND DEVELOPMENT COSTS

      Product research and development costs are charged to expense as incurred.
Research and development expense for the years ended December 31, 2000, 2001 and
2002 were $2,905,000, $4,094,000 and $3,022,000, respectively.

HEALTH, SAFETY AND ENVIRONMENTAL QUALITY PROGRAMS

      Costs associated with the Company's Health, Safety and Environmental
Quality ("HSEQ") programs, which include the Company's Product Stewardship
Program, the Ceramic Fibers Advisory Board, ongoing employee health studies and
workplace exposure monitoring studies, are expensed as incurred. Amounts charged
to operations during the years ended December 31, 2000, 2001 and 2002, relating
to HSEQ totaled $1,307,000, $1,643,000 and $1,564,000, respectively, and are
included in selling, general and administrative expenses in the accompanying
statements of income.


                                                                              26
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FINANCIAL INSTRUMENTS

      The Company periodically enters into interest rate swap agreements to
effectively convert a portion of fixed-rate debt into variable-rate debt. All
payments and receipts under the swap agreements are recorded as adjustments to
interest expense.

      The Company adopted statement SFAS 133 effective January 1, 2001. The
cumulative effect of adopting SFAS 133 was not material. The Company recognizes
all derivatives on the balance sheet at fair value. Derivatives that are not
qualifying hedges are adjusted to fair value through income. If the derivative
is a qualifying hedge, depending on the nature of the hedge, changes in the fair
value of derivatives are either offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or recognized
in other comprehensive income until the hedged item is recognized in earnings.
The ineffective portion of a derivative's change in fair value is immediately
recognized in earnings.

RECLASSIFICATIONS

      Certain reclassifications of 2000 and 2001 information have been made to
conform with the 2002 presentations.

2. BUSINESS ACQUISITIONS

      On October 4, 2000, the Company acquired the capital stock of certain
companies and certain assets of other companies that comprised the high
performance insulating ceramic fibers business (the "Ceramic Fiber Business") of
Saint-Gobain.

      The Ceramic Fiber Business was managed by Societe Europeenne de Produits
Refractaires and was contained in various legal entities which were owned
ultimately by Saint-Gobain.

      The purchase price was $58,500,000, subject to a purchase price adjustment
as defined in the stock and asset purchase agreement. The purchase price
adjustment process was completed in June 2001 with no significant change in the
original purchase price. In connection with the Acquisition, Saint-Gobain agreed
to compensate the Company for certain liabilities that the Company would be
responsible for discharging. Accordingly, in June 2001, Saint-Gobain paid the
Company $8,803,000, representing compensation for $8,309,000 of liabilities plus
interest. The Company financed the Acquisition with $28,500,000 drawn under a
new senior Credit Agreement, a subordinated note payable to Saint-Gobain for
$9,500,000 and $20,500,000 fair value of Series A Preferred Stock issued to
Holding in exchange for Holding issuing a $20,500,000 subordinated note payable
to Saint-Gobain.

      The Acquisition has been accounted for under the purchase method of
accounting, and the results of operations of the Ceramic Fiber Business have
been included in the consolidated statements of operations since the date of
acquisition. The initial purchase price has been allocated to the assets
acquired and liabilities assumed based upon their estimated fair values.

      The following unaudited pro forma information presents the results of
operations of the Company as if the Acquisition had taken place January 1, 2000.
These pro forma results of operations have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations
which actually would have resulted had the Acquisition occurred on the date
indicated, or which may result in the future.


                                                                              27
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                               DECEMBER 31
                                                  2000
                                              --------------
                                              (In Thousands)
<S>                                           <C>
                     Net Sales                $    168,257
                     Net Income                      7,504
</TABLE>

      Indian law required the Company to undertake a tender offering for the
shares of Orient Cerlane Ltd ("OCL"), the Company's majority-owned Indian
subsidiary, held by the minority shareholders. In January 2001, the Company
completed its initial tender offering and acquired 83,350 shares of OCL at a
cost of approximately $404,000. In December 2001 the Company acquired an
additional 24,300 shares of OCL at a cost of approximately $101,000. In 2002,
pursuant to the further tender offering, the Company acquired a further 55,025
shares in OCL at an approximate cost of $237,000.

      Following these acquisitions, the Company owns 1,328,025 shares of OCL
amounting to 67.14%. In November 2002, in association with the Indian Promotor
Group, who has beneficial ownership of 25.77% of the shares of OCL, the Company
applied to the Delhi Stock Exchange and the Stock Exchange Mumbai for delisting
of the Company's stock. If the delisting application is accepted, the Company is
obligated to purchase any further shares offered for sale before November 2003
by outside shareholders.

3. INVENTORIES

Major classes of inventories are as follows:

<TABLE>
<CAPTION>
                                                             DECEMBER 31
                                                         2001               2002
                                                      -------            -------
                                                             (In Thousands)
<S>                                                   <C>                <C>
Raw material and supplies                             $ 6,740            $ 6,990
In-process                                              1,604              1,861
Finished product                                        7,128              7,395
                                                      -------            -------
                                                       15,472             16,246
Adjustment to LIFO cost                                   833              1,061
                                                      -------            -------
                                                      $16,305            $17,307
                                                      =======            =======
</TABLE>

The cost of inventories determined on the LIFO method exceeds the current cost
of inventories principally as a result of reduced manufacturing costs.


                                                                              28
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
                                                              DECEMBER 31
                                                            2001             2002
                                                      ----------       ----------
                                                            (In Thousands)
<S>                                                   <C>              <C>
Land and land improvements                            $    2,884       $    3,059
Buildings                                                 28,452           29,976
Machinery, equipment, furniture and fixtures              91,179           92,054
Construction in progress                                   1,193            2,322
                                                      ----------       ----------
                                                         123,708          127,411
Less accumulated depreciation                            (54,599)         (61,945)
                                                      ----------       ----------
                                                      $   69,109       $   65,466
                                                      ==========       ==========
</TABLE>

For the years ended December 31, 2000, 2001 and 2002, depreciation expense
amounted to $5,689,000, $9,554,000 and $9,641,000, respectively.

5. LONG TERM DEBT AND SELLER NOTE

Long term debt consists of the following:

<TABLE>
<CAPTION>
                                      WEIGHTED AVERAGE
                                         INTEREST RATE           BALANCE OUTSTANDING
                                          DECEMBER 31                 DECEMBER 31
                                       2001           2002           2001          2002
                                   --------       --------       --------      --------
                                                                     (In Thousands)
<S>                                <C>            <C>            <C>           <C>
Credit Agreement:
     Term loans
         France                        5.90%            --       $    780      $     --
         Brazil                       20.35          26.57%         6,082         3,673
         India                           --             --            127            85
                                                                 --------      --------
              Total                                                 6,989         3,758

     Revolving loans
         United States                 4.75           4.25             32            17
         United Kingdom                6.64           6.24          2,243           620
                                                                 --------      --------
              Total                                                 2,275           637

10 1/2% Senior Notes due 2003         10.50          10.50         94,000        88,341

Subordinated promissory notes          7.00           8.50         12,000        16,000
                                                                 --------      --------

Total debt                                                        115,264       108,736
Less current portion                                                9,169        92,679
                                                                 --------      --------
Long term debt                                                   $106,095      $ 16,057
                                                                 ========      ========
</TABLE>

      The Company's Credit Agreement dated as of October 5, 2000, as amended,
provides a total Credit Facility consisting of (a) a U.S. Revolving Loan not to
exceed $19,000,000; (b) a U.K. Revolving Loan not to exceed GBP 4,123,711
(approximately $6,600,000); (c) a Term Loan (U.K.) in the amount of GBP
4,123,711 (approximately $6,600,000); (d) a Term Loan (France) in the amount of
EUR 11,454,754 (approximately $12,000,000); and (e) a


                                                                              29
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Brazilian Letter of Credit in the amount of $12,500,000, $9,000,000 of which is
part of the term loan facility and the balance of which is charged as a reserve
against the U.S. Borrowing Base. The revolving loan commitments expire August 1,
2003. Interest rates at December 31, 2002 on the revolving loans and term loans
in the U.S. and Europe are based on LIBOR or a bank base rate plus a margin of
2.00% or 2.25% as defined. Interest on the term
loan in Brazil is based on a market rate index. Term loan amounts under the
Credit Agreement mature August 1, 2003.

      A fee of 0.25% is charged on the amount by which the U.S. or U.K. maximum
revolving loan amount exceeds the average actual daily outstanding amount of
U.S. and U.K. revolving loans and letter of credit obligations including the
Brazilian letter of credit reserve. The Brazilian letter of credit and other
letters of credit are subject to fees of 2.5% and 2.00%, respectively, as
defined. As of December 31, 2002, the Company also has outstanding an Indian
letter of credit of $600,000 (necessary to support a tender offer), and a
$624,000 letter of credit required by the State of New York for Worker's
Compensation. The Brazilian letter of credit expired October 1, 2002 and was
initially renewed for $6.00 million up to February 28, 2003, and then again up
to June 15, 2003.

      Interest rates and fees under the Credit Agreement will be adjusted upward
or downward quarterly beginning January 2002 based on the previous 12 months'
actual fixed charge coverage ratio. Based on the fixed charge coverage ratio for
the 12 months ended December 31, 2002, the Company expects the letter of credit
fees and the applicable margins on the revolving loans and term loans in the
U.S. and Europe to decrease by 0.25%. In addition, the Company expects the fee
charged on the unused revolving loans in the U.S. and Europe to remain at 0.25%.

      The Credit Agreement contains various restrictive covenants which include,
but are not limited to, a minimum fixed charge coverage ratio, a maximum funded
debt to EBITDA ratio, a minimum interest coverage ratio, and restrictions on
capital expenditures, distributions, restricted investments, and additional
debt, as defined. Borrowings under the Credit Agreement are secured by assets of
the Company in the U.S. and the U.K. including, but not limited to, accounts
receivable, inventory, plant and equipment. All borrowings under the Credit
Agreement are guaranteed by the U.S. parent.

      At December 31, 2002, Unifrax also had outstanding subordinated promissory
notes to SEPR, for $16,000,000 ($12,000,000 at December 31, 2001). The notes
require annual interest payments at agreed upon rates. The notes mature on June
30, 2004. The notes permit interest payments to be added to principal in the
event payment of the interest would violate provisions of the Company's senior
indebtedness.

      In addition, Holding, which owns approximately 90% of Unifrax had
outstanding to SEPR at December 31, 2002, subordinated promissory notes totaling
$12,500,000 ($16,500,000 at December 31, 2001). The subordinated note between
Unifrax and SEPR can be increased under certain conditions with a corresponding
decrease in the subordinated notes between Holding and SEPR. On October 4, 2002,
the subordinated note between Unifrax and SEPR was increased by $4,000,000 and
the subordinated notes between Holding and SEPR were decreased $4,000,000.
Unifrax accounted for the additional notes assumed from Holding as a reduction
in the liquidation preference value of the Series A preferred stock issued to
Holding.

Maturities of debt are as follows (in thousands):

<TABLE>
<S>                                            <C>
                            2003               $ 92,679
                            2004                 16,028
                            2005                     29
</TABLE>

      The Company's Credit Agreement matures on August 1, 2003, and its 10.5%
Senior Notes mature November 1, 2003. Also, the subordinated promissory notes
payable to SEPR mature on June 30, 2004. During the fourth quarter of 2002 the
Company began discussions with several banking and other lending institutions
regarding the


                                                                              30
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

refinancing of all or a significant portion of its indebtedness.
Based on the preliminary discussions with these banks and other lending
institutions, management believes that all indebtedness maturing in 2003 can be
refinanced prior to its maturity date.

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

      At December 31, 2001 and 2002, the carrying amount and fair value of the
Company's financial instruments were as follows. Bracketed amounts in the
carrying amount column represent liabilities for potential cash outflows.
Bracketed amounts in the fair value column represent estimated cash outflows
required to currently settle the financial instrument at current market rates.

<TABLE>
<CAPTION>
                                        DECEMBER 31, 2001                  DECEMBER 31, 2002
                                        -----------------                  -----------------
                                     CARRYING           FAIR           CARRYING           FAIR
                                      AMOUNT           VALUE            AMOUNT           VALUE
                                    ----------       ----------       ----------       ----------
                                                            (In Thousands)
<S>                                 <C>              <C>              <C>              <C>
Assets:
     Cash and cash equivalents      $    3,219       $    3,219       $    5,962       $    5,962
     Marketable securities               1,464            1,464            2,094            2,094
Liabilities:
     Long-term debt (including
         current maturities)          (115,264)        (115,264)        (108,736)        (108,736)
</TABLE>

      The following methods and assumptions were used by the Company in
estimating the fair values of financial instruments. The carrying amount
reported in the balance sheet for cash and cash equivalents approximates fair
value. The fair value of the Company's marketable securities is based upon
current market quotes. The fair value of the Company's senior notes was
estimated using quoted prices. The fair value of variable rate loans approximate
carrying amounts.

      On January 30, 2002, the Company entered into an interest rate swap
agreement with Bank of America N.A. to mature November 1, 2003, effectively
converting fixed-rate debt with a notional principal amount of $25,000,000 to
variable-rate debt. Under the terms of the agreement, Unifrax received 10.50%
and paid 3 month LIBOR plus 7.30%, compounded quarterly and paid semi-annually
on the interest payment dates associated with the Senior Notes. Bank of America
N.A., in accordance with the terms of the agreement, exercised their right to
terminate the agreement, effective November 1, 2002.

7. RELATED PARTY TRANSACTIONS

      An affiliate of Kirtland Capital Partners II L.P. ("Kirtland"), the
principal shareholder of Holding, and the Company have entered into an Advisory
Services Agreement pursuant to which Kirtland provides management consulting and
financial advisory services to the Company for a stipulated fee. The Company was
charged $500,000 in 2000 and 2001 and $300,000 in 2002 by Kirtland in connection
with the Advisory Services Agreement. In addition, if the Company completes an
acquisition, Kirtland is entitled to receive a fee of approximately 1% of the
purchase price, including assumed debt. In connection with the Acquisition, the
Company paid Kirtland a fee of $585,000 in 2000.


                                                                              31
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. ACCRUED EXPENSES

Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31
                                                             2001           2002
                                                          -------        -------
                                                             (In Thousands)
<S>                                                       <C>            <C>
Accrued compensation and employee benefits                $ 6,335        $ 6,970
Interest                                                    3,842          2,889
Other                                                       4,678          5,414
                                                          -------        -------
                                                          $14,855        $15,273
                                                          =======        =======
</TABLE>

9. PENSION AND OTHER RETIREMENT BENEFITS

      The Company sponsors qualified defined benefit pension plans (the "Plans")
covering its U.S. hourly union employees, its U.K. employees, and certain other
foreign employees. Benefits under the Plans are generally based on length of
service. The following tables summarize certain information with respect to the
Plans:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31
                                                                 2001              2002
                                                           ----------        ----------
                                                                 (In Thousands)
<S>                                                        <C>               <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year                    $    1,947        $   16,229
Service cost                                                       37               907
Interest cost                                                     181             1,044
Benefits paid                                                    (166)             (144)
Actuarial gain                                                     51               177
Plan amendments                                                    --               102
Benefit obligations transferred from predecessor plan          14,119                --
Foreign currency translation impact                                60             2,250
                                                           ----------        ----------
Benefit obligation at end of year                              16,229            20,565
                                                           ----------        ----------

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year                    870            15,199
Actual return on plan assets                                      (64)           (2,839)
Employer contribution                                             156               720
Employee contribution                                              --               246
Benefits paid                                                    (166)              (37)
Plan asset transferred from predecessor plan                   14,304                --
Foreign currency translation impact                                99             1,402
                                                           ----------        ----------
Fair value of plan assets at end of year                       15,199            14,691
                                                           ----------        ----------

Funded status                                                  (1,030)           (5,874)
Unrecognized prior service cost                                    86               180
Unrecognized actuarial losses                                     140             4,901
Additional minimum liability                                     (226)             (678)
                                                           ----------        ----------
Accrued pension obligation                                 $   (1,030)       $   (1,471)
                                                           ==========        ==========
</TABLE>


                                                                              32
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
WEIGHTED-AVERAGE ASSUMPTIONS AS OF DECEMBER 31
<S>                                                        <C>               <C>
Discount rate                                              6.0% - 7.0%       5.8% - 6.5%
Expected return on plan assets                             6.0% - 8.0%              8.0%
Rate of compensation increase                                     3.5%             3.65%
</TABLE>

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31
                                                         2000           2001           2002
                                                     --------       --------       --------
                                                                  (In Thousands)
<S>                                                  <C>            <C>            <C>
COMPONENTS OF NET PERIODIC PENSION COST
Service cost                                         $     62       $     37       $    907
Interest cost                                              93            181          1,044
Expected return on plan assets                            (74)           (70)        (1,260)

Amortization of unrecognized prior service cost
     and actuarial gains and losses                         2              7              8
                                                     --------       --------       --------
Net periodic pension cost                            $     83       $    155       $    699
                                                     ========       ========       ========
</TABLE>

<TABLE>
<CAPTION>
                                                               DECEMBER 31
                                                            2001           2002
                                                         -------        -------
                                                             (In Thousands)
<S>                                                      <C>            <C>
AMOUNTS RECOGNIZED IN THE BALANCE SHEET
Prepaid (accrued) benefit asset (liability):
     Other assets                                        $   114        $   252
     Accrued liabilities                                    (384)          (100)
     Other long-term liabilities                            (760)        (1,623)
                                                         -------        -------
                                                         $(1,030)       $(1,471)
                                                         =======        =======
</TABLE>

      Unrecognized gains and losses and prior service cost are amortized on a
straight-line basis over a period approximating the average remaining service
period for active participants.

      The aggregate accumulated benefit obligation and aggregate fair value of
plan assets for pension plans with accumulated benefit obligations in excess of
plan assets were $2,412,000 and $689,000, respectively, as of December 31, 2002,
and $1,940,000 and $796,000, respectively, at December 31, 2001.

      Prior to the Acquisition, the Company's employees in the U.K. participated
in a defined benefit pension plan sponsored by affiliates of Saint-Gobain. In
connection with the Acquisition, Saint-Gobain retained pension liabilities
associated with all retirees and agreed to transfer assets equal to the
projected benefit obligations of all active employees transferred with the U.K.
Ceramic Fiber Business to a similar defined benefit pension plan to be
established and sponsored by the Company's U.K. subsidiary. Effective November
2001, the Company created a defined benefit pension plan in the United Kingdom.
In January 2002, Saint-Gobain transferred approximately GBP 9.9 million to
Barclay's Global Investors (BGI), the UK plan's fund manager, who then promptly
invested the transferred amount, largely in equity mutual funds. The funds
transferred represented the U.K. actuary's estimate of the pension rights and
entitlements, under the Trust Deed and Rules, of the members who transferred
from the Saint-Gobain defined benefit pension plan to the new Unifrax defined
benefit pension plan.

      From the Acquisition date through the effective date of the U.K. pension
plan, the Company continued to make contributions to the predecessor
Saint-Gobain plan. Contributions for 2001 totaled GBP 329,000 (approximately
$470,000). There were no contributions to the predecessor Saint-Gobain plan in
2002.


                                                                              33
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

      In France, Germany and Italy, the Company's employees participate in a
national retirement plan which may require annual contributions by the employer
and the employee. In some instances the Company may provide a limited lump sum
supplement to the employee at the retirement date.

      The Company also sponsors a qualified defined contribution, money-purchase
pension plan for its U.S. salaried employees. Under the money-purchase plan, the
Company contributes an amount equal to 2.5% of an employee's applicable annual
compensation to investment accounts as directed by the employee. The annual
expense for the money purchase plan was $458,000, $467,000 and $477,000 for the
years ended December 31, 2000, 2001 and 2002, respectively.

      The Company also sponsors a defined contribution 401(k) plan which is
available to substantially all U.S., non-union employees of the Company. Company
contributions, representing a 50% matching of employee contributions up to a
maximum of 6% of the employee's base pay, amounted to $488,000, $546,000 and
$466,000 during the years ended December 31, 2000, 2001 and 2002, respectively.

      During 2000, Unifrax began a non-qualified defined contribution retirement
plan covering the officers of the Company. The provisions of the Plan provide
Company contributions in an amount equal to 2.5% of compensation in excess of
applicable Internal Revenue Service limits, as well as Company contributions
representing a 50% matching of officer contributions in excess of Internal
Revenue Service limits, up to a maximum of 6% of the officer's base pay.

      In Australia, certain of the Company's current and former employees
participate in a defined contribution (superannuation) pension plan administered
by a trustee. Total assets in the plan at December 31, 2002 were approximately
A$2.6 million (approximately $1.5 million) and at December 31, 2001
approximately A$2.5 million (approximately $1.3 million). The annual expense for
the Australian plan in 2002 was approximately A$220,000 (approximately
$120,000), and for 2001 approximately A$98,000 (approximately $50,000).

      In addition to pension benefits, the Company also provides certain health
care benefits to retired U.S. employees who meet eligibility requirements. The
Company's policy is to fund other postretirement benefits as insurance premiums
or claims become due.

      The following table summarizes certain information with respect to the
Company's other postretirement benefits.

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31
                                                              2000           2001           2002
                                                            --------       --------       --------
                                                                       (In Thousands)
<S>                                                         <C>            <C>            <C>
COMPONENTS OF NET PERIODIC POSTRETIREMENT BENEFIT COST
Service cost--benefits earned                               $     95       $     69       $     79
Interest costs                                                   139            116            124
Amortization of unrecognized net gain                            (97)           (92)          (117)
Amortization of unrecognized prior service cost                   40             40             40
                                                            --------       --------       --------
Net periodic postretirement benefit expense                 $    177       $    133       $    126
                                                            ========       ========       ========
</TABLE>


                                                                              34
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                  DECEMBER 31
                                                2001          2002
                                             -------       -------
                                                 (In Thousands)
<S>                                          <C>           <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year      $ 2,069       $ 1,792
Service cost                                      69            79
Interest cost                                    116           124
Actuarial loss (gain)                           (418)           20
Benefits paid                                    (44)          (45)
                                             -------       -------
Benefit obligation at end of year              1,792         1,970
Unrecognized prior service cost                 (367)         (327)
Unrecognized actuarial gains                   2,153         2,016
                                             -------       -------
Accrued postretirement benefit cost          $ 3,578       $ 3,659
                                             =======       =======
</TABLE>

<TABLE>
<CAPTION>
WEIGHTED AVERAGE ASSUMPTIONS AS OF DECEMBER 31
<S>                                                  <C>         <C>
Discount rate                                        7.0%        6.5%
</TABLE>

      The assumed annual rate of future increase in the per capita cost of
health care benefits (health care cost trend rate) for 2002 and beyond is 6% for
all beneficiaries. 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 cost trend rates would have the following effect:

<TABLE>
<CAPTION>
                                                              ONE PERCENTAGE    ONE PERCENTAGE
                                                              POINT INCREASE    POINT DECREASE
                                                              --------------    --------------
                                                                       (In Thousands)
<S>                                                           <C>               <C>
Effect on total of service and interest cost components          $      1          $     (1)
Effect on postretirement benefit obligation                             6                (8)
</TABLE>

      Unrecognized gains and losses and prior service cost are amortized on a
straight-line basis over a period approximating the average remaining service
period for active participants.

10. INCOME TAXES

The components of income before income taxes and minority interest are as
follows:

<TABLE>
<CAPTION>
                                                YEAR ENDED DECEMBER 31
                                      2000               2001               2002
                                   -------            -------            -------
                                                   (In Thousands)
<S>                                <C>                <C>                <C>
Domestic                           $10,576            $ 6,237            $ 5,890
Foreign                                814              6,648              7,663
                                   -------            -------            -------
                                   $11,390            $12,885            $13,553
                                   =======            =======            =======
</TABLE>


                                                                              35
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31
                                      2000               2001               2002
                                   -------            -------            -------
                                                   (In Thousands)
<S>                                <C>                <C>                <C>
Current:
         Federal                   $   376            $   640            $    56
         State                         149                146               (273)
         Foreign                       534              2,254              2,961
                                   -------            -------            -------
                                     1,059              3,040              2,744
Deferred:                            3,182             (5,304)             1,649
                                   -------            -------            -------
                                   $ 4,241            $(2,264)           $ 4,393
                                   =======            =======            =======
</TABLE>

The provision for income taxes differs from the amount computed by applying the
statutory income tax rate as follows:

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31
                                            2000          2001          2002
                                         -------       -------       -------
                                                    (In Thousands)
<S>                                     <C>           <C>           <C>
Income before income taxes at 34%        $ 3,872       $ 4,381       $ 4,608
Impact of foreign taxes                      226            36            69
Permanent income tax disallowances           177            13            77
State taxes, net of federal benefit           98            96           (22)
Reduction of valuation allowance            (483)       (7,250)           --
Other                                        351           460          (339)
                                         -------       -------       -------
                                         $ 4,241       $(2,264)      $ 4,393
                                         =======       =======       =======
</TABLE>

      Deferred income taxes reflect the net effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. At December 31, 2001 and
2002, the major components of deferred tax assets and liabilities were as
follows:

<TABLE>
<CAPTION>
                                                         DECEMBER 31
                                                       2001           2002
                                                   --------       --------
                                                        (In Thousands)
<S>                                                <C>            <C>
Deferred tax liabilities:
     Property, plant and equipment                 $ (4,458)      $ (5,361)
     Other                                             (176)          (250)
                                                   --------       --------
Gross deferred tax liabilities                       (4,634)        (5,611)

Deferred tax assets:
     Tax goodwill and other intangible assets        16,650         14,957
     Net operating loss carryforward                  4,996          5,743
     Accrued liabilities                              1,361          1,131
     Accrued postretirement benefit cost              1,360          1,390
     Inventory                                          699            307
     Other                                              823          1,323
                                                   --------       --------
Gross deferred tax assets                            25,889         24,851
                                                   --------       --------
Net deferred tax asset                             $ 21,255       $ 19,240
                                                   ========       ========
</TABLE>

      During 2001, the Company reversed the remaining valuation allowance on
deferred tax assets, all of which related to the Company's U.S. operations.
Management has determined that based upon the expected future profitability of
the Company's U.S. operations, the recent utilization of net operating loss
carryforwards for Federal


                                                                              36
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

income tax purposes and the expectation that the remaining net operating loss
carryforwards for Federal income tax purposes will be fully utilized within the
subsequent four year period, it is more likely than not that the deferred tax
assets will be realized and, accordingly, a valuation allowance is no longer
necessary.

      The Recapitalization Agreement provided for an election to have the
Recapitalization (see Note 1) treated as an asset purchase for income tax
purposes, with a resulting increase in the tax basis of assets. The historical
cost basis of assets and liabilities was retained for financial reporting
purposes.

      At December 31, 2002, the Company has Federal and state net operating loss
carryforwards totaling approximately $16 million which will be available to
offset future taxable income. These net operating loss carryforwards expire in
2012 through 2023.

11. STOCK OPTIONS

      Effective October 30, 1996 the Company established the Unifrax Corporation
1996 Stock Option Plan to make awards of stock options to officers and key
employees for up to 1,505 shares of common stock. During 2000, the Stock Option
Plan was amended to provide for a total of up to 2,407 shares of common stock.
The options are granted at the approximate fair value of the underlying shares
at the date of grant and generally vest in equal amounts over a four year period
from the grant date. The options expire ten years after grant. A summary of
stock option activity and exercise prices is as follows:

<TABLE>
<CAPTION>
                                                    2000                          2001                         2002
                                          ------------------------      ------------------------      ------------------------
                                                         WEIGHTED                      WEIGHTED                      WEIGHTED
                                                          AVERAGE                       AVERAGE                       AVERAGE
                                                         EXERCISE                      EXERCISE                      EXERCISE
                                           OPTIONS         PRICE         OPTIONS         PRICE         OPTIONS         PRICE
                                          ---------      ---------      ---------      ---------      ---------      ---------
<S>                                       <C>           <C>             <C>            <C>            <C>            <C>
Outstanding, January 1                        1,236      $   1,500          1,531      $   2,047          2,347      $   2,843
Exercised                                        --            n/a             --            n/a            (32)         1,500
Granted                                         295          4,337            841          4,337             --            n/a
Forfeited                                        --            n/a            (25)         4,337             --            n/a
Expired                                          --            n/a             --            n/a            (22)         1,500
                                          ---------      ---------      ---------      ---------      ---------      ---------

Outstanding, December 31                      1,531      $   2,047          2,347      $   2,843          2,293      $   2,875
                                          =========      =========      =========      =========      =========      =========

Exercisable, end of year                      1,196      $   1,500          1,279      $   1,594          1,533      $   2,147
                                          =========      =========      =========      =========      =========      =========

Weighted average fair value of
     options granted during the year                     $     n/a                     $     641                     $     n/a
                                                         =========                     =========                     =========
</TABLE>


                                                                              37
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes information for stock options outstanding and
exercisable at December 31, 2002:

<TABLE>
<CAPTION>
                                                                                           WEIGHTED-
                                                                                            AVERAGE
                                                OPTIONS               OPTIONS              REMAINING
                                              OUTSTANDING           EXERCISABLE              LIFE
                                              -----------           -----------            ----------
<S>                                           <C>                   <C>                    <C>
                  Exercise price:
                  $1,500                          1,182                 1,182               4.05 years
                  $4,337                          1,111                   351               7.93 years
</TABLE>

12. LEASE COMMITMENTS AND RENTALS

      The Company rents three manufacturing facilities in the United States and
certain equipment under various operating leases. The lease agreement for one of
the facilities expires 2014 and contains options which allow the Company to
extend the lease term for up to two additional five year periods. The lease
agreement for a second facility expires 2004 and contains options which allow
the Company to extend the lease term for up to two additional five year periods,
or to purchase the facility for a purchase price equal to fair value. Total
rental expense was $2,181,000, $3,500,000 and $3,191,000 for the years ended
December 31, 2000, 2001 and 2002, respectively.

      Future minimum lease payments under all non-cancelable operating leases
having a remaining term in excess of one year as of December 31, 2002 are as
follows (in thousands):

<TABLE>
<S>                                        <C>
                 2003                      $     1,673
                 2004                            1,255
                 2005                            1,030
                 2006                              912
                 2007                              848
                 Thereafter                      5,609
</TABLE>

13. CONTINGENCIES

CERAMIC FIBERS

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

      From time to time Unifrax and other manufacturers of ceramic fibers have
been named as defendants in lawsuits alleging death or personal injury or in
worker's compensation claims as a result of exposure in the manufacture and
handling of ceramic fiber and other products. The amount of any liability that
might ultimately exist with respect to these claims or any other unasserted
claims is presently not determinable. The Company believes the lawsuits brought
against it have been without merit and the litigation currently pending, or to
its knowledge threatened, will not have a material adverse effect on the
financial condition or results of operations of the Company.


                                                                              38
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company's belief is based on the fact that, although animal studies have
indicated that ceramic fiber inhaled by test animals at elevated doses can cause
disease, there is no evidence that exposure to refractory ceramic fiber has
resulted in disease in humans.

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

      Pursuant to the Recapitalization Agreement, BP America Inc. and certain of
its affiliates (collectively "BP America"), have agreed to indemnify the Company
against liabilities for personal injury and wrongful death attributable to
exposure which occurred prior to October 30, 1996 (the "BP Closing") to
refractory ceramic fibers manufactured by the Company. BP America has agreed to
indemnify the Company against all liabilities arising from exposure claims
pending at the time of the BP Closing. For all other claims arising from alleged
exposure occurring solely prior to the BP Closing, BP America has agreed to
indemnify the Company against 80% of all losses, until the total loss which the
Company incurs reaches $3.0 million, after which time BP America has agreed to
indemnify the Company against 100% of such losses. BP America has agreed to
indemnify the Company against all punitive damages attributable to the conduct
of the Company prior to the BP Closing. Where losses arise from alleged exposure
both before and after the BP closing, the losses will be allocated between BP
America and the Company, pro rata, based on the length of exposure or pursuant
to arbitration if initiated by the Company. To date the Company has incurred no
losses applicable to the $3.0 million total mentioned above.

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

      Pursuant to a Warranty Agreement executed in conjunction with the
Acquisition, SEPR agreed to indemnify the Company, subject to certain maximums
as established in the Warranty Agreement, against losses resulting from alleged
or actual exposure to ceramic fibers which occurred prior to October 4, 2000
(the "SEPR Closing"). Where losses arise from alleged exposure both before and
after the SEPR Closing, the losses will be determined pro rata, temporis.

ENVIRONMENTAL MATTERS

      The Company is subject to loss contingencies pursuant to various federal,
state and local environmental laws and regulations and is currently involved in
several actions regarding the clean-up of disposal sites alleged to contain
hazardous and/or toxic wastes generated over a number of years. These include
possible obligations to remove or mitigate the effects on the environment of the
placement, storage, disposal or release of certain chemical or petroleum
substances by the Company or by other parties. In addition, The Carborundum
Company has entered into a Consent Decree with the New York State Department of
Environmental Conservation to remediate contamination at the facility located in
Sanborn, New York. While the Company's ultimate clean-up liability at the
various sites is not presently determinable, the Company does not expect to
incur any material liability with respect to any of these sites,


                                                                              39
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

individually or in the aggregate, as a result of its activities at these sites.
Furthermore, BP America has agreed to indemnify the Company for certain
environmental liabilities, which might ultimately exist, under the
Recapitalization Agreement. In addition, BP America has assumed liability for
other potential off-site clean-up obligations associated with Carborundum. The
locations at which the Company has maintained potential off-site liability in
the U.S. and the Carborundum Sanborn, New York facility are described below.

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

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

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

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

      Pursuant to the Warranty Agreement executed in conjunction with the sale
of its ceramic fiber business to Unifrax, SEPR also agreed to indemnify the
Company against certain environmental liabilities related to activities
conducted at the various acquired sites prior to the SEPR Closing, subject to
certain maximums as established in the Warranty Agreement.

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

LEGAL PROCEEDINGS

      In addition to the ceramic fiber and environmental matters discussed
above, BP/Carborundum and Unifrax are involved in litigation relating to various
claims arising out of their operations in the normal course of business,


                                                                              40
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

including product liability claims. In addition, the Company has recently been
named in a lawsuit alleging patent infringement. The Company is also involved in
two employment-related legal claims, the outcomes of which are currently not
expected to be material to the Company. While the outcomes of these various
litigations could be material to the results of operations in the period
recognized, based on the current claims asserted the management of the Company
believes that the ultimate liability, if any, resulting from such matters will
not have a material adverse effect on the Company's financial position.

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

      Also, SEPR has indemnified Unifrax for any future asbestos claims which
may arise related to alleged pre- SEPR Closing asbestos exposures associated
with products or sites sold by SEPR to Unifrax.

14. PREFERRED STOCK

SERIES A PREFERRED STOCK

      In conjunction with the Acquisition, Unifrax amended its Certificate of
Incorporation authorizing the issuance of up to 30,000 shares of cumulative,
nonvoting, non-convertible Series A preferred stock, with a par value of $0.01
per share. The Company issued 20,500 shares of Series A preferred stock to
Holding, and Holding pledged those shares as security for its $20,500,000
subordinated note payable to SEPR. Dividends are payable quarterly on March 31,
June 30, September 30 and December 31 of each year at an annual rate of 7% from
the date of issuance through December 31, 2001, 8.5% from January 1, 2002
through December 31, 2002, and 10% thereafter.

      In the event that on January 20th of any year the dividends owed by the
Company to the holders of the Series A preferred stock are in arrears, then
until the dividends in arrears have been paid, the holders of a majority of the
shares of the Series A preferred stock are entitled as a class to elect one
Director of the Company, and the Board of Directors of the Company shall be
expanded by one director during such period. On January 31, 2001, the Company
paid dividends on the Series A preferred stock of $467,849. On December 18, 2001
the Company declared dividends on the Series A preferred stock of $1,364,733,
which were paid on January 31, 2002. On December 17, 2002 , the Company declared
dividends on the Series A preferred stock of $1,307,575, which were paid in
February 2003. Declared but unpaid dividends at December 31, 2001 and December
31, 2002, were included in accounts payable, related parties, in the
accompanying balance sheets.

      The Company may redeem the outstanding shares of Series A preferred stock
at any time at a price per share equal to the liquidation preference amount plus
accrued but unpaid dividends. The amount of the liquidation preference may be
reduced if the Company were to issue certain guarantees associated with the
$20,500,000 of subordinated promissory notes issued by Holding to SEPR, or if
the Company were to increase the $8,000,000 subordinated promissory note issued
by Unifrax to SEPR. On October 4, 2001, the Company increased its subordinated
promissory note to SEPR from $8,000,000 to $12,000,000, as required by the note.
On the same date, the subordinated notes issued by Unifrax Holding Co. to SEPR
were reduced by $4,000,000, from $20,500,000 to $16,500,000. On October 4, 2002,
the Company increased its subordinated promissory note to SEPR from $12,000,000
to $16,000,000 as required by the note. On the same date, the subordinated notes
issued by Unifrax Holding Co. to SEPR were reduced by $4,000,000 from
$16,500,000 to $12,500,000. The liquidation preference value of the Series A
preferred stock issued by Unifrax Corporation to Unifrax Holding Co. and pledged
to Saint-Gobain as security for the subordinated notes, was also reduced by
$4,000,000 on October 4, 2002, from $805 per share to $610 per share (in 2001
from $1,000 per share to $805 per share).


                                                                              41
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SERIES B PREFERRED STOCK

      The Series B preferred stock has a par value of $0.01 per share and is
redeemable, in full, at the option of the Company, at $1,500 per share, plus
accrued but unpaid dividends, which equals the stated value of the preferred
stock. The preferred Series B stock accrues cumulative dividends at the rate of
6% per annum, payable annually, and is convertible, at the option of the
stockholder, into an equal number of shares of common stock. The number of
shares into which the Series B preferred stock is convertible is subject to
adjustment for subsequent stock dividends payable on the common stock, stock
splits or reverse stock splits, and other modifications to the common stock.

      Dividends in arrears totaled $786,250 at December 31, 2002 or $472 per
share ($636,250 or $382 per share at December 31, 2001).

15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

      The components of accumulated other comprehensive income (loss), net of
related tax, are as follows:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31
                                                              2001           2002
                                                          --------       --------
                                                              (In Thousands)
<S>                                                       <C>            <C>
         Currency translation adjustment                  $ (2,034)      $     34
         Minimum pension liability adjustment                  (87)          (309)
         Unrealized gain on marketable equity securities        64            159
                                                          --------       --------
                                                          $ (2,057)      $   (116)
                                                          ========       ========
</TABLE>

16. SEGMENT AND GEOGRAPHIC INFORMATION

      The Company regards its principal business as being in a single operating
segment, ceramic fibers.

      Selected information related to Unifrax Corporation's operations by
geographical area is as follows:

<TABLE>
<CAPTION>
                                            United
                                            States              Other
                                         ----------          ----------
<S>                                      <C>                 <C>
         December 31, 2002:
              Net sales                  $   63,453          $   90,506
              Long-lived assets              33,734              31,732

         December 31, 2001:
              Net sales                  $   70,863          $   87,576
              Long-lived assets              35,778              33,331
</TABLE>

17. EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

      In June 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting


                                                                              42
<PAGE>

                               UNIFRAX CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Standards No. 141, Business Combinations, and No. 142, Goodwill and Other
Intangible Assets, effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill and intangible assets deemed to have indefinite
lives will no longer be amortized but will be subject to annual impairment tests
in accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives.

      The Company has applied the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
non-amortization provisions of the statement has not had any impact on the net
income of the Company.

      In August 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 144, Accounting for the Impairment of
Disposal of Long-Lived Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, the criteria for classifying an asset as
held-for-sale are significantly changed from prior treatment. Assets which are
to be disposed of are stated at the lower of their fair values or carrying
amounts and depreciation is no longer recognized.

      The Company has applied this new rule beginning in the first quarter of
2002. The implementation of this new rule has not impacted the financial
position of the Company in 2002.


                                                                              43
<PAGE>

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS

                               UNIFRAX CORPORATION
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               BALANCE
                                                                  AT                     CHARGED TO                      BALANCE AT
                                                              BEGINNING    CHARGED TO      OTHER                           END OF
                                                              OF PERIOD     EXPENSE       ACCOUNTS       DEDUCTIONS        PERIOD
                                                              ----------   ----------    ----------      ----------      ----------
<S>                                                           <C>          <C>           <C>             <C>             <C>
YEAR ENDED DECMEBER 31, 2002
Deducted from asset accounts:
     Allowance for doubtful accounts                          $    1,236   $      289    $       48(d)   $      269(a)   $    1,304
     Allowance for return                                            826        3,102            24(d)        3,340(b)          612
     Allowance for obsolescence and shrinkage                        915          402            32(d)          369             980
                                                              ----------   ----------    ----------      ----------      ----------
                                                              $    2,977   $    3,793    $      104      $    3,978      $    2,896
                                                              ==========   ==========    ==========      ==========      ==========

YEAR ENDED DECEMBER 31, 2001
Deducted from asset accounts:
     Allowance for doubtful accounts                          $    1,062   $      441    $       --      $      267(a)   $    1,236
     Allowance for return                                            915        4,455            --           4,544(b)          826
     Allowance for obsolescence and shrinkage                      1,355          451            --             891             915
                                                              ----------   ----------    ----------      ----------      ----------

                                                              $    3,332   $    5,347    $       --      $    5,702      $    2,977
                                                              ==========   ==========    ==========      ==========      ==========

YEAR ENDED DECEMBER 31, 2000
Deducted from asset accounts:
     Allowance for doubtful accounts                          $      380   $      134    $      561(c)   $       13(a)   $    1,062
     Allowance for return                                            441        1,916           266(c)        1,708(b)          915
     Allowance for obsolescence and shrinkage                         --          234         1,299(c)          178           1,355
                                                              ----------   ----------    ----------      ----------      ----------

                                                              $      821   $    2,284    $    2,126      $    1,899      $    3,332
                                                              ==========   ==========    ==========      ==========      ==========
</TABLE>

(a)   Uncollectible accounts written off, net of recoveries.

(b)   Returns from customers during the year.

(c)   Valuation allowances of businesses acquired.

(d)   Impact of exchange changes.

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

        None.


                                                                              44
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

      The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME                      AGE       POSITION
----                      ---       --------
<S>                       <C>       <C>
William P. Kelly           53       Director, President and Chief Executive Officer
Mark D. Roos               47       Senior Vice President and Chief Financial Officer
David E. Brooks            53       Senior Vice President, Americas
Kevin J. O'Gorman          52       Senior Vice President, Europe, Africa and India
Paul J. Viola              47       Vice President, Acquisitions and Strategic Development
Paul M. Boymel             50       Worldwide Vice President, Technology
Joseph J. Kuchera          45       Vice President, Human Resources
John E. Pilecki            50       Vice President, Engineering and Purchasing
Thomas N. Littman          39       Director
William D. Manning, Jr.    68       Director
John G. Nestor             58       Chairman of the Board
John F. Turben             67       Director
Edmund S. Wright           60       Director
</TABLE>

      Mr. Kelly has been President and Chief Executive Officer of the Company
since February 1996. He joined Carborundum in 1972 as an engineer, and served in
several positions, including Vice President of Carborundum's worldwide ceramic
fiber business from 1993 to 1996, Vice President of Carborundum's domestic
ceramic fiber business from 1989 to 1993, and Vice President of Carborundum's
European operations from 1986-1989.

      Mr. Roos has been Senior Vice President since May 2001 and Vice President
and Chief Financial Officer of the Company since February 1996, and has been
Chief Financial Officer of the Company since 1995. He joined Carborundum in 1985
and served in several financial planning, control and business strategy
positions until he left in 1991 to become Vice President, Finance and
Administration, of The Airolite Company, a metal products manufacturer. He
rejoined Carborundum in 1993 as Director of Finance, Planning and Control.

      Mr. Brooks has been Senior Vice President, Americas for the Company since
May 2001 and Vice President, Americas since October 2000. Previously he was Vice
President of Sales and Marketing since May 1998. Before joining Unifrax, he was
President of Monofrax, Inc., a unit of Cookson Group/Vesuvius Refractories,
since January 1997. Mr. Brooks originally joined Carborundum in 1980 and served
in several positions, including Marketing Manager of Carborundum's domestic
ceramic fiber business from 1988 to 1993 and General Manager of the Monofrax
Refractories Division from 1993 to 1996.

      Mr. O'Gorman has been Senior Vice President, Europe, Africa and India
since May 2001 and Vice President, Europe, Africa and India since October 2000.
Previously he was Vice President of Operations since February 1996. He joined
Carborundum in 1990 and served as General Manager, Manufacturing and Engineering
of its worldwide ceramic fiber business from 1993 to 1995 and Manager,
Manufacturing for its domestic ceramic fiber business from 1990 to 1993.


                                                                              45
<PAGE>

      Mr. Viola has been Vice President, Acquisitions and Strategic Development
of the Company since May 1998. Previously he had been Vice President, Sales and
Marketing of the Company since February 1996. Mr. Viola joined Carborundum in
1978 and served in several positions, including General Manager, Sales and
Marketing for Carborundum's worldwide ceramic fiber business from 1993 to 1995
and Manager of the Automotive Products Group of Carborundum's Structural
Ceramics Division from 1991 to 1993.

      Dr. Boymel has been Worldwide Vice President, Research and Development of
the Company since May 2001 and Vice President, Research and Development since
February 1996 and Manager of Technology since 1989. He joined Carborundum in
1981.

      Mr. Kuchera has been Vice President, Human Resources of the Company since
February 1996 and was Manager of Human Resources for Carborundum's domestic
ceramic fiber business from 1988 to 1996. He joined Carborundum in 1981 and
served in several human resource positions in connection with a number of
different Carborundum business units.

      Mr. Pilecki has been Vice President, Engineering and Purchasing of the
Company since February 1996. He joined Carborundum's ceramic fiber business in
1976 and has served in various engineering and manufacturing positions,
including domestic engineering manager since 1990 and worldwide engineering and
purchasing manager since 1993.

      Mr. Littman has been a Partner with Kirtland since 1995. He is a director
of R Tape Corporation, Stonebridge Industries, Inc. and Instron Corporation.

      Mr. Manning has been self-employed as a management consultant for more
than 6 years. From 1987 to 1994, he was Senior Vice President of The Lubrizol
Corporation and President of Lubrizol Petroleum Chemicals Co. Mr. Manning is a
Director of Robbins and Myers, Inc.

      Mr. Nestor has been with Kirtland since 1986 and has been a Managing
Partner since 1995. He serves as Chairman of TruSeal Technologies, Inc. and
Essex Crane Rental Corp. and is a director of Kirtland Capital Partners,
Fairmount Minerals Ltd., R Tape Corporation and PVC Container Corporation.

      Mr. Turben founded Chagrin Valley Company, the predecessor to Kirtland
Capital Partners in 1977. During the 1960s and 70s, he served as Chairman of the
Executive Committee and Vice Chairman of the Board of Prescott, Ball & Turben,
an investment banking firm headquartered in Cleveland, and was Chairman of the
Executive Committee and Director of the Geneve Corp. He is Chairman of PVC
Container Corp., Instron Corporation, Fairport Asset Management LLC and is
Chairman of the Executive Committee of Fairmount Minerals Ltd. He is a member of
Kirtland Capital Partners' Advisory Board, and a Director of Stonebridge
Industries, Inc., Gries Financial LLC, PDM Bridge LLC and NACCO Industries, Inc.

      Mr. Wright has been affiliated with Kirtland since 1985. He is past
Chairman of Dakota Catalyst Products Inc. and from 1981 to 1994 was President
and Chief Executive Officer of North American Refractories Company. Mr. Wright
is a director of Fairmount Minerals Ltd., STAM, Inc., Stonebridge Industries,
Inc., Essex Crane Rental Corporation, and Chairman of Miss Molly's Tea Room,
Inc.


                                                                              46
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

      All non-Executive Directors receive an annual retainer of $10,000 which is
paid in approximately quarterly installments.

      The following table sets forth the respective amounts of compensation of
the Chief Executive Officer and the next four highest-paid executive officers of
the Company (the "named executive officers") for 2000, 2001 and 2002.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                               LONG-TERM                 ALL OTHER
                                                   ANNUAL COMPENSATION       COMPENSATION              COMPENSATION*
                                                   -------------------   ----------------------        -------------
                                                                                AWARDS
                                                                         ---------------------
NAME AND                                                                 SECURITIES UNDERLYING
PRINCIPAL POSITION                                 SALARY        BONUS         OPTIONS
------------------                                 ------        -----   ---------------------
<S>                               <C>              <C>          <C>      <C>                           <C>
W. Kelly                          2002             277,202      129,000           N/A                      20,411
President and                     2001             268,986       98,449           296                      20,209
Chief Executive Officer           2000             259,159      335,800           N/A                      29,203

K. O'Gorman                       2002             218,610       46,562           N/A                      14,119
Senior Vice President,            2001             205,169       23,800           135                      12,592
Europe, Africa, India             2000             161,696      166,597           N/A                      18,983

D. Brooks                         2002             183,579       38,710           N/A                      12,226
Senior Vice President,            2001             178,043       20,447           135                      10,917
Americas                          2000             171,308      178,292           N/A                      19,022

M. Roos                           2002             150,692       31,776           N/A                      10,036
Senior Vice President,            2001             138,750       15,934           100                       8,508
Chief Financial Officer           2000             132,459      137,166           N/A                      14,869

P. Viola                          2002             142,977       30,149           N/A                       9,522
Vice President,                   2001             137,690       15,813            25                       8,443
Acquisitions &                    2000             133,107      137,837           N/A                      14,898
Strategic Development
</TABLE>

*     All Other Compensation includes Company match on 401k savings plan and
      Company contribution to defined contribution pension plan.


                                                                              47
<PAGE>

STOCK OPTION GRANTS, EXERCISES AND YEAR-END VALUES

      The following tables set forth information regarding grants of Unifrax
Corporation stock options to the named executive officers. The stock options
were granted in 1996, 1998, and 2001, and relate to shares of common stock of
Unifrax Corporation. No options were granted in 1997, 1999, 2000, or 2002 and no
options have been exercised to date.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                            AND FY-END OPTION VALUES

<TABLE>
<CAPTION>
                                    NUMBER OF SECURITIES UNDERLYING                       VALUE OF UNEXERCISED IN-THE-
                                     UNEXERCISED OPTIONS AT FY-END                          MONEY OPTIONS AT FY-END
NAME                                   EXERCISABLE/UNEXERCISABLE                            EXERCISABLE/UNEXERCISABLE
-----------                         -------------------------------                       -----------------------------
<S>                                 <C>                                                   <C>
W. Kelly                              450.25     /    222.00                                 $    659,472   /$  -0-
K. O'Gorman                           195.00     /    101.25                                      282,631   /   -0-
D. Brooks                             195.00     /    101.25                                      282,631   /   -0-
P. Viola                              167.50     /     18.75                                      282,631   /   -0-
M. Roos                               132.50     /     75.00                                      188,421   /   -0-
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Of the 20,025 shares of common stock of Unifrax Corporation outstanding as
of February 28, 2003, Unifrax Holding Co. owns 18,000 shares or 90% and BP
Exploration (Alaska) Inc., a subsidiary of BP, owns 2,000 shares or 10%. Unifrax
Holding Co. owns 100% of the 20,500 shares of the Series A preferred stock
outstanding. Of the 1666.67 shares of Series B cumulative preferred stock
outstanding, Unifrax Holding Co. owns 1500 shares or 90% and BP Exploration
(Alaska) Inc., owns 166.67 shares or 10% as of February 28, 2003. The following
own shares of Unifrax Holding Co. and, consequently, have a beneficial interest
in Unifrax Corporation.

                      EQUITY COMPENSATION PLAN INFORMATION

      The following table shows information as of December 31, 2002 concerning
compensation plans (including individual compensation arrangements) under which
equity securities of the Company are authorized to be issued.

<TABLE>
<CAPTION>
                                   NUMBER OF SECURITIES TO BE                                        NUMBER OF SECURITIES
                                     ISSUED UPON EXERCISE OF       WEIGHTED AVERAGE EXERCISE        REMAINING AVAILABLE FOR
                                      OUTSTANDING OPTIONS,       PRICE OF OUTSTANDING OPTIONS,          FUTURE ISSUANCE
         PLAN CATEGORY                 WARRANTS AND RIGHTS            WARRANTS AND RIGHTS             UNDER EQUITY PLANS
-----------------------------      ---------------------------   -----------------------------      -----------------------
<S>                                <C>                           <C>                                <C>
Equity compensation plans
approved by security holders                  2,293                          $2,875                           35

Equity compensation plans not
approved by security holders                     -0-                            n/a                           -0-

Total                                         2,293                          $2,875                           35
</TABLE>


                                                                              48
<PAGE>

<TABLE>
<CAPTION>
                                                NUMBER OF
                                                SHARES OF                               BENEFICIAL
                                            UNIFRAX HOLDING CO.      PERCENT OF        OWNERSHIP OF
BENEFICIAL OWNER                               COMMON STOCK      UNIFRAX HOLDING CO    UNIFRAX CORP.
----------------                               ------------      ------------------    -------------
<S>                                         <C>                  <C>                   <C>
Kirtland
     2550 SOM Center Road
     Suite 105
     Willoughby Hills, Ohio 44094(a)             246,344                90.2%             81.2%
William P. Kelly                                   5,000                 1.8%              1.6%
David E. Brooks                                    3,700                 1.4%              1.2%
Kevin J. O'Gorman                                  1,500                   *                 *
Paul J. Viola 1,350                                                        *                 *
Mark D. Roos                                       1,000                   *                 *
All directors and executive officers
     of Unifrax Corporation as a group(b)         17,050                 6.2%              5.6%
</TABLE>

*     Less than 1.0%

(a)   "Kirtland" includes Kirtland Capital Partners II L.P. and its affiliates.
      Kirtland Capital Corporation is the general partner of Kirtland and
      exercises voting control and investment discretion with respect to
      Kirtland's investment in Unifrax. John F. Turben and John G. Nestor are
      advisory board members of Kirtland Capital Corporation.

(b)   Excludes shares held by Kirtland of which Messrs. Turben and Nestor may be
      deemed to be beneficial owners as a result of their control of Kirtland.
      Messrs. Turben and Nestor disclaim any such beneficial ownership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Reference is made to the information included in Notes 1 and 13 of the
financial statements contained in Item 8, which is hereby incorporated herein by
reference.

RELATIONSHIP WITH BP AND ITS SUBSIDIARIES

      Stockholders Agreement. On October 30, 1996, Unifrax Holding Co.
("Holding") and BP Exploration (Alaska), Inc. ("BPX") entered into an agreement
relating to their respective ownership of stock of the Company (the
"Stockholders Agreement"). This agreement (i) in certain circumstances grants
BPX preemptive rights and rights of first refusal with respect to issuances and
sales, respectively, of stock of the Company; (ii) grants BP piggyback
registration rights with respect to equity securities of the Company; (iii)
restricts in certain circumstances the ability of the Company to enter into
certain dilutive or non-arm's length transactions; and (iv) grants BP the right
to participate in certain circumstances in sales by Unifrax Holding of Holding's
common stock of the Company.

      Recapitalization Agreement. Pursuant to the Unifrax Corporation
Recapitalization Agreement ("Recapitalization Agreement"), BP America, Inc. ("BP
America") has agreed to indemnify the Company as set forth below.


                                                                              49
<PAGE>

      General Indemnity. The Recapitalization Agreement provides that, subject
to certain limitations, BP America and certain of its affiliates shall jointly
and severally indemnify the Company and Holding against, among other things, any
and all claims, damages, losses, expenses, costs, penalties, liens, fines,
assessments, obligations or liabilities of any kind, arising from all the
discontinued operations of the Company or its subsidiaries. The discontinued
operations include but are not limited to certain previously divested
businesses, any other former Carborundum business not part of the Company or its
foreign subsidiaries, and the Sanborn, New York, real estate transferred from
the Company to a BP subsidiary prior to Closing. BP America also has agreed to
indemnify the Company and Holding for any breach of a representation or warranty
set forth in the Recapitalization Agreement.

      Health and Safety Indemnity. Pursuant to the Recapitalization Agreement,
BP America has agreed to indemnify the Company and Holding against liabilities
for personal injury and wrongful death attributable to exposure prior to the
Closing to refractory ceramic fibers manufactured by the Company. BP America has
agreed to indemnify the Company and Holding against all liabilities arising from
exposure claims pending at the time of the Closing. For all other claims arising
from alleged exposure occurring solely prior to Closing, BP America has agreed
to indemnify the Company and Holding against 80% of all losses, until the total
loss which the Company incurs reaches $3.0 million, after which time BP America
has agreed to indemnify the Company and Holding against 100% of such losses. BP
America has agreed to indemnify the Company and Holding against all punitive
damages attributable to the conduct of the Company prior to Closing. Where
losses arise from alleged exposure both before and after Closing, the losses
will be allocated between BP America and the Company, pro rata, based on the
length of exposure or pursuant to arbitration if initiated by the Company.

      The Company cannot avail itself of this indemnity for losses attributable
to the Company's failure to maintain a Product Stewardship Program consistent
with the program maintained by the Company prior to Closing, as modified in a
commercially reasonable manner in accordance with changing regulatory,
scientific and technical factors. BP America shall not indemnify the Company
with respect to any liabilities for wrongful death or personal injury to the
extent caused by the failure of the Company to maintain a Product Stewardship
Program consistent with that maintained by the Company prior to October 30,
1996.

      Environmental Indemnity. Pursuant to the Recapitalization Agreement, and
subject to certain limitations, BP America has agreed to indemnify the Company
and Holding against environmental liabilities arising from pre-closing
conditions. The Recapitalization Agreement also provides that BP America shall
indemnify the Company and Holding against off-site liabilities caused by the
transport, storage or disposal of hazardous substances as well as for the
remedial obligations at the Sanborn, New York site.

      Sanborn Lease. Prior to the Closing, the Company transferred the real
property located in Sanborn, New York (the "Sanborn Property") to a subsidiary
of BP America. BP America leased the real property comprising the Sanborn
Property currently used by the Company in its operations to the Company in
accordance with the terms and conditions of a 20 year lease (the "Lease"). The
Lease provides that the Company will be responsible for taxes, utilities and
insurance. The Company has an option to purchase the property for $1.00 at any
time during the 20-year lease term. The Company will utilize this facility
pursuant to a lease, rather than fee ownership, in order to preserve maximum
flexibility for possible consolidation of operations in the future.

RELATIONSHIP WITH KIRTLAND AND UNIFRAX HOLDING CO.

      Kirtland Advisory Services Agreement. Kirtland and the Company have
entered into an Advisory Services Agreement pursuant to which Kirtland will
provide management consulting and financial advisory services to the Company for
an annual fee initially in the amount of $300,000, which amount was increased in
2000 and 2001 to $500,000 with the approval of the members of the Board of
Directors of the Company who do not have a direct financial interest in any
person receiving payments under the Advisory Services Agreement. In 2002,
Kirtland charged the Company an annual fee of $300,000. In addition, if the
Company completes an acquisition, Kirtland will be entitled to receive a fee in
an amount which will approximate 1% of the gross purchase price of the


                                                                              50
<PAGE>

acquisition (including assumed debt). In connection with the Acquisition, the
company paid Kirkland a fee of $585,000 in 2000. The Advisory Services Agreement
included customary indemnification provisions in favor of Kirtland.

      Tax Sharing Agreement. Holding will file a consolidated federal income tax
return, under which the federal income tax liability of Holding and its
subsidiaries will be determined on a consolidated basis. Holding has entered
into a tax sharing agreement with the Company (the "Tax Sharing Agreement"). The
Tax Sharing Agreement provides that in any year in which the Company is included
in any consolidated tax return of Holding and has taxable income, the Company
will pay to Holding (except with respect to tax benefits resulting from the
Non-compete Agreement between BP and Holding) the amount of the tax liability
that the Company would have had on such date if it had been filing a separate
return. Conversely, if the Company generates losses or credits which actually
reduce the consolidated tax liability of Holding and its other subsidiaries, if
any, Holding will credit to the Company the amount of such reduction in the
consolidated tax liability. In the event any state and local income taxes are
determinable on a combined or consolidated basis, the Tax Sharing Agreement
provides for a similar allocation between Holding and the Company of such state
and local taxes.

ITEM 14. CONTROLS AND PROCEDURES

      The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the Company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based closely on the definition of
"disclosure controls and procedures" in Rule 13a-14(c). In designing and
evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

      Within 90 days prior to the date of this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on the foregoing, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.

      There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect the internal controls
subsequent to the date the Company completed its evaluation.


                                                                              51
<PAGE>

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

<TABLE>
<CAPTION>
                                                                         Page in
                                                                        Form 10-K
                                                                        ---------
<S>                                                                     <C>
(1) FINANCIAL STATEMENTS

       Audited consolidated financial statements of the Company             17
       as of December 31, 2001 and 2002, and for the three years
       in the period ended December 31, 2002.

(2) FINANCIAL STATEMENT SCHEDULE

       II - Valuation and Qualifying Accounts                               44
</TABLE>

       All other schedules have been omitted as the required information is not
       applicable or the information is presented in the financial statements or
       the notes thereto.

(3)  EXHIBITS

<TABLE>
<S>                     <C>
            2.1(i)      Unifrax Corporation Recapitalization Agreement

            2.2(vii)    Stock and Asset Purchase Agreement, dated as of July 27,
                        2000, by and among the Company, SEPR and certain other
                        parties

            2.3(vii)    Amendment to the Stock and Asset Purchase Agreement,
                        dated as of October 4, 2000

            3.1(i)      Certificate of Incorporation of the Registrant

            3.2(iii)    Consent of Stockholders for Amendment of Certificate of
                        Incorporation

            3.3(iii)    Certificate of Amendment to Certificate of Incorporation

            3.4(vii)    Certificate of Amendment No. 2 to Certificate of
                        Incorporation

            3.5(i)      By-laws of the Registrant

            4.1(i)      Form of Indenture (including form of Note)

            4.2(i)      Form of Stockholders Agreement among the Company, BPX
                        and Holding

            4.3(iii)    Amendment to Stockholders Agreement dated September 30,
                        1997, among the Company, BP Exploration (Alaska), Inc.
                        and Holding

</TABLE>


                                                                              52
<PAGE>

<TABLE>
<S>                     <C>

            4.4(iii)    Stock Purchase Agreement dated September 30, 1997,
                        between the Company and Holding

            4.5(iii)    Stock Purchase Agreement dated September 30, 1997,
                        between the Company and BP Exploration (Alaska), Inc.

            4.6(vii)    Amendment to Stockholders Agreement dated October 4,
                        2000, between the Company, BP Exploration (Alaska), Inc.
                        and Holding

            10.1(vii)   Credit Agreement dated October 5, 2000 among Bank of
                        America, N.A., National City Bank, Multi Banco, S.A.,
                        Unifrax Corporation, NAF Brazil Ltda. and others

            10.2(i)*    1996 Stock Option Plan

            10.3(ii)    Unifrax Corporation Noncompetition Agreement

            10.4(i)     Lease relating to Tonawanda plant

            10.5(vi)    Amendment to lease relating to Tonawanda plant

            10.6(i)     Lease relating to Amherst plant

            10.7(i)     Sanborn Lease

            10.8(i)     Covenant Not to Compete between The British Petroleum
                        Company p.l.c., its affiliates, and the Unifrax
                        Corporation and Societe Europeenne de Produits
                        Refractaires, and its affiliates (portions of this
                        Exhibit have been omitted and were filed separately with
                        the Commission pursuant to a request for confidential
                        treatment)

            10.9(i)     Form of Covenant Not to Compete between Holding and BP

            10.10(i)    Tax Sharing Agreement between the Company and Holding

            10.11(i)    Advisory Services Agreement between the Company and
                        Kirtland Capital Corporation

            10.12(vi)*  Retirement Select Basic Plan document and Trust
                        Agreement

            10.13(vii)  Subordinated Promissory Note, dated as of October 4,
                        2000, issued by the Company in favor of SEPR in the
                        original principal amount of $8,000,000

            10.14(vii)  Subordinated Promissory Note, dated as of October 4,
                        2000, issued in favor of SEPR in the original principal
                        amount of $1,500,000

            10.15(vii)  Limited Recourse Promissory Note, dated as of October 4,
                        2000, issued in favor of SEPR in the original principal
                        amount of $20,200,000

            10.16(vii)  Limited Recourse Promissory Note, dated as of October 4,
                        2000, issued in favor of Carborundum do Brasil in the
                        original principal amount of $300,000

            10.17(vii)  Pledge Agreement, dated of as October 4, 2000, by
                        Holding in favor of SEPR
</TABLE>


                                                                              53
<PAGE>

<TABLE>
<S>                     <C>
            10.18(vii)  Subordination Agreement, dated as of October 5, 2000, by
                        and among SEPR, the Company, Bank of America, N.A. and
                        the lenders named therein

            10.19(vii)  Subordination Agreement (Real Estate), dated as of
                        October 5, 2000, by and among SEPR, the Company, Bank of
                        America, N.A. and the lenders named therein

            10.20(vii)  Subordination Agreement, dated as of October 5, 2000, by
                        and among SEPR, the Company, Chase Manhattan Trust
                        Company, National Association and the noteholders named
                        therein.

            12.1        Computation of Ratio of Earnings to Fixed Charges

            21.1        Subsidiaries of the Registrant

            99.1        Certification pursuant to 18 U.S.C. Section 1350, as
                        adopted pursuant to Section 906 of the Sarbanes-Oxley
                        Act of 2002.

            (i)         Incorporated by reference to the exhibits filed with the
                        Registration Statement on Form S-1 of Unifrax Investment
                        Corp (Registration No. 333-10611).

            (ii)        Incorporated by reference to the exhibits filed with
                        Form 10-K for the fiscal year ended December 31, 1996
                        for Unifrax Corporation.

            (iii)       Incorporated by reference to the exhibits filed with
                        Form 10-K for the fiscal year ended December 31, 1997
                        for Unifrax Corporation.

            (iv)        Incorporated by reference to the exhibits filed with
                        Form 10-Q for the fiscal quarter ended June 30, 1998 for
                        Unifrax Corporation.

            (v)         Incorporated by reference to the exhibits filed with
                        Form 10-K for the fiscal year ended December 31, 1998
                        for Unifrax Corporation.

            (vi)        Incorporated by reference to the exhibits filed with
                        Form 10-K for the fiscal year ended December 31, 1999
                        for Unifrax Corporation.

            (vii)       Incorporated by reference to the exhibits filed with
                        Form 8-K in connection with the SEPR Ceramic Fiber
                        Business acquisition filed October 19, 2000.

            *           Indicates a management contract or compensatory plan or
                        arrangement.
</TABLE>

      (b)   Reports on Form 8-K.
            None


                                                                              54
<PAGE>

                                   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, on March 25, 2003.

                                          UNIFRAX CORPORATION.

                                          By: /s/ William P. Kelly
                                             -----------------------------------
                                          William P. Kelly, President and
                                          Chief Executive Officer

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

<TABLE>
<CAPTION>
SIGNATURE                              TITLE                                                 DATE
---------                              -----                                                 ----
<S>                                    <C>                                                   <C>
/s/ William P. Kelly                                                                         March 25, 2003
----------------------------
William P. Kelly                       Director, President and Chief
                                       Executive Officer (Principle
                                       Executive Officer)

/s/ Mark D. Roos                                                                             March 25, 2003
----------------------------
Mark D. Roos                           Sr. Vice President & Chief
                                       Financial Officer (Principal
                                       Financial Officer and Principal
                                       Accounting Officer)
/s/ John G. Nestor                                                                           March 25, 2003
----------------------------
John G. Nestor                         Chairman of the Board

/s/ Thomas N. Littman                                                                        March 25, 2003
----------------------------
Thomas N. Littman                      Director

/s/ William D. Manning Jr.                                                                   March 22, 2003
----------------------------
William D. Manning, Jr.                Director

/s/ John F. Turben                                                                           March 24, 2003
----------------------------
John F. Turben                         Director

                                                                                             March   , 2003
----------------------------
Edmund S. Wright                       Director
</TABLE>

                                                                              55
<PAGE>

                                  CERTIFICATION

I, William P. Kelly, certify that:

1.    I have reviewed this Annual Report on Form 10-K of Unifrax Corporation;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this annual
      report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

            a.    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

            b.    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

            c.    presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditor and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent functions):

            a.    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b.    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      annual report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: March 25, 2003          By: /s/  William P. Kelly
      --------------------    --------------------------------------------
                                       William P. Kelly
                                       President & Chief Executive Officer


                                                                              56
<PAGE>

                                  CERTIFICATION

I, Mark D. Roos, certify that:

1.    I have reviewed this Annual Report on Form 10-K of Unifrax Corporation;

2.    Based on my knowledge, this annual report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this annual report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this annual report, fairly present in all material
      respects the financial condition, results of operations and cash flows of
      the registrant as of, and for, the periods presented in this annual
      report;

4.    The registrant's other certifying officers and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
      have:

            a.    designed such disclosure controls and procedures to ensure
                  that material information relating to the registrant,
                  including its consolidated subsidiaries, is made known to us
                  by others within those entities, particularly during the
                  period in which this annual report is being prepared;

            b.    evaluated the effectiveness of the registrant's disclosure
                  controls and procedures as of a date within 90 days prior to
                  the filing date of this annual report (the "Evaluation Date");
                  and

            c.    presented in this annual report our conclusions about the
                  effectiveness of the disclosure controls and procedures based
                  on our evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most recent evaluation, to the registrant's auditor and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent functions):

            a.    all significant deficiencies in the design or operation of
                  internal controls which could adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial data and have identified for the registrant's
                  auditors any material weaknesses in internal controls; and

            b.    any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls; and

6.    The registrant's other certifying officers and I have indicated in this
      annual report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: March 25, 2003          By: /s/ Mark D. Roos
     ------------------       --------------------------------------------
                                      Mark D. Roos
                                      Sr. Vice President & Chief Financial
                                      Officer


                                                                              57