United States
                      Securities and Exchange Commission
                            Washington, D.C. 20549


                                  FORM 10-Q


   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
           Act of 1934 For the Quarterly Period ended March 31, 2002

                        Commission File Number 333-34323


                   HYDROCHEM INDUSTRIAL SERVICES, INC. (*)
            (Exact name of registrant as specified in its charter)


                      Delaware                          75-2503906
          (State or other jurisdiction of            (I.R.S. Employer
           incorporation or organization)           Identification Number)

                 900 Georgia Avenue
                  Deer Park, Texas                          77536
          (Address of principal executive offices)        (Zip Code)

                                 (713) 393-5600
              (Registrant's telephone number, including area code)


     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


     The  number  of  shares of Common  Stock of  the  Registrant outstanding on
     May 1,  2002  was  100  shares.   The  Registrant's  Common  Stock  is  not
     registered under the  Securities Act of 1933, as amended, or the Securities
     Exchange Act of 1934, as amended.

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

     * HydroChem  International,  Inc., a wholly-owned  subsidiary  of HydroChem
       Industrial Services, Inc.,  is a Co-Registrant.  It is incorporated under
       the laws of the State of Delaware.  Its  I.R.S.  Employer  Identification
       Number  is 75-2512100.
<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>


<S>                                                                                                        <C>
Part I.  Financial Information

         Item 1.  Financial Statements

                  Consolidated Balance Sheets as of December 31, 2001 and
                      March 31, 2002 (unaudited).....................................................      3

                  Consolidated Statements of Operations for the three
                      months ended March 31, 2001 and 2002 (unaudited)...............................      4

                  Consolidated Statement of Stockholder's Equity for the three
                      months ended March 31, 2002 (unaudited)........................................      5

                  Consolidated Statements of Cash Flows for the three
                      months ended March 31, 2001 and 2002 (unaudited)...............................      6

                  Notes to Consolidated Financial Statements (unaudited).............................      7

         Item 2.  Management's Discussion and Analysis of Financial Condition
                      and Results of Operations......................................................     12

Part II.      Other Information

         Item 1.  Legal Proceedings..................................................................     16

         Item 6.  Exhibits and Reports on Form 8-K...................................................     16

Signatures...........................................................................................     19

Exhibit Index........................................................................................     20
</TABLE>




                                       2
<PAGE>

                       HYDROCHEM INDUSTRIAL SERVICES, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)


<TABLE>
<CAPTION>
                                                                     December 31,      March 31,
                                                                         2001            2002
                                                                         ----            ----
                                     ASSETS
     <S>                                                              <C>          <C>
     Current assets:
         Cash and cash equivalents ................................   $   7,943    $     502
         Receivables, less allowance of $280 and $311, respectively      30,589       39,807
         Inventories ..............................................       4,119        3,651
         Prepaid expenses and other current assets ................       2,566        5,272
         Income taxes receivable ..................................         652          695
         Deferred income taxes ....................................       3,042        2,892
                                                                      ---------    ---------
              Total current assets ................................      48,911       52,819

     Property and equipment, at cost ..............................     103,438      102,690
         Accumulated depreciation .................................     (62,411)     (63,851)
                                                                      ---------    ---------
                                                                         41,027       38,839

     Intangible assets, net .......................................      91,697       91,410
                                                                      ---------    ---------

              Total assets ........................................   $ 181,635    $ 183,068
                                                                      =========    =========

                      LIABILITIES AND STOCKHOLDER'S EQUITY
     Current liabilities:
         Accounts payable .........................................   $   7,065    $   9,912
         Accrued liabilities ......................................      15,404       11,945
         Current portion of long-term debt (Note 3) ...............       4,286        4,286
                                                                      ---------    ---------
              Total current liabilities ...........................      26,755       26,143

     Long-term debt (Note 3) ......................................     135,714      135,740
     Deferred income taxes ........................................       7,440        8,133
     Commitments and contingencies (Note 7)

     Stockholder's equity:
         Common stock, $.01 par value:
              1,000 shares authorized, 100 shares outstanding .....           1            1
         Additional paid-in capital ...............................      16,558       16,558
         Retained deficit .........................................      (4,833)      (3,507)
                                                                      ---------    ---------
         Total stockholder's equity ...............................      11,726       13,052
                                                                      ---------    ---------

              Total liabilities and stockholder's equity ..........   $ 181,635    $ 183,068
                                                                      =========    =========
</TABLE>



                             See accompanying notes.

                                       3
<PAGE>
                       HYDROCHEM INDUSTRIAL SERVICES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                            Three months ended
                                                                 March 31,
                                                                 ---------
                                                             2001         2002
                                                             ----         ----
<S>                                                         <C>          <C>
Revenue ..............................................      $59,390      $56,800
Cost of revenue ......................................       37,331       35,841
                                                            -------      -------
      Gross profit ...................................       22,059       20,959

Selling, general and administrative expense ..........       13,457       12,457
Depreciation .........................................        2,701        2,676
Amortization of intangibles (Note 2) .................          995          158
                                                            -------      -------
      Operating income ...............................        4,906        5,668

Other expense:
      Interest expense, net ..........................        3,930        3,420
      Other expense, net .............................            5           79
                                                            -------      -------

Income before taxes ..................................          971        2,169

      Income tax expense (Note 5) ....................          495          843
                                                            -------      -------

Net income ...........................................      $   476      $ 1,326
                                                            =======      =======
</TABLE>
















                             See accompanying notes.



                                       4
<PAGE>
                       HYDROCHEM INDUSTRIAL SERVICES, INC.
                                AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
                                 (in thousands)


<TABLE>
<CAPTION>
                                                    Additional
                                          Common     Paid-in         Retained
                                          Stock      Capital          Deficit       Total
                                          -----      -------         --------       -----
<S>                                    <C>           <C>           <C>            <C>
Balance at December 31, 2001 .......   $      1      $ 16,558      $(4,833)       $ 11,726

    Net income .....................          -             -        1,326           1,326
                                       --------      --------      -------         -------

Balance at March 31, 2002 ..........   $      1      $ 16,558      $(3,507)       $ 13,052
                                        =======       =======       ======         =======
</TABLE>




















                             See accompanying notes.

                                       5
<PAGE>
                       HYDROCHEM INDUSTRIAL SERVICES, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                Three months ended
                                                                                     March 31,
                                                                              2001             2002
                                                                           ---------         --------
<S>                                                                         <C>             <C>
Operating activities:
     Net income........................................................     $   476         $ 1,326
     Adjustments to reconcile net income
         to net cash used in operating activities:
         Depreciation..................................................       2,701           2,676
         Amortization..................................................         995             158
         Amortization of deferred financing costs......................         195             129
         Deferred income tax provision.................................         495             843
         Loss on sale of property and equipment........................           -              72
     Changes in operating assets and liabilities:
         Receivables, net..............................................      (7,037)         (9,218)
         Inventories...................................................          76             468
         Prepaid expenses and other current assets.....................        (696)         (2,706)
         Income taxes receivable.......................................         249             (43)
         Accounts payable..............................................       2,232           2,847
         Accrued liabilities...........................................      (4,389)         (3,459)
                                                                            -------         -------
              Net cash used in operating activities....................      (4,703)         (6,907)
                                                                            -------         -------

Investing activities:
     Expenditures for property and equipment...........................      (1,740)           (823)
     Proceeds from sale of property and equipment......................         309             263
                                                                            -------         -------
              Net cash used in investing activities....................      (1,431)           (560)
                                                                            -------         -------

Financing activities:
     Proceeds from revolver............................................       2,000           1,250
     Repayments of long-term debt, net.................................      (1,293)         (1,224)
                                                                            -------         -------
              Net cash provided by financing activities................         707              26
                                                                            -------         -------

Net decrease in cash...................................................      (5,427)         (7,441)
Cash at beginning of period............................................       6,380           7,943
                                                                            -------         -------

Cash at end of period..................................................     $   953         $   502
                                                                            =======         =======
</TABLE>





                             See accompanying notes.



                                       6
<PAGE>
                       HYDROCHEM INDUSTRIAL SERVICES, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2002


1.   Organization, Formation and Basis of Presentation

         The consolidated financial statements include the accounts of HydroChem
     Industrial Services, Inc. ("HydroChem") and its wholly-owned  subsidiaries.
     (HydroChem  and its  subsidiaries  are  hereinafter  sometimes  referred to
     either  separately  or  collectively  as  the  "Company.")  HydroChem  is a
     wholly-owned subsidiary of HydroChem Holding, Inc. ("Holding").

         The Company is engaged in the business of providing industrial cleaning
     services to a wide range of processing industries,  including petrochemical
     plants,  oil refineries,  power plants,  pulp and paper mills, steel mills,
     and aluminum plants. Services provided include high-pressure and ultra-high
     pressure  water cleaning  (hydroblasting),  chemical  cleaning,  industrial
     vacuuming,  tank  cleaning,  waste  minimization,  commissioning  and other
     specialized  services.  The majority of these  services  involve  recurring
     maintenance to improve or sustain the operating efficiencies and extend the
     useful lives of process equipment and facilities.

         The accompanying unaudited consolidated financial statements  presented
     herein  have  been  prepared  in  accordance  with  accounting   principles
     generally  accepted in the United States for interim financial  information
     and the rules and  regulations of the  Securities and Exchange  Commission.
     Accordingly,  they do not include all of the  information  and  disclosures
     required by accounting  principles  generally accepted in the United States
     for complete  financial  statements.  Certain  information  and disclosures
     normally  included in  financial  statements  prepared in  accordance  with
     accounting  principles  generally  accepted in the United  States have been
     condensed  or  omitted.  In the  opinion of  management,  the  accompanying
     unaudited interim financial statements include all adjustments,  consisting
     of only normal recurring accruals, necessary for a fair presentation of the
     results of the  interim  periods.  Operating  results  for the three  month
     interim period ended March 31, 2002 are not  necessarily  indicative of the
     results that may be expected for the year ending  December 31, 2002.  These
     unaudited  consolidated  financial statements should be read in conjunction
     with the Company's audited  consolidated  financial  statements included in
     the Company's  Annual  Report on Form 10-K for the year ended  December 31,
     2001.

2.   Adoption of New Accounting Principle

         On  January 1,  2002,   the  Company  adopted  Statement  of  Financial
     Accounting  Standards  (SFAS) SFAS No. 142,  "Goodwill and Other Intangible
     Assets"  (the  Statement),  effective  for  fiscal  years  beginning  after
     December 15, 2001.  Under these new rules,  goodwill and intangible  assets
     with  indefinite  lives will no longer be amortized  but will be subject to
     annual impairment tests in accordance with the Statement.  Other intangible
     assets will continue to be amortized  over their useful lives.  Application
     of the non-amortization provisions of the Statement resulted in an increase
     in net income of $649,000 for the three months ended March 31, 2002. During
     the second  quarter of 2002,  the Company  will  complete  the first of the
     required  impairment  tests of goodwill and on assets with indefinite lives
     as of January 1, 2002. Management has not yet determined what the effect of
     these tests will be on the Company's earnings and financial position.

         Pro forma results for the three months ended  March 31, 2001,  assuming
     the discontinuation of amortization for goodwill and intangible assets with
     indefinite lives, are shown below (in thousands):
<TABLE>
                <S>                                     <C>
                Reported net income...................  $    476
                Amortization, net of taxes............       649
                                                             ---
                Adjusted net income...................  $  1,125
                                                        ========
</TABLE>

                                       7
<PAGE>
         Intangible assets as of December 31, 2001 and March 31, 2002 consist of
     the following (in thousands):
<TABLE>
<CAPTION>
                                               2001                        2002
                                      ----------------------     ----------------------
                                      Gross Book    Net Book      Gross Book   Net Book
                                         Value        Value          Value       Value
                                         -----        -----          -----       -----

<S>                                   <C>           <C>           <C>          <C>
    Deferred financing costs..        $  5,127      $  2,777      $  5,127     $  2,648
    Other intangibles.........          14,759         9,418        14,759        9,260
    Goodwill .................          92,116        79,502        92,116       79,502
                                        ------        ------        ------       ------
       Total .................        $112,002      $ 91,697      $112,002     $ 91,410
                                      ========      ========      ========     ========
</TABLE>
3.   Long-term Debt

         Long-term debt at December 31, 2001 and March 31, 2002 consisted of the
     following (in thousands):
<TABLE>
<CAPTION>
                                                      2001         2002
                                                      ----         ----
<S>                                                 <C>          <C>
        Subordinated Notes ......................   $ 110,000    $ 110,000
        Machinery and Equipment Loan ............      24,250       23,384
        Real Estate Loan ........................       5,750        5,392
        Revolver ................................           -        1,250
                                                        -----        -----
           Total long-term debt .................     140,000      140,026
           Less current portion of long-term debt      (4,286)      (4,286)
                                                       ------       ------
                                                    $ 135,714    $ 135,740
                                                     ========     ========
</TABLE>

4.   Restructuring Charge

         As of  March  31,  2002,  accruals of $588,000  remain  relating to the
     restructuring  charge recorded in 2001.  These accruals relate primarily to
     severance and benefits,  which will be paid out during 2002,  and redundant
     facilities  costs,  which will be paid over the respective  remaining lease
     terms.

5.   Income Taxes

         The  Company  files  a  consolidated  tax  return  with  Holding.   The
     Company's  effective  income tax rate for the interim periods  presented is
     based on management's  estimate of the Company's effective tax rate for the
     applicable  year and  differs  from the federal  statutory  income tax rate
     primarily due to nondeductible permanent differences.

6.   Guarantor Information

         Condensed  consolidating  financial  information  for  HydroChem  is as
     follows (in thousands):

                                       8
<PAGE>

                      CONDENSED CONSOLIDATING BALANCE SHEET
<TABLE>
<CAPTION>
                                                                  As of December 31, 2001
                                                                  -----------------------
                                                                 Guarantor                             Total
                                               HydroChem       Subsidiaries        Eliminations     Consolidated
                                               ---------       ------------        ------------     ------------
                                                              Int'l    Other
                                                              -----    -----
<S>                                            <C>           <C>       <C>         <C>                <C>
Assets:
  Receivables...........................       $ 30,127      $  462    $  --       $    --            $ 30,589
  Other current assets .................         13,929       3,748      645            --              18,322
                                                 ------       -----      ---                            ------
   Total current assets.................         44,056       4,210      645            --              48,911

  Property and equipment, net...........         40,793         101      133            --              41,027
  Intangible assets, net................         91,630          67       --            --              91,697
  Investments...........................          1,102          --       --        (1,102)                 --
                                                  -----      ------      ---        ------             -------
   Total assets.........................       $177,581      $4,378    $ 778       $(1,102)           $181,635
                                                =======       =====     ====        ======             =======

Liabilities and Equity:
  Current liabilities...................         26,454         282       19            --              26,755

  Long-term debt........................        135,714          --       --            --             135,714
  Deferred income taxes.................          7,440          --       --            --               7,440
  Stockholder's equity..................          7,973       4,096      759        (1,102)             11,726
                                                 ------       -----      ---        ------              ------
   Total liabilities and equity.........       $177,581      $4,378    $ 778       $(1,102)           $181,635
                                                =======       =====     ====        ======             =======
</TABLE>

<TABLE>
<CAPTION>
                                                                    As of March 31, 2002
                                                                  -----------------------
                                                                 Guarantor                             Total
                                               HydroChem       Subsidiaries        Eliminations     Consolidated
                                               ---------       ------------        ------------     ------------
                                                              Int'l    Other
                                                              -----    -----
<S>                                            <C>           <C>       <C>         <C>                <C>
Assets:
  Receivables...........................       $ 38,912      $  895    $  --       $    --            $ 39,807
  Other current assets .................          8,632       3,635      745            --              13,012
                                                 ------       -----      ---                            ------
   Total current assets.................         47,544       4,530      745            --              52,819

  Property and equipment, net...........         38,748          91       --            --              38,839
  Intangible assets, net................         91,349          61       --            --              91,410
  Investments...........................          1,102          --       --        (1,102)                 --
                                                  -----       -----      ---         -----              ------
   Total assets.........................       $178,743      $4,682    $ 745       $(1,102)           $183,068
                                               ========      ======    =====       =======            ========

Liabilities and Stockholder's Equity:
  Current liabilities...................         25,730         413       --            --              26,143

  Long-term debt........................        135,740          --       --            --             135,740
  Deferred income taxes.................          8,133          --       --            --               8,133
  Stockholder's equity..................          9,140       4,269      745        (1,102)             13,052
                                                 ------       -----      ---        ------              ------
   Total liabilities and equity.........       $178,743      $4,682    $ 745       $(1,102)           $183,068
                                               ========      ======    =====       =======            ========
</TABLE>

                                       9
<PAGE>
                       CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
                                                              Three months ended March 31, 2001
                                                            -------------------------------------
                                                                 Guarantor                             Total
                                               HydroChem       Subsidiaries        Eliminations     Consolidated
                                               ---------       ------------        ------------     ------------
                                                              Int'l    Other
                                                              -----    -----
<S>                                            <C>           <C>       <C>         <C>                <C>
Revenue.................................       $58,032       $1,229    $  129      $    -             $59,390
Cost of revenue.........................        36,320          909       102           -              37,331
                                                ------          ---       ---                          ------
   Gross profit.........................        21,712          320        27           -              22,059
Selling, general and administrative expense     12,786          611        60           -              13,457
Depreciation............................         2,678           18         5           -               2,701
Amortization of intangibles.............           995            -         -           -                 995
                                                   ---          ---       ---         ---                 ---
   Operating income.....................         5,253         (309)      (38)          -               4,906
Interest and other expense, net.........         3,927            8         -           -               3,935
                                                 -----            -                                     -----
   Income (loss) before taxes...........         1,326         (317)      (38)          -                 971
Income tax expense......................           495            -         -           -                 495
                                                   ---          ---       ---         ---                 ---
   Net income (loss)....................       $   831       $ (317)   $  (38)     $    -             $   476
                                                ======        =====     =====        ====              ======
</TABLE>


<TABLE>
<CAPTION>
                                                              Three months ended March 31, 2002
                                                            -------------------------------------
                                                                 Guarantor                             Total
                                               HydroChem       Subsidiaries        Eliminations     Consolidated
                                               ---------       ------------        ------------     ------------
                                                              Int'l    Other
                                                              -----    -----
<S>                                            <C>           <C>       <C>         <C>                <C>
Revenue.................................       $55,874       $  927    $   (1)     $    -             $56,800
Cost of revenue.........................        35,183          647        11           -              35,841
                                                ------          ---       ---                          ------
   Gross profit.........................        20,691          280       (12)          -              20,959
Selling, general and administrative expense     12,369           86         2           -              12,457
Depreciation............................         2,665           11         -           -               2,676
Amortization of intangibles.............           152            6         -           -                 158
                                                   ---          ---       ---         ---                 ---
   Operating income.....................         5,505          177       (14)          -               5,668
Interest and other expense, net.........         3,496            3         -           -               3,499
                                                 -----            -                                     -----
   Income (loss) before taxes...........         2,009          174       (14)          -               2,169
Income tax expense......................           843            -         -           -                 843
                                                   ---          ---       ---         ---                 ---
   Net income (loss)....................       $ 1,166       $  174    $  (14)     $    -             $ 1,326
                                                ======        =====     =====        ====              ======
</TABLE>

                       CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                              Three months ended March 31, 2001
                                                            -------------------------------------
                                                                 Guarantor                             Total
                                               HydroChem       Subsidiaries        Eliminations     Consolidated
                                               ---------       ------------        ------------     ------------
                                                              Int'l    Other
                                                              -----    -----
<S>                                            <C>          <C>        <C>         <C>                <C>
Net cash used in operating activities...       $(4,510)     $(135)     $    (3)    $    -             $(4,703)

Capital expenditures....................        (1,712)       (28)           -          -              (1,740)
Other investing activities..............           309          -            -          -                 309
                                                  ----                                                   ----
Net cash used in investing
  activities............................        (1,403)       (28)           -          -              (1,431)

Net cash provided by financing
  activities............................           707          -            -          -                 707
                                                  ----       ----         ----       ----                ----

Net (decrease) in cash..................       $(5,206)     $(218)     $    (3)    $    -             $(5,427)
                                                ======       ====       ======      =====              ======
</TABLE>

                                       10
<PAGE>
<TABLE>
<CAPTION>
                                                              Three months ended March 31, 2002
                                                            -------------------------------------
                                                                 Guarantor                             Total
                                               HydroChem       Subsidiaries        Eliminations     Consolidated
                                               ---------       ------------        ------------     ------------
                                                              Int'l    Other
                                                              -----    -----
<S>                                            <C>           <C>       <C>         <C>                <C>
Net cash provided by (used in)
  operating activities..................       $(6,929)      $149      $(127)      $ -                $(6,907)

Capital expenditures....................          (956)         -        133         -                   (823)
Other investing activities..............           263          -          -         -                    263
                                                   ---                                                    ---
Net cash provided by (used in)
  investing..... .......................          (693)         -        133         -                   (560)

Net cash provided by financing
  activities............................            26          -          -         -                     26
                                                ------                                                 ------

Net increase (decrease) in cash.........       $(7,596)      $149      $   6       $ -                $(7,441)
                                                ======        ===       ====        ==                 ======
</TABLE>


7.   Commitments and Contingencies

         The Company is a defendant  in various  lawsuits  arising in the normal
     course of business and certain other lawsuits.  Substantially  all of these
     suits are being defended by the Company's  insurance  carriers.  Management
     believes  that any  material  contingent  liability  associated  with  this
     litigation  will not exceed the limits of  applicable  insurance  policies.
     While the  results  of  litigation  cannot  be  predicted  with  certainty,
     management  believes  adequate  provision  has  been  made  for  all of the
     foregoing  claims and the final outcome of any pending  litigation will not
     have a material  adverse  effect on the  Company's  consolidated  financial
     position or results of operations.

                                       11
<PAGE>
                       HYDROCHEM INDUSTRIAL SERVICES, INC.
                                AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statement Regarding Forward-Looking Information

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  and  other  items in this  Quarterly  Report  on Form  10-Q  contain
forward-looking  statements  and  information  that are  based  on  management's
beliefs, as well as assumptions made by, and information currently available to,
management.  When  used in this  document,  the words  "believe",  "anticipate",
"estimate", "expect", "intend", and similar expressions are intended to identify
forward-looking  statements.  Although management believes that the expectations
reflected in these  forward-looking  statements are  reasonable,  it can give no
assurance  that  these  expectations  will  prove to have  been  correct.  These
statements are subject to certain risks,  uncertainties and assumptions.  Should
one or more of these risks or uncertainties  materialize,  or should  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
anticipated.  The Company  undertakes  no  obligation  to release  publicly  any
revisions to these forward-looking statements that may be made to reflect events
or  circumstances  after  the  date  hereof  or to  reflect  the  occurrence  of
unanticipated events.

     For supplemental information, it is suggested that "Management's Discussion
and  Analysis  of  Financial  Condition  and Results of  Operations"  be read in
conjunction  with the  corresponding  sections  included in the Company's Annual
Report on Form 10-K for the year ended  December  31,  2001.  The Form 10-K also
includes the Company's  Consolidated  Financial Statements and the Notes thereto
for certain prior  periods,  as well as other  relevant  financial and operating
information.

Critical Accounting Policies

     The  discussion  and  analysis of the  Company's  financial  condition  and
results of  operations  are based upon our  consolidated  financial  statements,
which have been  prepared in accordance  with  accounting  principles  generally
accepted in the United States.  The  preparation of these  financial  statements
requires  management to make  estimates  and judgments  that affect the reported
amounts of assets, liabilities,  revenues and expenses and related disclosure of
contingent assets and liabilities.  On an on-going basis,  management  evaluates
these  estimates,  including  those related to  self-insurance  reserves and the
allowance for doubtful  accounts  receivable.  Estimates are based on historical
experience and on various other  assumptions  that are believed to be reasonable
under  the  circumstances,  the  results  of which  form the  basis  for  making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates under different assumptions or conditions.

     Management   believes  the  following  are  the  Company's   most  critical
accounting policies.  These policies require significant judgments and estimates
used in the preparation of the Company's consolidated financial statements.

     Allowance  for  doubtful  accounts  receivable.   The  Company  establishes
reserves for doubtful accounts receivable using various percentages according to
the age of the receivable and also evaluates  customers on a case-by-case  basis
when management  believes the required  payment of specific  amounts owed to the
Company is unlikely to occur.

     Property  and  casualty  insurance  reserve.  The  Company's  property  and
casualty  insurance  reserves  are  based  upon  management's   assumptions  and
estimates  regarding  the  probable  outcome of the  claims.  Should the outcome
differ from  management's  assumptions  and  estimates  or should the  insurance
carriers become insolvent to cover claims in excess of the Company's deductible,
revisions to the estimated reserves for property and casualty insurance would be
required.

                                       12
<PAGE>
Results of Operations

     The  following  table sets forth,  for the periods  indicated,  information
derived from the Company's consolidated statements of operations, expressed as a
percentage  of revenue.  There can be no assurance  that the trends in operating
results will continue in the future.
<TABLE>
<CAPTION>
                                                      Three months ended
                                                           March 31,
                                                         -------------
                                                       2001           2002
                                                       ----           ----
    <S>                                               <C>            <C>
    Revenue..................................         100.0%         100.0%
    Cost of revenue..........................          62.9           63.1
                                                       ----           ----
          Gross profit.......................          37.1           36.9
    SG&A expense.............................          22.7           21.9
    Depreciation.............................           4.5            4.7
    Amortization.............................           1.7            0.3
                                                        ---            ---
          Operating income...................           8.2           10.0
    Other expense:
          Interest expense, net..............           6.6            6.0
          Other expense, net.................             -            0.2
                                                       ----           ----
    Income before taxes......................           1.6            3.8
          Income tax expense.................           0.8            1.5
                                                       ----           ----
    Net income...............................           0.8%           2.3%
                                                       ====           ====

    EBITDA (1)...............................          14.5%          15.0%
                                                       ====           ====
</TABLE>
----------
     (1) EBITDA for any relevant period  presented above represents gross profit
     less  selling,  general and  administrative  expense.  EBITDA should not be
     construed  as a  substitute  for  operating  income,  as  an  indicator  of
     liquidity or as a substitute for net cash provided by operating activities,
     which are determined in accordance  with  accounting  principles  generally
     accepted  in the  United  States.  EBITDA is  included  because  management
     believes  it to be a  useful  tool  for  analyzing  operating  performance,
     leverage,  liquidity and a company's ability to service debt. The Company's
     calculation  of EBITDA  may not be  comparable  to similar  entitled  items
     reported by other companies, as such companies may not define EBITDA as the
     Company defines it.

Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001
-------------------------------------------------------------------------------

     Revenue.  The Company's  revenue by service line for the three months ended
March 31, 2001 and 2002 is set forth in the following table (in thousands):

<TABLE>
<CAPTION>
                                    Three Months ended March 31,
                               ---------------------------------------
                                 2001       %         2002       %
                                 ----       -         ----       -
     <S>                      <C>         <C>      <C>         <C>
     Hydroblasting            $ 25,542    43.0     $ 21,825    38.4
     Chemical cleaning          13,727    23.1       14,840    26.1
     Industrial vacuuming       13,088    22.0       15,496    27.3
     Tank cleaning               3,173     5.4        3,505     6.2
     Other                       3,861     6.5        1,134     2.0
                                 -----     ---        -----     ---
          Total               $ 59,391   100.0     $ 56,800   100.0
                               =======   =====      =======   =====
</TABLE>

     Revenue  decreased $2.6 million,  or 4.4%, for the three months ended March
31, 2002,  compared to the prior year period.  This decrease resulted  primarily
from lower  hydroblasting  and other  revenues,  which was  partially  offset by
higher  industrial  vacuuming  and  chemical  cleaning  revenues.  Hydroblasting
revenue  declined  by  $3.7  million  primarily  due  to  decreased  maintenance
activities with chemical and refining industry customers,  who are continuing to
experience  depressed  margins.  Other revenue for the first quarter of 2002 was
lower by $2.7 million  compared to the first quarter of 2001 because the Company
began using  sub-contractors  to provide  mechanical  services to its  customers
instead of performing these services  directly.  Industrial  vacuuming  revenues
increased by $2.4 million resulting from new customer  contracts and an increase
in services to existing customers.  Chemical cleaning revenues increased by $1.1
million due to project work, primarily relating to plant  pre-commissioning  and
boiler cleanings.

                                       13
<PAGE>

     Gross  profit.  Gross profit  decreased  $1.1  million,  or 5.0%,  to $21.0
million in 2002 from $22.1  million  in the prior year  period.  Cost of revenue
decreased $1.5 million,  or 4.0%, to $35.8 million in 2002 from $37.3 million in
the prior year period. A reduction in compensation  expenses,  associated with a
cost reduction program  implemented in the fourth quarter of 2001, was offset by
higher equipment lease costs due to additional  vacuum trucks placed in service.
Accordingly,  gross  profit  margin  remained  relatively  unchanged at 36.9% as
compared to 37.1% in the prior year period.

     SG&A  expense.  SG&A expense  decreased  $1.0  million,  or 7.4%,  to $12.5
million  in 2002 from  $13.5  million in the prior  year  period.  The  decrease
reflected  lower  compensation  and facility  expenses  resulting  from the cost
reduction program.

     EBITDA.  EBITDA  remained  relatively  unchanged at $8.5 million in 2002 as
compared to $8.6 million in the prior year period.  The cost  reduction  program
offset the impact on EBITDA of the revenue decrease from the prior year period.

     Depreciation.  Depreciation  expense remained  unchanged at $2.7 million in
both the current and the prior year period.

     Amortization.   Amortization  expense  decreased  $837,000,  or  84.1%,  to
$158,000 in 2002 from $995,000 in the prior year period. This decrease is due to
the Company's adoption of SFAS No. 142, "Goodwill and Other Intangible  Assets".
Under this new accounting policy, goodwill is no longer amortized but instead is
periodically  reviewed for  impairment.  During the second  quarter of 2002, the
Company will complete the first of the required impairment tests of goodwill and
on assets with  indefinite  lives as of January 1, 2002.  Management has not yet
determined what the effect of these tests will be on the Company's  earnings and
financial position.

     Operating  income. A decrease in SG&A and amortization  expense,  partially
offset by a reduction  in gross  margin,  resulted  in an increase in  operating
income of $762,000,  or 15.5%,  to $5.7 million in 2002 from $4.9 million in the
prior year period.

     Interest expense,  net. Interest expense, net decreased $510,000, or 13.0%,
to $3.4  million  in 2002  from $3.9  million  in the prior  year  period.  This
decrease  resulted from an $8.9 million  reduction of outstanding  debt from the
prior year and lower interest rates on floating rate debt.

     Income before  taxes.  The Company's  income  before taxes  increased  $1.2
million to $2.2  million in 2002  compared  to $971,000 in the prior year period
from higher operating income and a decrease in interest expense.

     Income tax  provision.  The  effective  income tax rate  decreased  in 2002
primarily as a result of the discontinuance of certain goodwill amortization for
book purposes, which was previously nondeductible for tax purposes.

     Net  income.  Due to an  increase  in  operating  income and a decrease  in
interest  expense,  net, the  Company's  net income  increased  $850,000 to $1.3
million in 2002, as compared to $476,000 in the prior year period.

                                       14
<PAGE>

Liquidity and Capital Resources

     The Company  has  financed  its  operations  through  net cash  provided by
operating activities,  existing cash balances,  and available credit facilities.
On October 25, 2001, the Company entered into a financing agreement with The CIT
Group/Business Credit, Inc., the proceeds of which were used for the refinancing
of previously existing bank debt. The new credit facility in the amount of $62.5
million  consists of (i) a revolving  line of credit (the  "Revolver")  of up to
$32.5  million,  subject to a borrowing base  determined by accounts  receivable
balances and (ii) two  separate  term loans in the  respective  amounts of $24.3
million (the "Machinery and Equipment  Loan") and $5.8 million (the "Real Estate
Loan").

     As of March 31, 2002, $23.4 million was outstanding under the Machinery and
Equipment Loan and $5.4 million was outstanding  under the Real Estate Loan. The
Company's  borrowing  base under the Revolver was $32.0  million,  of which $3.5
million  was  reserved  for  standby  letters of credit,  principally  issued in
connection with the Company's property and casualty  insurance  program.  On the
same date, there was $1.3 million  outstanding  under the Revolver and available
borrowings of $27.0 million.

     For the three months ended March 31, 2002,  net cash used in operations was
$6.9  million,  reflecting  a  seasonal  increase  in  accounts  receivable  and
increases in prepaid expenses due to annual insurance premium payments. Net cash
used in  investing  activities  was  $560,000  for the  first  quarter  of 2002.
Expenditures  for  property and  equipment  for the three months ended March 31,
2002 were  $823,000.  The value of new vacuum trucks and light  vehicles  leased
during  the  three  months  ended  March  31,  2002 was  $434,000.  The  capital
expenditure  budget  and the value of  equipment  to be placed in  service  from
operating leases for 2002 are $3.8 million and $4.6 million respectively.

     Management  believes that cash and cash  equivalents at March 31, 2002, net
cash  expected  to be provided  by  operating  activities,  and  borrowings,  if
necessary,  under the Revolver will be  sufficient  to meet the  Company's  cash
requirements  for operations and expenditures for property and equipment for the
next twelve months and the foreseeable future thereafter. From time to time, the
Company  reviews  acquisition  opportunities  as they  arise,  and  may  require
additional  financing if it decides to make  additional  acquisitions.  However,
there can be no assurance if such  acquisition  opportunities  arise,  that such
acquisitions  will be consummated,  or there will be financing  available and on
terms satisfactory to the Company.

                                       15
<PAGE>

Part II.  Other Information

    Item 1.Legal Proceedings

     There have been no material changes to the proceedings  previously reported
in the  Registrant's  Annual Report on Form 10-K for the year ended December 31,
2001.

    Item 6.  Exhibits and Reports on Form 8-K
    (a)      Exhibits

      Exhibit
      Number          Description
      ------          -----------
         3.1          Certificate  of  Incorporation  of   HydroChem  Industrial
                      Services, Inc. as  amended.  (Exhibit 3.1 to the Company's
                      Registration Statementon Form S-4,  filed August 25, 1997,
                      is hereby incorporated by reference.)

         3.2          Certificate of Incorporation of  HydroChem  International,
                      Inc.,   as   amended.   (Exhibit   3.2  to  the  Company's
                      Registration Statement on Form S-4, filed August 25, 1997,
                      is hereby incorporated by reference.)

         3.3          By-Laws  of  HydroChem Industrial Services, Inc.  (Exhibit
                      3.3 to the Company's  Registration  Statement on Form S-4,
                      filed   August  25,  1997,   is   hereby  incorporated  by
                      reference.)

         3.4          By-Laws of HydroChem International,  Inc.  (Exhibit 3.4 to
                      the Company's Registration  Statement  on Form S-4,  filed
                      August 25,  1997,  is  hereby  incorporated by reference.)

         4.1          Purchase  Agreement,  dated  as  of  July 30, 1997, by and
                      among   HydroChem  Industrial  Services,  Inc.,  HydroChem
                      International,  Inc.  and  Donaldson,  Lufkin  &  Jenrette
                      Securities Corporation,  as Initial Purchaser, relating to
                      the 10 3/8%  Series A Senior  Subordinated Notes due 2007.
                      (Exhibit 4.1  to  the  Company's Registration Statement on
                      Form S-4, filed August 25, 1997, is hereby incorporated by
                      reference.)

         4.2          Indenture, dated as of August  1,  1997,  among  HydroChem
                      Industrial Services, Inc., HydroChem International,  Inc.,
                      as Guarantor,  and  Norwest Bank,   Minnesota,   N.A.,  as
                      Trustee.   (Exhibit  4.2  to  the  Company's  Registration
                      Statement on Form S-4, filed  August 25,  1997,  is hereby
                      incorporated by reference.)

         4.3          Registration Rights Agreement dated August 4, 1997, by and
                      among  HydroChem  Industrial  Services,  Inc.,   HydroChem
                      International,  Inc. and  Donaldson,   Lufkin  &  Jenrette
                      Securities Corporation, as Initial Purchaser. (Exhibit 4.3
                      to the Company's Registration Statement on Form S-4, filed
                      August 25, 1997, is hereby incorporated by reference.)

         10.1         HydroChem Holding, Inc.  1994 Stock Option Plan.  (Exhibit
                      10.1 to the Company's Registration  Statement on Form S-4,
                      filed   August  25,   1997,   is  hereby  incorporated  by
                      reference.)

         10.2         Deferred Bonus Plan of HydroChem Industrial Services, Inc.
                      effective May 1,  1999.  (Exhibit  10.14 to the  Company's
                      Form 10-Q filed August 10, 1999, is hereby incorporated by
                      reference.)

         10.3         First  Amendment  to  Deferred  Bonus  Pla n of  HydroChem
                      Industrial  Services,  Inc.  dated  as  of  May  1,  2000.
                      (Exhibit 10.3 to the Company's  Form 10-Q filed August 11,
                      2000, is hereby incorporated by reference.)

                                       16
<PAGE>
         10.4         Second  Amendment  to  Deferred  Bonus  Plan  of HydroChem
                      Industrial  Services,  Inc.  dated  as  of  May  1,  2001.
                      (Exhibit 10.4  to  the  Company's  Form 10-Q filed May 11,
                      2001, is hereby incorporated by reference.)

         10.5         Employment Agreement dated December 15, 1993  by and among
                      HydroChem Holding, Inc.,  HydroChem  Industrial  Services,
                      Inc.  and  B. Tom Carter, Jr., as amended through December
                      9,  1996.   (Exhibit 10.5  to  the  Company's Registration
                      Statement on Form S-4, filed  August 25,  1997,  is hereby
                      incorporated by reference.)

         10.6         Fourth  Amendment  to  Employment Agreement dated April 9,
                      1998  by  and  among  HydroChem  Holding,  Inc., HydroChem
                      Industrial Services, Inc. and B. Tom Carter, Jr.  (Exhibit
                      10.8  to the Company's  Form 10-Q,  filed May 14, 1998, is
                      hereby incorporated by reference.)

         10.7         Fifth  Amendment  to  Employment Agreement dated April 18,
                      2002  by  and  among  HydroChem  Holding,  Inc., HydroChem
                      Industrial Services,  Inc., and  B. Tom Carter, Jr. (Filed
                      herewith.)

         10.8         Secured  Promissory  Note dated March 15, 2002 from B. Tom
                      Carter, Jr.  to  HydroChem Holding, Inc.  (Exhibit 10.7 to
                      the  Company's  Form 10-K, filed March 29, 2002, is hereby
                      incorporated by reference.)

         10.9         Pledge  Agreement  dated  March  15,  2002  between B. Tom
                      Carter, Jr. and HydroChem Holding,  Inc.  (Exhibit 10.8 to
                      the  Company's  Form 10-K, filed March 29, 2002, is hereby
                      incorporated by reference.)

         10.10        Executive  Bonus  Plan  dated  April 18,  2002 for  B. Tom
                      Carter,  Jr.  (Filed herewith.)

         10.11        Employment  Agreement  dated   November  1,  1992  between
                      HydroChem  Industrial Services,  Inc. and  Gary  D.  Noto.
                      (Exhibit 10.3 to the Company's Registration  Statement  on
                      Form S-4, filed August 25, 1997, is hereby incorporated by
                      reference.)

         10.12        Amendment  dated January 27, 1999 to Employment  Agreement
                      dated   November  1,  1992  between  HydroChem  Industrial
                      Services,  Inc.  and  Gary  D. Noto.  (Exhibit 10.8 to the
                      Company's  Form 10-K,   filed  March  29,  1999, is hereby
                      incorporated by reference.)

         10.13        Employment  Agreement  dated   November  1,  1992  between
                      HydroChem Industrial Services, Inc.  and  J.  Pat  DeBusk.
                      (Exhibit  10.2  to  the  Company's Registration  Statement
                      on Form S-4, filed August 25, 1997, is hereby incorporated
                      by reference.)

         10.14        Employment  Agreement  dated  September 26,  1997  between
                      HydroChem Industrial Services, Inc.  and  Donovan W. Boyd.
                      (Exhibit 10.10 to the Company's Form 10-K filed  March 29,
                      1999,  is hereby  incorporated  by reference.)

         10.15        First  Amendment to Employment  Agreement dated as of June
                      28, 1999 to Employment Agreement dated as of September 26,
                      1997  between  HydroChem  Industrial  Services  Inc.   and
                      Donovan W. Boyd. (Exhibit 10.10 to the Company's Form 10-Q
                      filed   August  10,  1999,  is  hereby   incorporated   by
                      reference.)

         10.16        Second  Amendment  to  Employment  Agreement  dated  as of
                      January  17,  2001  to  Employment  Agreement  dated as of
                      September  26,  1997 between HydroChem Industrial Services
                      and Donovan W. Boyd.  (Exhibit 10.13 to the Company's Form
                      10-K,  filed  March  21,  2001,  is hereby incorporated by
                      reference.)

         10.17        Supplemental Confidentiality  and Proprietary  Information
                      Agreement with Provision for Severance Benefit dated as of
                      April 1, 2000 between HydroChem Industrial Services,  Inc.
                      and Dwane Ruiz. (Exhibit 10.15 to the Company's Form 10-K,
                      filed   March   29,  2002,   is   hereby  incorporated  by

                                       17
<PAGE>
                      reference.)

         10.18        Letter Agreement regarding termination of employment dated
                      March 27, 2002 between HydroChem Industrial Services, Inc.
                      and  Pelham  H. A. Smith.  (Exhibit 10.16 to the Company's
                      Form 10-K, filed March 29, 2002, is hereby incorporated by
                      reference.)

         10.19        Letter Agreement regarding  employment  dated  January 28,
                      2002  between  HydroChem  Industrial  Services,  Inc.  and
                      Kelvin Collard. (Exhibit 10.17 to the Company's Form 10-K,
                      filed March 29, 2002,is hereby incorporated by reference.)

         10.20        Finance Agreement dated October 25, 2001  among  HydroChem
                      Industrial  Services,   Inc.,   HydroChem   Holding,  Inc.
                      HydroChem  International,   Inc.,   HydroChem   Industrial
                      Cleaning, Inc. and The CIT Group/Business Credit, Inc., as
                      Agent and  Lender.  (Exhibit  10.25 to the Company's  Form
                      10-Q,  filed  November 8, 2001,  is hereby incorporated by
                      reference.)

         10.21        First  Amendment  dated as of November 30, 2001 to Finance
                      Agreement   dated   October  25,   2001   among  HydroChem
                      Industrial  Services,  Inc.,   HydroChem   Holding,  Inc.,
                      HydroChem   International,   Inc,   HydroChem   Industrial
                      Cleaning, Inc., and The CIT Group/Business Credit, Inc. as
                      Agent  and  Lender.  (Exhibit 10.19  to the Company's Form
                      10-K,  filed  March  29,  2002,  is hereby incorporated by
                      reference.)

         10.22        Second  Amendment  dated as of January 31, 2002 to Finance
                      Agreement  dated   October   25,  2001   among   HydroChem
                      Industrial  Services,  Inc.,   HydroChem  Holding,   Inc.,
                      HydroChem   International,   Inc.,   HydroChem  Industrial
                      Cleaning,  Inc., The  CIT Group/Business  Credit, Inc., as
                      Agent and Lender, and the other  Lender  parties  thereto.
                      (Exhibit 10.20 to the Company's Form 10-K, filed March 29,
                      2002, is hereby incorporated by reference.)

    (b)      Reports on Form 8-K.

             None.

                                       18
<PAGE>


                                   SIGNATURES


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, each
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                               HYDROCHEM INDUSTRIAL SERVICES, INC.


   Date: May 3, 2002               By:  /s/ Kelvin R. Collard
                                    ------------------------------------
                                    Kelvin R. Collard, Vice President
                                    and Chief Financial Officer





                               HYDROCHEM INTERNATIONAL, INC.


   Date: May 3, 2002               By:  /s/ Kelvin R. Collard
                                    ------------------------------------
                                    Kelvin R. Collard, Vice President
                                    and Chief Financial Officer




                                       19

<PAGE>



                                  EXHIBIT INDEX



      10.7        Fifth Amendment to Employment Agreement dated April 18, 2002
                  by and among HydroChem Holding,  Inc.,  HydroChem Industrial
                  Services, Inc., and B. Tom Carter, Jr.


      10.10       Executive Bonus Plan dated April 18, 2002 for B. Tom Carter,
                  Jr.



                                       20