<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) FOR THE
                         SECURITIES EXCHANGE ACT OF 1934

                   for the Fiscal Year Ended December 31, 1998

                         Commission File number: 0-22098

                               INSILCO HOLDING CO.
             (Exact name for Registrant as specified in its charter)

            DELAWARE                                           NO. 06-1158291
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization                               Identification No.)

                       425 METRO PLACE NORTH, FIFTH FLOOR
                               DUBLIN, OHIO 43017
                    (Address of principal executive offices,
                               including zip code)

                                 (614) 792-0468
                         (Registrant's telephone number,
                              including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.001 par value

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) for 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 the filing
requirements for at least the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the Registrant's Common Stock held by
non-affiliates for the Registrant was approximately $3,343,240 on March 26,
1999.

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [X] No [ ]

There were 1,472,487 shares of the Registrant's common stock outstanding on
March 26, 1999.

Portions of the Registrant's Proxy Statement for the 1999 Annual Meeting of
Stockholders are incorporated by reference in Part III.

<PAGE>   2
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                       Page
                                                                       ---- 
<S>        <C>                                                         <C>
                       
Part I

Item 1.    Business                                                      3

Item 2.    Properties                                                   10

Item 3.    Legal Proceedings                                            13

Item 4.    Submission of Matters to a Vote of Security Holders          13


Part II

Item 5.    Market for the Registrant's Common Equity and Related
            Stockholder Matters                                         14

Item 6.    Selected Financial Data                                      16

Item 7.    Management's Discussion and Analysis of Financial
            Condition and Results of Operations                         18

Item 7A.   Quantitative and Qualitative Disclosures About
            Market Risk                                                 29

Item 8.    Financial Statements and Supplementary Data                  29

Item 9.    Changes in and Disagreements With Accountants on
            Accounting and Financial Disclosure                         29

Part III

Item 10.   Directors and Executive Officers of the Registrant           29

Item 11.   Executive Compensation                                       29

Item 12.   Security Ownership of Certain Beneficial
            Owners and Management                                       29

Item 13.   Certain Relationships and Related Transactions               29

Part IV

Item 14.   Exhibits, Financial Statement Schedules,
            and Reports on Form 8-K                                     31

           Signatures                                                   36

           Consolidated Financial Statements                           F-1


</TABLE>
<PAGE>   3




NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this Form 10-K, including without
limitation the statements under "Business", "Properties" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
forward-looking statements. Although the Company (as defined below) believes
that the expectations reflected in the forward-looking statements contained
herein are reasonable, no assurance can be given that such expectations will
prove to have been correct. Certain important factors that could cause actual
results to differ materially from expectations ("Cautionary Statements")
include, but are not limited to the following: delays in new product
introductions, lack of market acceptance of new products, changes in demand for
the Company's products, changes in market trends, operating hazards, general
competitive pressures from existing and new competitors, effects of governmental
regulations, changes in interest rates, and adverse economic conditions which
could affect the amount of cash available for debt servicing and capital
investments. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements.

                                     PART I

                                ITEM 1. BUSINESS

                                   THE COMPANY

On August 17, 1998, Insilco Corporation, a Delaware corporation originally
incorporated in New Jersey in 1898 (collectively with its subsidiaries is
referred to hereinafter as "Insilco"), completed a series of transactions. These
transactions included, among other things, the formation by Insilco Holding Co.
("Holdings" or the "Company") (then a wholly owned subsidiary of Insilco) of a
wholly owned subsidiary ("ReorgSub"), followed by the merger of ReorgSub with
and into Insilco (the "Reorganization Merger"), pursuant to which each
stockholder of Insilco converted their shares into shares of Holdings and the
right to receive $0.01 per share in cash, and Holdings became the parent of
Insilco.

Promptly following the Reorganization Merger, a second merger took place
pursuant to which Silkworm Acquisition Corporation ("Silkworm"), an affiliate of
Donaldson, Lufkin & Jenrette Merchant Banking Partners, II, L.P. ("DLJMB"),
merged with and into Holdings (the "Merger", and together with the
Reorganization Merger, the "Mergers").

The Company, a Delaware corporation, is a diversified producer of automotive,
telecommunications and electronics components, and is a leading specialty
publisher of student yearbooks. Its principal executive offices are located at
425 Metro Place North, Fifth floor, Dublin, Ohio 43017, telephone (614)
792-0468.

                                        3


<PAGE>   4


                                    BUSINESS

BUSINESS SEGMENT INFORMATION

The Company operates in three primary business segments: Automotive Components,
Technologies, which produces telecommunications and electronics components, and
Specialty Publishing. The percentages of the Company's total net sales by
segment in each of its last three fiscal years were as follows:


<TABLE>
<CAPTION>
                                                                            1998           1997        1996
                                                                            ----           ----        ----
<S>                                                                           <C>           <C>         <C> 
   Automotive Components                                                      40 %          37 %        35 %
   Technologies                                                               35            38          37
    Specialty Publishing                                                      19            18          20
    Other(1)                                                                   6             7           8
                                                                            ----          ----        ----
         Total                                                               100%          100%        100%
                                                                            ====          ====        ====
</TABLE>

(1) This segment includes two operating units that fall below the quantitative
    reporting thresholds. They are a manufacturer of machinery and equipment for
    the heat exchanger market and a welded stainless steel tubing manufacturer.

For additional business segment information, see Note 21 to the Consolidated
Financial Statements.

AUTOMOTIVE COMPONENTS SEGMENT

The Automotive Components Segment is made up of two operating units, Thermal
Components Group ("Thermal"), and Steel Parts Corporation ("Steel Parts"). The
businesses in this segment manufacture automotive heat exchangers and related
tubing, and automatic transmission and suspension components, respectively.

Tubing and Heat Transfer. Thermal is a vertically integrated manufacturer of
heat exchangers for the automotive, specialty vehicle, truck, heavy equipment
and off-road vehicle and industrial equipment markets. Its products include thin
wall aluminum and brass tubes used principally in heat transfer applications,
radiators, air conditioning condensers, and oil coolers and heaters used in the
manufacture and assembly of automotive heat exchangers.

Thermal uses a direct sales force and independent sales representatives to
market its products. Thermal sells to both original equipment manufacturers
("OEMs") and aftermarket customers.

Thermalex, a joint venture owned equally by the Company (through a holding
company subsidiary), and Mitsubishi Aluminum Co., Ltd., manufactures multiport
aluminum extrusions used principally in automotive air conditioning condensers.

The markets for automobile heat-exchanger products are highly competitive and
have many participants, particularly automobile OEMs that produce for their own
use and several large independent manufacturers. Thermal supplies tubes and,
through Thermalex, extrusions to domestic automobile OEMs and independent
manufacturers. Thermal is an established supplier of welded radiator tubes to
manufacturers and repair shops in the heat-exchanger aftermarket.


                                        4
<PAGE>   5


Thermal has manufacturing facilities in Alabama, Michigan, South Carolina,
Wisconsin and Germany. At December 31, 1998, Thermal (excluding Thermalex) had
883 employees.

Transmission Components. Steel Parts manufactures automotive parts consisting of
close-tolerance precision metal stampings at its facility in Indiana. Its
products include clutch plates for automatic transmissions, suspension parts for
vibration-reducing assemblies and engine mounts.

Substantially all Steel Parts' sales are made to the domestic automobile
industry, either directly or indirectly through other independent automotive
parts suppliers. As a result, the demand for Steel Parts' products historically
has been heavily dependent on the level of new car production by the domestic
automobile industry. Steel Parts has also seen its production content per
automobile increase in recent years as automobile manufacturers have moved from
three-speed to four- and five-speed automatic transmissions. The market for
original equipment automobile parts is highly competitive and has many
participants, principally the automobile manufacturers themselves because of
their ability to make their own parts. Approximately 72%, 70% and 70% of Steel
Parts' sales were to one of the "Big 3" domestic automotive manufacturers in
1998, 1997 and 1996, respectively.

At December 31, 1998, Steel Parts had 361 employees.

TECHNOLOGIES SEGMENT

The Technologies Segment consists of four operating units, Stewart Connector,
Signal Transformer, Stewart Stamping and Escod Industries, which manufacture
telecommunication and electrical component products for the computer networking,
telephone digital switching, premises wiring, main frame computer, automotive
and medical equipment markets.

Specialized Connector Systems. Stewart Connector designs and manufactures
specialized high speed data connector systems, including modular plugs, modular
jacks, shielded and nonshielded specialized connectors, and cable assemblies for
telecommunications, cellular communications and data transmission, including
local and wide area networks. Its primary manufacturing facility is located in
Pennsylvania, with an assembly operation in Mexico.

Stewart Connector sells its products throughout the world, directly and through
sales subsidiaries, and through a network of manufacturers' representatives.
Foreign sales accounted for approximately 36% of Stewart Connector's sales in
1998, 41% in 1997 and 40% in 1996. It maintains direct sales offices (and to a
lesser extent, distribution operations) in England, Japan, Germany and has
numerous domestic and foreign competitors, some of which are substantially
larger than Stewart Connector. Competition is based principally on price with
respect to older product lines, and on technology and product features for newer
products and to a lesser extent, patent protection.

At December 31, 1998, Stewart Connector had 1,139 employees.

Power Transformers. Signal Transformer manufactures both standard
"off-the-shelf" and custom-made power transformers serving a broad customer base
in a variety of industries. Signal's markets include telecommunications, home
and retail security systems, medical instrumentation, gaming and entertainment
and process controls. Signal markets its products directly, utilizing catalogs
and print advertising, and indirectly through selective independent sales
representatives in targeted regions of the country. It has a customer base of
over nine thousand accounts, consisting of both OEMs and aftermarket resellers.


                                        5

<PAGE>   6


The electronic transformer industry includes both domestic and foreign
manufacturers and there are numerous competitors to Signal. Competition is based
on price and availability of product to meet customers' needs. Signal has
directed its marketing efforts for many years towards engineers and other
customers having specialized, low-volume demand and prompt delivery
requirements. To capitalize on an identified market niche, Signal has a service
that guarantees 24 hour delivery for small order quantities of certain
"off-the-shelf" transformers.

Signal manufactures its transformers at production facilities located in the
Dominican Republic, Puerto Rico and New York. The New York facility also serves
as Signal's major sales, administration and distribution center.

At December 31, 1998, Signal had 519 employees.

Precision Stampings and Wireforms. Stewart Stamping is a tool designer and
subcontract manufacturer of precision stampings and wireformed parts. Stewart
Stamping manufactures components used in electrical devices such as circuit
breakers, electric fuses, lighting and process controls and the electronics
industries, including passive components such as capacitor cans and connector
contacts. Stewart Stamping sells its products to a broad customer base primarily
in the U.S. through a network of manufacturers' representatives. Stewart
Stamping manufactures its products at its plants in Yonkers, New York and El
Paso, Texas.

Stewart Stamping's competitors in each of its product lines are numerous
(including, in the case of metal stampings, its own customers), but Stewart
Stamping traditionally has focused on products that, because of the engineering
and manufacturing capability required to produce them, have the potential for
repeat business.

At December 31, 1998, Stewart Stamping had 320 employees.

Cable and Wire Assemblies. Escod Industries produces electronic cable
assemblies, specialized wire harnesses and certain telecommunication equipment
subassemblies for sale to manufacturers of telecommunications, computer and
other electronics equipment. Escod's markets generally are regional in nature.
Escod has three production facilities in the Carolinas, one in Florida, one in
Northern Ireland and one in Ireland, which are operated principally to serve
local plants of OEMs. Because substantially all of Escod's customers are OEMs
having a number of production facilities, the demand for Escod's products
depends not only on the demand for its customers' products, but also on its
customers' varying utilization of their production sites.

Telecommunications and computer OEMs account for the bulk of Escod's sales. Two
telecommunications OEMs directly or indirectly together accounted for
approximately 64%, 68% and 66% of Escod's total revenues in 1998, 1997 and 1996,
respectively. Escod's dependence on these two major customers makes its revenues
and operating income sensitive to changes in demand from those customers.

Competition in Escod's markets is based primarily on price and, to a lesser
extent, on responsiveness to customers' needs. The profitability of Escod's
sales generally depend on the relative raw material content, labor productivity,
quality of the products sold, proximity to customers and timeliness of delivery.
As a result of the low barriers to entry into Escod's business and increased,
low-cost foreign competition in recent years, Escod's business has become
intensely competitive.


                                        6



<PAGE>   7


At December 31, 1998, Escod had 292 employees.

SPECIALTY PUBLISHING SEGMENT

Taylor Publishing Company ("Taylor") is engaged primarily in the contract design
and printing of student yearbooks from which it derived at least 88% of its
revenues in each of the last three years. Its principal yearbook customers are
secondary (middle and senior high) schools. Other yearbook customers include
elementary schools, colleges and academies. Taylor also publishes a variety of
specialty books on a contract basis and a limited number of its own publishing
titles and provides reunion planning and other services for alumni of schools,
colleges and academies.

Competition in the yearbook industry is based upon customer service, quality and
price. The market for yearbooks is affected more by demographic trends than by
business cycles. Taylor offers several yearbook lines with different graphic and
typographic options and capabilities. Taylor has expended significant resources
in recent years to develop a system of electronic copy preparation designed to
enhance the quality and consistency of photographs, reduce production costs and
shorten the time required for yearbook production. Taylor has developed
proprietary software programs for use by its customers in developing yearbooks.
This software facilitates the yearbook design work performed by schools and
improves the overall production process.

Taylor markets its yearbook services through commissioned independent sales
representatives who maintain contact with yearbook faculty advisors, school
principals and other key purchasing personnel. It also trains students and their
advisors in layout, design and marketing, conducts seminars and workshops and
provides supporting materials, including software, to assist student yearbook
staffs in the production process.

Yearbook production is highly seasonal. Orders are normally obtained in the fall
and finished yearbooks are delivered at or near the end of the school year,
typically late spring to early summer and to a lesser degree, in the fall of the
following school year. Deposits representing approximately 25% of the yearbook
contract price are due from the yearbook customer upon its submission of the
first set of yearbook pages. Given the seasonal production cycle, the Company
typically receives significant cash deposits commencing each November and
continuing through each March. These deposits are available to fund the working
capital requirements of the yearbook production cycle, and to a lesser extent,
to provide the Company working capital for general corporate purposes.

Taylor operates six production facilities in Texas (two owned and four leased)
and one leased production facility in Pennsylvania. Its work force reflects the
seasonality of its business, typically ranging from 1,000 to 1,700 full-time
employees. At December 31, 1998, it had 1,327 employees.

OTHER SEGMENT

Stainless Steel Tubing. Romac manufactures stainless steel tubing for a variety
of marine, architectural, automotive and decorative applications at its facility
in North Carolina. Substantially all of its sales are domestic.

The markets for these products are highly competitive. Competition is based
principally on price and, to a lesser extent, on the shapes and finishes that
can be achieved with the tubing.

At December 31, 1998, Romac had 130 employees.


                                        7


<PAGE>   8


Heat exchanger machinery and equipment. McKenica manufactures high speed welded
tube mills and other machinery and equipment for the heat exchanger market. It
sells its products predominately to automotive suppliers and automotive OEMs.

At December 31, 1998, McKenica had 80 employees.

DIVESTED OFFICE PRODUCTS BUSINESSES

On September 3, 1996, the Company sold Curtis, its computer accessories
business. On October 4, 1996, the Company sold the Rolodex Electronics product
line. On March 5, 1997, the Company sold the Rolodex Business. Curtis, Rolodex
Electronics and the Rolodex Business are referred to collectively as the "Office
Products Business." See Item 7 "Managements Discussion and Analysis of Financial
Condition and Results of Operations Discontinued Operations."

PATENTS AND TRADEMARKS

The Company holds patents or trademarks in most of its businesses which have
expiration dates ranging from 1999 to 2019. The Company expects to maintain such
patents and to renew the trademarks important to its business prior to their
expiration and does not believe the expiration of any one of its patents will
have material adverse effect on any of its businesses.

RAW MATERIALS AND SUPPLIES

The principal raw materials and supplies used by the Company include: (i) steel,
aluminum, copper, zinc, brass and nickel (Automotive Components Group); (ii)
copper wire, steel, brass, aluminum, plastics, ceramics and precious metals
(Technologies Group); and (iii) paper, film and other photographic and printing
supplies (Specialty Publishing). The Company purchases these materials and
supplies on the open market to meet its current requirements and believes its
sources of supply are adequate for its needs.

BACKLOG

The Company's backlog by industry segment, believed to be firm, at December 31,
1998 and 1997 follows (in thousands):

<TABLE>
<CAPTION>

                                                                                               December 31,
                                                                                         ------------------------
                                                                                         1998                1997
                                                                                         ----                ----
<S>                                                                                     <C>                 <C>   
  Automotive Components                                                                 $ 54,986            56,049
  Technologies                                                                            46,528            51,245
  Specialty Publishing                                                                   120,017           113,232
  Other                                                                                    5,190             3,347
                                                                                       ---------           -------
       Total                                                                           $ 226,721           223,873
                                                                                       =========           =======
</TABLE>

Management believes that approximately $211 million of its 1998 backlog will be
filled in 1999, and the remainder in 2000.


                                       8

<PAGE>   9


EMPLOYEES AND LABOR RELATIONS

At December 31, 1998, the Company employed approximately 5,541 people on a
full-time basis, of whom approximately 25% were covered by collective bargaining
agreements with various unions. The largest collective bargaining unit covers
approximately 563 employees. Among the union agreements that will expire in 1999
are those covering certain union employees of McKenica and Steel Parts. The
Company considers relations with its employees to be good.

The Company has defined benefit and defined contribution pension plans covering
substantially all employees. For information respecting defined benefit pension
plans, See Note 12 to the Consolidated Financial Statements.

ENVIRONMENTAL REGULATION AND PROCEEDINGS

The Company's manufacturing operations involve the generation of a variety of
waste materials and are subject to extensive federal, state and local
environmental laws and regulations. The waste materials generated include metal
scrap from stamping operations, cutting and cooling oils, degreasing agents,
chemicals from plating and tinning operations, etching acids and photographic
and printing chemicals. The Company uses offsite disposal facilities owned by
third parties to dispose of its wastes and does not store wastes it generates to
the extent such storage would require a permit. The Company does not treat,
store or dispose of waste for others. The Company is required to obtain permits
to operate various of its facilities, and these permits generally are subject to
revocation or modification.

The Company has taken significant measures to address emissions, discharges and
waste generation and disposal; improve management practices and operations in
response to legal requirements; and internally audit compliance with applicable
environmental regulations and approved practices. These measures include: raw
material and process substitution; recycling and material management programs;
periodic review of hazardous waste storage and disposal practices; and reviewing
the compliance and financial status and management practices of its offsite
third-party waste management firms.

As a result of the Company's 1993 reorganization, much uncertainty has been
removed concerning the Company's potential liability for environmental
contamination at sites owned or operated by the Company (and at third party
disposal and waste management facilities used by the Company) prior to the
filing of its bankruptcy petition. During the reorganization, the Company
settled all claims of the United States relating to the Company's pre-petition
date conduct at previously owned or third party sites arising under the federal
Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"). This settlement (i) discharged the Company's liability to the United
States at a number of hazardous waste sites; (ii) protects the Company from
contribution claims of the remaining potentially responsible parties; (iii)
limits the amount the Company may be required to pay the United States in any
one year on pre-petition claims; and (iv) provides that any such payment may be
made in cash or, at the Company's option, common stock valued at 30% of the
allowed claim.

The Company is also currently engaged in clean up programs at sites located in
Newtown, Connecticut, Mount Vernon, New York and Oak Creek, Wisconsin. The
Company has established what it believes are appropriate reserves for
anticipated remedial obligations. Due to the establishment of these reserves and
the environmental settlements reached during the Company's reorganization,
management does not believe that environmental compliance or remedial
requirements are likely to have a material adverse effect on the Company.


                                       9



<PAGE>   10


FINANCIAL INFORMATION ABOUT EXPORT SALES

In 1998, the Company's export sales were $46.7 million or 9% of consolidated
sales. Export Sales in 1998 to Europe, Asia, Canada and Mexico were $ 22.8
million, $ 8.8 million and $ 7.7 million and $3.0, respectively. All other
export sales in 1998 totaled $4.4 million. In 1997, the Company's export sales
were $55.4 million or 10% of consolidated sales. Export sales in 1997 to Europe,
Asia, Canada and Mexico were $21.2 million, $14.0 million, $9.7 million and $4.3
million, respectively. All other export sales in 1997 totaled $6.2 million. In
1996, export sales were $58.2 million or 12% of consolidated sales. The
Company's transactions are primarily in U.S. dollars.

                               ITEM 2. PROPERTIES

PROPERTIES

The Company manufactures its products in various locations, primarily in the
United States. Management believes that the Company's facilities generally are
well maintained and adequate for the purposes of which they are used. The
Company's principal operating plants and offices at December 31, 1998 included
the following properties:








                      [This space intentionally left blank]

                                       10


<PAGE>   11



<TABLE>
<CAPTION>
                                                                                             APPROXIMATE          TERMS OF
BUSINESS SEGMENT                     LOCATION                 PRINCIPAL USE                SQUARE FOOTAGE        OCCUPANCY
----------------                     --------                 -------------                --------------        ---------
<S>                                  <C>                      <C>                            <C>                  <C>
Automotive Components
                                     Montgomery, AL           Office/Manufacturing           137,325              Owned(1)
                                     Montgomery, AL           Manufacturing                   45,000               Leased
                                     Franklin, WI             Office/Manufacturing           123,200               Leased
                                     Iron Ridge, WI           Office/Manufacturing            44,000                Owned
                                     Oak Creek, WI            Office/Manufacturing            39,250                Owned
                                     Montgomery, AL           Office/Warehouse                10,890               Leased
                                     Belleville, MI           Office/Manufacturing            42,000               Leased
                                     Duncan, SC               Office/Manufacturing           100,000                Owned
                                     Dortmund, Germany        Office/Manufacturing            45,000                Owned
                                     Dortmund, Germany        Office                           8,500               Leased
                                     Tipton, IN               Office/Manufacturing           235,350                Owned
Technologies      
                                     Durham, NC               Office                           3,205               Leased
                                     N. Myrtle Beach, SC      Office/Manufacturing            46,506                Owned
                                     Lake Wales, FL           Office/Manufacturing            42,000                Owned
                                     Taylorsville, NC         Office/Manufacturing            44,350                Owned
                                     Loris, SC                Office/Manufacturing            36,960                Owned
                                     Canon City, CO           Office/Manufacturing            21,000                Owned
                                     Colorado Springs,
                                      Co.                     Warehouse                        1,400               Leased
                                     Loris, SC                Office/Warehouse                 9,500               Leased
                                     Winterhaven, FL          Warehouse                        3,000               Leased
                                     Galway, Ireland
                                      Carraoe County          Manufacturing                   25,120               Leased
                                     Larne, County
                                      Antrim, Northern
                                      Ireland                 Manufacturing                   25,000               Leased
                                     Inwood, NY               Office/Manufacturing            39,361                Owned
                                     St. Just, PR             Office/Manufacturing            41,214               Leased
                                     San Cristobal,
                                      Dominican Republic      Office/Manufacturing            27,773               Leased
                                     Glen Rock, PA            Office/Manufacturing            84,000                Owned
                                     Santa Clara, CA          Office                             133               Leased
                                     Essex, UK                Office                             485               Leased
                                     Freidrichsdorf/Ts.,
                                      Germany                 Office                           1,500               Leased
                                     Yokohama, Japan          Office/Warehouse                 4,695               Leased
                                     Cananea, Mexico          Warehouse/
                                                               Manufacturing                  22,646               Leased
                                     Yonkers, NY              Office/Manufacturing           190,000                Owned
                                     El Paso, TX              Office/Manufacturing            41,400               Leased
</TABLE>



                                       11


<PAGE>   12
<TABLE>
<CAPTION>
                                                                                             APPROXIMATE          TERMS OF
BUSINESS SEGMENT                     LOCATION                 PRINCIPAL USE                SQUARE FOOTAGE        OCCUPANCY
----------------                     --------                 -------------                --------------        ---------

<S>                                  <C>                      <C>                            <C>                  <C>
Specialty Publishing
                                     Dallas, TX               Office/Manufacturing           320,000                Owned
                                     Dallas, TX               Office/Manufacturing            25,000                Owned
                                     San Angelo, TX           Office/Manufacturing            33,200               Leased
                                     El Paso, TX              Office/Manufacturing            31,000               Leased
                                     El Paso, TX              Manufacturing                   52,000               Leased
                                     Malvern, PA              Office/Manufacturing            41,000               Leased
                                     San Angelo, TX           Manufacturing                    7,800               Leased
                                     Dallas, TX               Office                           1,282               Leased
                                     Orange, CA               Office                           3,373               Leased
                                     Galveston, TX            Office                           1,200               Leased
                                     Garden Grove, CA         Office                             662               Leased

Other
                                     Troutman, NC             Office/Manufacturing           110,000                Owned
                                     Buffalo, NY              Office/Manufacturing            78,800               Leased
Corporate
                                     Dublin, OH               Office                          18,300               Leased
</TABLE>

(1) Property is leased from an industrial development authority in connection
 with an expired industrial revenue bond and is eligible for purchase by the
 Company for a nominal consideration at the expiration of the lease term.

Substantially all of the Company's material domestic assets, including owned
properties, are subject to major encumbrances securing the Company's obligations
under the Bank Credit Agreement.

The Company believes that all of its production facilities have additional
production capacity.


                                       12
<PAGE>   13


                            ITEM 3. LEGAL PROCEEDINGS

On January 14, 1997, Taylor sued one of its principal competitors in the
yearbook business, Jostens, Inc. ("Jostens"), in the U.S. District Court for the
Eastern District of Texas, alleging violations of the federal antitrust laws as
well as various claims arising under state law. On May 13, 1998, the jury in the
case returned a verdict in favor of Taylor, and, on June 12, 1998, the judge
rendered his judgment in the amount of $25.2 million plus interest at an annual
rate of 5.434%. On January 14, 1999, in response to a motion by Jostens, the
judge entered an order vacating the jury verdict and granting judgment in
Jostens' favor. The Company will seek to overturn the order and reinstate the
jury verdict on appeal, but is uncertain what the actual amount is, if any, that
Taylor will recover from Jostens.

From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of its business. The Company
maintains insurance coverage against potential general liability and certain
other claims in an amount it believes to be adequate. In the Company's opinion,
the outcome of these matters will not have a material adverse effect on the
Company's financial condition, liquidity or results of operations.

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

Not Applicable.


                     [This space intentionally left blank.]


                                       13


<PAGE>   14



                                     PART II

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

DLJMB is now the Company's principal stockholder, owning approximately 69% of
the 1,472,487 shares outstanding at March 26, 1999.

From November 29, 1993 to August 17, 1998, the Common Stock of the Company's
subsidiary, Insilco Corporation, traded on the Nasdaq National Market under the
symbol "INSL". After the Mergers, the Common Stock of the Company was traded on
Nasdaq temporarily (initially under the temporary symbol "INSLD" before resuming
the "INSL" designation) but is now traded in the over-the-counter market under
the symbol "INSL". The number of record holders of the Common Stock of the
Company on March 26, 1999 was 63. The closing sales price of the Common Stock of
the Company on March 26, 1999 was $23.875. The following table sets forth, for
the periods indicated, the high and low closing sale prices for the Company's
Common Stock.

<TABLE>
<CAPTION>
                                                                                       Low Sale         High Sale
                                                                                    --------------- ----------------
<S>                                                                                    <C>              <C>  
        1999:
        First Quarter (through March 26, 1999)                                         $ 22.000         $ 25.000
        1998:
        First Quarter                                                                  $ 32.000         $ 43.375
        Second Quarter                                                                 $ 42.875         $ 44.625
        Third Quarter                                                                  $ 35.000         $ 45.000
        Fourth Quarter                                                                 $ 20.000         $ 30.000
        1997:
        First Quarter                                                                  $ 34.000         $ 41.000
        Second Quarter                                                                 $ 36.750         $ 39.000
        Third Quarter                                                                  $ 36.000         $ 39.250
        Fourth Quarter                                                                 $ 33.000         $ 38.500
</TABLE>

Since its incorporation, the Company has not paid any cash dividends. Future
dividend policy will depend upon the earnings and financial condition of the
Company and the Company's need for funds and other factors. The payment of
dividends is restricted by the terms of the Bank Credit Agreement and the 14%
Senior Discount Notes due 2008 (the "14% Notes") issued by the Company on August
17, 1998.

On August 17, 1998, a series of transactions involving the Company was
completed. These transactions included, among other things, the formation by
Insilco Holding Co. ("Holdings" or the "Company") (then a wholly owned
subsidiary of Insilco) of a wholly owned subsidiary ("ReorgSub"), followed by
the merger of ReorgSub with and into Insilco (the "Reorganization Merger"),
pursuant to which each stockholder of Insilco had his or her shares of Insilco
converted into the same number of shares of Holdings and the right to receive
$0.01 per share in cash, and Holdings became the parent of the Company.

Promptly following the Reorganization Merger, a second merger took place
pursuant to which Silkworm Acquisition Corporation ("Silkworm"), an affiliate
DLJMB, merged with and into Holdings (the "Merger", and together with the
Reorganization Merger, the "Mergers") and each share of Holdings Common Stock
was converted into the right to receive $43.47 in cash and 0.03378 of a share of
Holdings Common Stock. 
                                       14


<PAGE>   15


Thus, as a result of the Mergers, each stockholder of Insilco, in respect of
each of his or her shares, received $43.48 in cash and retained 0.03378 of a
share of Holdings Common Stock. Concurrently with the consummation of the
Mergers, the DLJMB Funds purchased 1,400,000 shares of Holdings 15% Senior
Exchangeable Preferred Stock due 2012 (the "PIK Preferred Stock"), and warrants
to purchase 65,603 shares of Holdings Common Stock at an exercise price of
$0.001 per share.

Following the Mergers, (i) Insilco's existing stockholders retained, in the
aggregate, approximately 10.1% (9.4% on a fully diluted basis) of the
outstanding shares of Holdings Common Stock; (ii) the DLJMB Funds held
approximately 69.0% (69.8% on a fully diluted basis) of the outstanding shares
of Holdings Common Stock; (iii) 399 Venture Partners Inc., an affiliate of
Citibank, N.A. ("CVC"), purchased shares of Silkworm which in the Merger were
converted into approximately 19.3% (17.8% on a fully diluted basis) of the
outstanding shares of Holdings Common Stock; and (iv) management of the Company
purchased approximately 1.7% (1.5% on a fully diluted basis) of the outstanding
shares of Holdings Common Stock.

Immediately prior to the effectiveness of the Reorganization Merger, each
outstanding option to acquire shares of the common stock of Insilco granted to
employees and directors, whether or not vested (the "Options") was canceled and
in lieu thereof, each holder of an Option received a cash payment in an amount
equal to (x) the excess, if any, of $45.00 over the exercise price of the Option
multiplied by (y) the number of shares subject to the Option, less applicable
withholding taxes (the "Option Cash Payments"). Certain holders of such Options
elected to utilize amounts otherwise receivable by them to purchase equity or
equity units of Holdings.


                                       15

<PAGE>   16


                         ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected financial information (dollars in
thousands, except per share data) derived from the Company's Consolidated
Financial Statements.


<TABLE>
<CAPTION>
                                                       1998          1997           1996        1995           1994
                                                       ----          ----           ----        ----           ----

<S>                                                   <C>            <C>           <C>           <C>          <C>
   OPERATIONS DATA (1)
     Sales (net)                                      $ 535,629      528,233       492,405       449,506      438,434
     Depreciation and amortization                       20,159       18,377        15,357        13,352       12,251
     Merger Expenses                                     25,529            -             -             -            -
     Severance and write-downs                            2,542            -         1,500             -            -
     Amortization of Reorganization Goodwill (2)              -            -             -        16,205       34,812
     Operating income (3)                                12,642       51,102        48,433        38,881        9,491

     Other income (expense)
        Interest expense                               (32,894)     (20,562)      (18,378)      (19,546)     (29,113)
        Interest income                                     979        2,837           724         1,472        1,788
        Other income (expense), net (4)                   5,877        3,441         7,706        13,893        3,257

     Income (loss) from continuing operations
      before extraordinary item and income taxes       (13,396)       36,818        38,485        34,700     (14,577)
     Income tax benefit (expense)                         1,253     (13,404)      (13,272)      (16,694)      (5,718)

     Income (loss) from continuing operations
      before extraordinary items                       (12,143)       23,414        25,213        18,006     (20,295)

     Income (loss) from discontinued operations,
      net of tax                                              -       58,958        13,840      (15,431)      (9,683)

     Income (loss) before extraordinary items          (12,143)       82,372        39,053         2,575     (29,978)

     Extraordinary items, net of tax                    (5,888)        (728)             -             -      (2,156)

     Net income (loss)                                 (18,031)       81,644        39,053         2,575     (32,134)

   BALANCE SHEET DATA AT PERIOD END (1)
     Working capital                                     66,576       39,508        51,436        47,436       35,327
     Total assets                                       327,274      302,673       348,393       340,129      368,669
     Long-term debt                                     383,062      257,743       161,042       186,489      198,109
     Other long-term liabilities                         46,329       43,402        44,156        48,153       60,529
     Redeemable preferred stock                          34,094            -             -             -            -
     Stockholders' equity (deficit)                   (236,322)    (102,328)        33,402      (15,779)     (13,451)

   CASH FLOW DATA (1)
     Net cash provided by
      operating activities                                  432       45,511        55,423        37,744       34,305
     Net cash provided by (used in)
      investing activities                             (23,366)       95,217      (29,783)      (14,678)       36,295
     Net cash provided by (used in)
      financing activities                               19,602    (133,256)      (32,053)      (21,862)    (115,648)
   PER SHARE DATA
     Basic income (loss) per share from
      continuing operations                              (4.49)         3.25          2.65          1.83       (2.09)
     Diluted income (loss) per share from
    continuing operations                                (4.49)         3.19          2.55          1.77       (2.09)
     Book value per share                              (170.68)      (25.08)          3.52        (1.64)       (1.37)
</TABLE>

See accompanying notes to the Selected Financial Data.


                                       16


<PAGE>   17


The notes to the selected financial data follow:

(1)  The Company has consummated several material transactions over the
     five-year period presented here, which significantly affect the
     comparability of the information shown. (See Note 1 to the Consolidated
     Financial Statements.)

(2)  Amortization of Reorganization Goodwill for 1995 and 1994 resulted from the
     Company's emergence from Chapter 11 bankruptcy proceedings (the "Chapter 11
     Cases") on April 1, 1993 (the "Reorganization Date") pursuant to an Amended
     and Restated Plan of Reorganization dated November 23, 1992 (the "Plan of
     Reorganization").

(3)  Operating income in 1995 includes a gain of $4.3 million related to a
     change in the Company's pension plan (see Note 12 to the Consolidated
     Financial Statements). In addition, operating income for 1995 and 1994
     includes the deduction for Amortization of Reorganization Goodwill.

(4)  Other income in 1995 includes favorable adjustments of $3.6 million related
     to the Company's environmental liabilities, $1.5 million related to the
     resolution of several legal disputes, and a $4.0 million gain on the sale
     of idle corporate assets.


                                       17

<PAGE>   18


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

                                    OVERVIEW


The Company's three primary business segments have different operating and
growth characteristics.

The Company's Automotive Components Segment designs, manufactures, and
distributes component products used in automotive, heavy-equipment, and other
transportation vehicles. Growth and performance in this segment is tied closely
to the vehicle production rates of automotive and heavy-equipment manufacturers
as well as after-market demand for replacement products.

The growth and performance of the Company's Technologies Segment is dependent on
the demand for its customers' end products and network infrastructure
build-outs. The Company feels it has aligned itself with market leaders in the
electric, electrical, telecommunications and data communications markets.

The Company is one of the largest producers of yearbooks to middle and high
school markets and colleges. The growth and performance of the Company's
Specialty Publishing Segment is dependent on the growth rate of the domestic
school age population and on increasing the proportion of students who purchase
school yearbooks.

The Company's Other Segment includes two operating units that fall below the
quantitative reporting thresholds and do not meet all of the criteria for
aggregation with the Company's reportable segments. These operations are a
manufacturer of high speed welded tube mills and other machinery and equipment
for the heat exchanger market to automotive suppliers and OEMs and a welded
stainless steel tubing manufacturer that provides tubing and tubing products to
a variety of markets, including pipe and tube distributors, recreational marine
and construction.

The Company consummated several material transactions in 1998, 1997 and 1996
that resulted in significant changes to its debt and capital structure. A
summary of these transactions is as follows:

The Mergers: On August 17, 1998, a series of transactions involving the Company
was completed. These transactions included, among other things, the formation by
Insilco Holding Co. ("Holdings" or the "Company") (then a wholly owned
subsidiary of Insilco) of a wholly owned subsidiary ("ReorgSub"), followed by
the merger of ReorgSub with and into Insilco (the "Reorganization Merger"),
pursuant to which each stockholder of Insilco had his or her shares of Insilco
converted into the same number of shares of Holdings and the right to receive
$0.01 per share in cash, and Holdings became the parent of Insilco.

Promptly following the Reorganization Merger, a second merger took place
pursuant to which Silkworm Acquisition Corporation ("Silkworm"), an affiliate of
DLJMB, merged with and into Holdings (the "Merger," and together with the
Reorganization Merger, the "Mergers") and each share of Holdings Common Stock
was converted into the right to receive $43.47 in cash and 0.03378 of a share of
Holdings Common Stock. Thus, as a result of the Mergers, each stockholder of
Insilco, in respect of each of his or her shares, received $43.48 in cash and
retained 0.03378 of a share of Holdings Common Stock. Concurrently with the
consummation of the Mergers, the DLJMB Funds purchased 1,400,000 shares of
Holdings 15% Senior Exchangeable Preferred Stock due 2012 (the "PIK Preferred
Stock"), and warrants to purchase 65,603 shares of Holdings Common Stock at an
exercise price of $0.01 per share.


                                       18


<PAGE>   19


Following the Mergers, (i) Insilco's existing stockholders retained, in the
aggregate, approximately 10.1% (9.4% on a fully diluted basis) of the
outstanding shares of Holdings Common Stock; (ii) the DLJMB Funds held
approximately 69.0% (69.8% on a fully diluted basis) of the outstanding shares
of Holdings Common Stock; (iii) 399 Venture Partners Inc., an affiliate of
Citibank, N.A. ("CVC"), purchased shares of Silkworm which in the Merger were
converted into approximately 19.3% (17.8% on a fully diluted basis) of the
outstanding shares of Holdings Common Stock; and (iv) management of the Company
purchased approximately 1.7% (1.5% on a fully diluted basis) of the outstanding
shares of Holdings Common Stock.

Immediately prior to the effectiveness of the Reorganization Merger, each
outstanding option to acquire shares of the common stock of Insilco granted to
employees and directors, whether or not vested (the "Options") was canceled and
in lieu thereof, each holder of an Option received a cash payment in an amount
equal to (x) the excess, if any, of $45.00 over the exercise price of the Option
multiplied by (y) the number of shares subject to the Option, less applicable
withholding taxes (the "Option Cash Payments"). Certain holders of such Options
elected to utilize amounts otherwise receivable by them to purchase equity or
equity units of Holdings.

The Company incurred $25,529,000 of costs related to the Merger in 1998.

The Merger Financing: The total amount of cash required to consummate the
foregoing transactions was approximately $204.4 million. This amount was
financed with (i) gross proceeds of approximately $70.2 million from the
issuance by Silkworm of units (which were converted into units of Holdings (the
"Holdings Units") in the Merger), each unit consisting of $1,000 principal
amount at maturity of 14% Senior Discount Notes due 2008 (the "Holdings Senior
Discount Notes") and one warrant to purchase 0.325 of a share of Holdings Common
Stock at an exercise price of $0.01 per share, (ii) the issuance by Holdings to
the DLJMB Funds, CVC and certain members of management of the Company, for an
aggregate consideration of approximately $56.1 million, of 1,245,138 shares of
Silkworm common stock (which were converted into Holdings Common Stock in the
Merger), (iii) the issuance to the DLJMB Funds for an aggregate consideration of
$35.0 million of 1,400,000 shares of the PIK Preferred Stock by Holdings and the
DLJMB Warrants to purchase 65,603 shares of Holdings Common Stock at an exercise
price of $0.01 per share, and (iv) approximately $43.1 million of new borrowings
under the Company's existing credit facility (the "Existing Credit Facility").

Refinancing of 10 1/4% Subordinated Debt: As a result of the Merger, Insilco was
required to make an Offer to Purchase (as defined in the indenture relating to
the 10 1/4% Notes) all of the outstanding 10 1/4% Notes at 101% of their
aggregate principal amount, plus accrued interest. To fund a portion of the
repurchase of the 10 1/4% Notes, Insilco, on November 9, 1998, completed the
sale of $120 million of 12% Senior Subordinated Notes due 2007 (the "12% Notes")
with warrants to purchase 62,400 shares of Holdings common stock at $45 per
share. The net proceeds from the sale of the 12% Notes, which was approximately
$116.4 million after payment of $3.6 million in underwriting fees to DLJSC and
other expenses, along with approximately $30.0 million in borrowings under
Insilco's Credit Facilities, were used to repurchase the 10 1/4% Notes plus the
accrued and unpaid interest. As of December 31, 1998, Insilco purchased $148.5
million of these notes and in February 1999, purchased an additional $1.5
million. As of March 26, 1999, there is an aggregate of $26,000 principal amount
of 10 1/4% Notes outstanding.

In addition, on November 24, 1998, Insilco amended and restated its Bank Credit
Agreement to, among other things, provide for two credit facilities: a $175
million revolving loan and $125 million term loan.

Acquisitions: In 1996, the Company acquired Great Lake, Inc. ("Great Lake"),
which serves the automotive, heavy truck and industrial manufacturing radiator
replacement market and the automotive 


                                       19


<PAGE>   20


aluminum tube business of Helmut Lingemann GmbH & Co. (the "Lingemann Business")
for approximately $37,726,000 in the aggregate including transaction fees and
expenses. The Lingemann transactions include the purchase of stock of
Lingemann's German subsidiary, ARUP Alu-Rohr und-Profil GmbH, and the automotive
aluminum tube business assets of its Duncan, South Carolina based
Helima-Helvetion International, Inc. This cash transaction was financed
principally from borrowings under the Company's prior bank credit agreement (See
Note 7).

These acquisitions have been accounted for as purchases and, accordingly, the
purchase prices have been allocated to the assets and liabilities acquired based
on their fair values at the acquisition dates. The operating results of the
businesses acquired have been included for the period subsequent to their
acquisition dates. (See Note 22 for pro forma results). The fair value of the
assets acquired totaled $47,478,000 and the liabilities assumed totaled
$9,752,000.

Divestitures: The Office Products Business of the Company's Office
Products/Specialty Publishing Group was divested in three separate transactions
during 1996 and the first quarter of 1997. The 1996 transactions included the
divestitures of the Company's computer accessories business (Curtis) and
electronic organizer business (Rolodex Electronics) for $21.8 million in the
aggregate which was used to reduce the outstanding amounts on the Company's bank
loans. On March 5, 1997, the remainder of the Office Products Business, which
consisted of the Rolodex Business, was sold for net cash proceeds of
approximately $112 million (the "Rolodex Proceeds"). As a result of the sale of
the Rolodex Business, the Office Products Business segment is being accounted
for as a discontinued operation (See "Discontinued Operations").

1997 Amended and Restated Credit Agreement: Insilco entered into an Amended and
Restated Credit Agreement as of July 3, 1997 (the "1997 Bank Credit Agreement")
that among other things, provided for (i) a $200 million revolving credit
facility, (ii) a $50 million sublimit for commercial and standby letters of
credit, and (iii) a $50 million sublimit for advances in selected foreign
currencies.

Issuance of 10 1/4% Subordinated Debt: On August 12, 1997, Insilco issued $150
million aggregate principal amount of 10.25% Senior Subordinated Notes due 2007
(the "10 1/4% Notes"), realizing therefrom net proceeds of $145.9 million.

Share Repurchase: On July 10, 1997, Insilco, using the proceeds from the sale of
the Rolodex Business, purchased an aggregate of 2,857,142 shares of its common
stock for $109,999,967. On August 12, 1997, Insilco completed a tender offer
pursuant to which it purchased an additional 2,857,142 shares for $109,999,967.
These shares were purchased with proceeds received from the issuance of $150
million aggregate amount of the 10 1/4% Notes.

These transactions have had a significant impact on the Company's results of
operations and financial position. Results of operations have been affected by
increases in the amortization of intangibles, inventory costs, depreciation,
interest expense, and deferred financing and prepayment fees. As a result of
these transactions, the Company's consolidated results for 1998, 1997 and 1996
are not directly comparable. Pro forma results of operations, which assume these
transactions occurred at the beginning of their respective periods, are
presented in Note 22 of the Notes to the Consolidated Financial Statements.


                                       20

<PAGE>   21

                              RESULTS OF OPERATIONS

The table below is a summary (in thousands) of net sales from continuing
operations, operating income from continuing operations and net income (loss)
for the periods ended December 31, 1998, 1997, and 1996, respectively. This
presentation and the discussion that follows is based on a management approach
and is consistent with the basis and manner in which the Company's management
internally disaggregates financial information for the purposes of assisting in
making internal operating decisions (see Note 20 of the Consolidated Financial
Statements).

<TABLE>
<CAPTION>

                                                  1998      1997       1996
                                                  ----      ----       ----
<S>                                             <C>        <C>       <C>

NET SALES FROM CONTINUING OPERATIONS
  Automotive Components Segment                 $213,365   193,839   169,280
  Technologies Segment                           189,781   198,941   183,663
  Specialty Publishing Segment                   101,325    98,222    99,020
  Other Segment                                   31,158    37,231    40,442
                                                --------   -------   -------
    Total                                       $535,629   528,233   492,405
                                                ========   =======   =======

OPERATING INCOME FROM CONTINUING OPERATIONS
  Automotive Components Segment                 $ 23,015    21,859    21,722
  Technologies Segment                            21,169    26,734    27,604
  Specialty Publishing Segment                     4,945     7,299     5,136
  Other Segment                                    1,290     4,748     5,175
  Unallocated amounts:
    Corporate operating expenses                  (7,752)   (9,138)   (9,704)
    Significant legal expenses                    (1,954)     (400)        -
    Severance and writedowns                      (2,542)        -    (1,500)
    Merger fees and expenses                     (25,529)        -         -
                                                --------   -------   -------
      Total operating income from
      continuing operations                     $ 12,642    51,102    48,433
                                                ========   =======   =======
NET INCOME (LOSS)                               $(18,031)   81,644    39,053
                                                ========   =======   =======
</TABLE>


1998 COMPARED TO 1997

Consolidated Results of Operations: Net sales from continuing operations in 1998
increased $7.4 million, or 1%, to $535.6 million from $528.2 million in 1997.
The increase in sales was due primarily to higher sales from the Automotive
Components Segment, which increased $19.5 million or 10% over 1997. This
increase was due primarily to higher heat exchanger and tubing sales, which were
up 16%. These increased sales were partially offset by a 2% decrease in the
sales of transmission related components. The increase in automotive component
sales was partly offset by a decrease in sales of technologies related
components, which declined $9.1 million or 5%. Although connector product sales
increased 7%, sales of wire and cable assembles, 


                                       21


<PAGE>   22


transformers and precision stampings declined a combined 9%. In addition, sales
of heat exchanger machinery and equipment and welded stainless steel tubing
products decreased a combined $6.1 million or 16%.

Operating income from continuing operations in 1998 decreased $38.5 million, or
75%, to $12.6 million from $51.1 million in 1997. Contributing to this decrease
in operating income were merger expenses relating to the Company's August 1998
merger with DLJMB, charges for severance expenses totaling $2.3 million related
to workforce reductions at Corporate, and in the Specialty Publishing and
Technologies Segments and writedowns related to lease cancellation costs of $0.2
million. In addition, the Company incurred higher legal expenses relating to two
significant lawsuits. Excluding the effects of these items, operating income in
1998 would have decreased $8.4 million, or 17% to $42.7 million from $51.5
million in 1997. This decrease (excluding the legal, and non-recurring charges)
was due to lower operating income from the Technologies, Specialty Publishing,
and Other Segments, which were partly offset by a $1.2 million increase in
operating income from the Automotive Components Segment.

Operating income from the Technologies Segment declined $5.6 million, or 21%,
from 1997 due mainly to the decline in sales and related decrease in gross
profits and higher depreciation expense. Operating income from the Specialty
Publishing Segment was down $2.4 million from 1997 due to higher delivery
expenses and higher commissions and new marketing initiatives. Operating income
from the Company's Other Segment declined $3.5 million as a result of a $3.6
million decrease in operating income relating to its tube-mill equipment and
machinery product line, which had a 45% decrease in sales.

Interest expense in 1998 increased $12.3 million to $32.9 million from $20.6
million in 1997, reflecting higher interest rates on the Company's 1998 debt
offerings and higher debt levels as a result of the August 1998 Merger and the
July 1997 Share Repurchase.

Interest income in 1998 decreased $1.8 million to $1.0 million from $2.8 million
in 1997, due to lower investment levels. Other income in 1998 increased $2.2
million to $3.0 million from $0.8 million in 1997, due to various non-operating,
non-recurring items. Equity income from the Company's unconsolidated joint
venture, Thermalex, in 1998 increased $0.2 million to $2.9 million from $2.7
million in 1997, due to an improvement in Thermalex's net income as a result of
higher sales.

The Company had an income tax benefit in 1998 of $1.3 million compared to an
expense of $13.4 million in 1997 due to the loss generated from continuing
operations in 1998. For information concerning the provision for income taxes,
as well as information regarding differences between effective tax rates and
statutory rates, see Note 14 of the Notes to the Consolidated Financial
Statements.

The Company recorded income from discontinued operations of $59.0 million in
1997 and $13.8 million in 1996 relating to the sale of its Office Products
Business, a significant line of business within the Company's then Office
Products/Specialty Publishing Segment. The sale of this line of business was
completed on March 5, 1997 with the sale of Rolodex for $112.6 million, net of
transaction costs. This sale was preceded in 1996 by the sale of Rolodex
Electronics and Curtis for an aggregate $21.8 million, net of transaction costs.
As a result of these sales, the Office Products Business has been accounted for
as a discontinued operation and, accordingly, the accompanying consolidated
statements of operations and cash flows for the periods prior to the sales have
been reclassified. Revenues associated with the discontinued Office Products
Business for the years 1998, 1997 and 1996 were $0, $10.8 million and $80.1
million, respectively.

The Company recorded an extraordinary item of $5.9 million, net of tax, in 1998
relating to the write-off of deferred financing fees associated with the 1997
Bank Credit Agreement and 10 1/4% Notes.


                                       22

<PAGE>   23


Automotive Components Segment: Net sales in 1998 increased $19.5 million, or
10%, to $213.4 million from $193.8 million in 1997. The increase was due to
higher aluminum and charged-air-cooler tubing, aluminum heat exchangers, and
radiator sales. These sales increases were partially offset by lower
transmission component and brass tubing sales.

Operating income in 1998 increased $1.2 million, or 5%, to $23.0 million from
$21.8 million in 1997 due to higher sales and the resulting increase in gross
profits while selling, general, administrative and depreciation expenses were
flat compared to 1997. Operating margins in 1998 decreased to 10.8% from 11.3%
in 1997. This decrease is attributable to lower gross profit margins due to a
product mix shift to lower margin products offset by a decline in selling,
general and administrative expenses as a percent of sales, which fell to 8.9% in
1998 from 9.7% in 1997.

Technologies Segment: Net sales in 1998 decreased $9.1 million, or 5%, to $189.8
million from $198.9 million in 1997. While connector sales were up 7% from 1997,
sales of wire and cable assemblies, transformers and precision stampings were
collectively down 9% due a continuing slowdown in global electronics markets and
weak demand for electronic end products.

Operating income in 1998 decreased $5.5 million, or 21%, to $21.2 million from
$26.7 million in 1997. The decrease was due primarily to the decrease in sales
and a slight decrease in gross profit margins, which resulted in lower gross
profits. In addition, selling, general and administrative expenses increased 3%
and depreciation expense increased 17%. The majority of the increase in
depreciation was due to tooling investments for new connector and precision
stamped products.

Specialty Publishing Segment: Net sales in 1998 increased $3.1 million, or 3%,
to $101.3 million from $98.2 million in 1997. A 5% increase in yearbook sales
was partially offset by a $2.0 million decrease in non-yearbook publication
sales.

Operating income in 1998 decreased $2.4 million, or 32%, to $4.9 million from
$7.3 million in 1997 due to higher yearbook delivery expenses and increased
selling, general and administrative expenses due to new marketing initiatives
and increased sales commissions to sales representatives on higher yearbook
revenues.

Other Segment: Net sales in 1998 decreased $6.0 million, or 16%, to $31.2
million from $37.2 million in 1997. A 45% decrease in tube-mill capital
equipment sales, as a result of weak domestic and international demand for
milling equipment accounted for the decline.

Operating income in 1998 decreased $3.5 million, or 73%, to $1.3 million from
$4.8 million in 1997 due to the decline in tube-mill capital equipment sales.

1997 COMPARED TO 1996

Consolidated Results of Operations: Net sales from continuing operations in 1997
increased $35.8 million, or 7%, to $528.2 million from $492.4 million in 1996.
This increase was due to a $21.4 million, or 10%, increase in automotive
component sales due to the acquisition of Lingemann, which was not owned for the
full year in 1996. In addition, electronic and telecommunications component
sales increased $15.2 million, or 8%, primarily due to higher sales of wire and
cable assemblies, transformers, and precision stampings.

Operating income from continuing operations in 1997 increased $2.7 million, or
6%, to $51.1 million from $48.4 million in 1996. This increase was due to
increased productivity in the Specialty Publishing Segment, which accounted for
$2.2 million of the increase. In addition, the Company recorded a $1.5 million



                                       23


<PAGE>   24


restructuring charge in 1996 for severance expenses relating to a salaried
workforce reduction in its Specialty Publishing Segment. A $0.9 million decrease
in operating income from the Technologies Segment due to higher selling, general
and administrative expenses partially offset these gains. Operating margins in
1997 were flat at 9.7% compared to 9.8% in 1996.

Interest expense in 1997 increased $2.2 million to $20.6 million from $18.4
million in 1996 due to higher interest costs relating to the 1997 debt financing
and higher debt levels due to the July 1997 Share Repurchase. Interest income in
1997 increased $2.1 million to $2.8 million from $0.7 million in 1996. The
increase reflects higher interest income earned on the sales proceeds derived
from the Company's sale of its Rolodex Business on March 5, 1997, which were
later used in the Company's 1997 Share Repurchase. Other income in 1997
decreased $4.0 million to $0.8 million from $4.8 million in 1996, due to the
inclusion in 1996 of a $2.2 million environmental liability settlement for an
amount less than previously estimated and several other smaller items. Equity
income from Thermalex in 1997 decreased $0.3 million to $2.6 million from $2.9
million in 1996 due to additional expenses relating to Thermalex's plant
expansion and the start-up of a new extrusion press.

Automotive Components Segment: Net sales in 1997 increased $24.6 million, or
15%, to $193.8 million from $169.2 million in 1996. The increase is primarily
attributable to the acquisition of Lingemann, which was not owned for the full
year in 1996. Sales for the full year in 1997 and the partial year of 1996
relating to this acquisition were $31.6 million and $13.1 million, respectively.
The Company also experienced higher sales of aluminum tubing, charged-air-cooler
tubing, radiators, and transmission components due to strong OEM and supplier
demand. The increase in transmission sales was also due to the shift from
three-speed to four and five-speed automatic transmissions, which increased the
Company's content per vehicle produced.

Operating income in 1997 was flat at $21.9 million compared to $21.7 million in
1996 due to increased expenses relating to the integration of Lingemann.
Selling, general and administrative expenses increased $4.8 million, of which
$2.5 million was due to the acquisition of Lingemann and $0.5 million related to
the Company's new R&D tech center.

Technologies Segment: Net sales in 1997 increased $15.2 million, or 8%, to
$198.9 million from $183.7 million in 1996. The increase is primarily due to
increased sales across all product lines except connectors. Sales of wire and
cable assemblies were up 19% due to strong demand from existing
telecommunication customers and additional sales from new customers. Transformer
sales increased 9% over 1996 due to higher demand for internationally certified
products from electronic OEMs. Precision stampings sales were up 7% due to new
products and strong demand from automotive, electrical control and circuit
protection markets. Connector sales decreased 1% from the prior year as a result
of price erosion within older product lines and delayed new product
introductions. International connector sales grew to 41% of sales in 1997 from
40% of sales in 1996.

Operating income in 1997 decreased $0.9 million, or 3%, to $26.7 million from
$27.6 million in 1996, as a result of lower operating margins on connector
products caused by competitive price pressures and delays in introducing new,
higher margin connector products. Also, impacting operating income were
additional start-up costs relating to the Company's new El Paso stamping
facility. Higher sales and gross profits from wire and cable assemblies offset a
portion of these declines.

Specialty Publishing Segment: Net sales in 1997 were flat at $98.2 million
compared to $99.0 million in 1996. The lack of growth is attributable to flat
yearbook sales and a $1.9 million decrease in non-yearbook publication sales.


                                       24

<PAGE>   25


Operating income in 1997 increased $2.2 million, or 42%, to $7.3 million from
$5.1 million in 1996 due to increased productivity relating to workflow
improvements.

Other Segment: Net sales in 1997 decreased $3.2 million, or 8%, to $37.2 million
from $40.4 million in 1996. Heat exchanger capital equipment sales decreased 15%
and sales of welded stainless steel tubing products were down 4%.

Operating income in 1997 decreased $0.4 million, or 8%, to $4.8 million from
$5.2 million in 1996. A $1.5 million decrease in operating income from heat
exchanger capital equipment sales was offset by a $1.1 million increase in
operating income from welded stainless steel tubing products.

LIQUIDITY AND CAPITAL RESOURCES

In general, the Company requires liquidity for working capital, capital
expenditures, interest, taxes, debt repayment and its acquisition strategy. Of
primary importance are the Company's working capital requirements, which
increase whenever the Company experiences strong incremental demand or
geographical expansion. The Company expects to satisfy its liquidity
requirements through a combination of funds generated from operating activities
and the funds available under its Bank Credit Agreement.

Operating activities: For the year ended December 31, 1998, net cash provided
from operating activities was $0.4 million compared to $45.5 million provided
from operating activities during the same period in 1997. The increase in cash
requirements was primarily the result of the merger expenses and lower operating
income as previously discussed. In addition, the Company required additional
working capital due to the timing of year-end collections from a large
automotive components customer and two large technologies customers, which
accounted for a significant increase in accounts receivable and were collected
in January.

Investing activities: For the year ended December 31, 1998, capital expenditures
were $3.4 million less than the comparable period for 1997. Capital spending for
equipment in the Automotive Components Segment accounted for approximately 47%
and spending related to connector and precision stamping equipment and tooling
in the Technologies Segment accounted for 39%. The Company expects its 1999
capital expenditures to be flat compared to 1998. The Company also acquired two
small cable assembly operations for a total of $2.3 million during 1998. These
operations are located in Ireland and Northern Ireland and are being integrated
into the Technologies Segment.

The Company received cash dividends from its investment in Thermalex in 1998 and
1997 of $1.3 million and $1.5 million, respectively. In addition, as of December
31, 1998, the Company had a dividend receivable from this investment of $2.9
million relating to the declaration of a dividend that was paid in February
1999.

Financing activities: The Company has completed several transactions during
1998, 1997 and 1996 relating to its Merger with DLJMB and changes in its debt
and equity structure. For details regarding these transactions see the beginning
of this section.

The Company's annual cash interest expense on Insilco's 12% Notes, which are due
2007, is approximately $14.4 million. Interest on these notes is payable
semi-annually on February 15 and August 15 of each year commencing February 15,
1999. Cash interest on Holdings' 14% Senior Discount Notes, which are due 2008,
is payable semi-annually beginning February 15, 2004. Dividends on Holdings' 15%
Senior Exchangeable Preferred Stock ("PIK Preferred Stock") are payable in
additional shares of PIK Preferred Stock until August 1, 2003. After August 1,
2003, dividends are payable in cash.


                                       25


<PAGE>   26


Insilco is party to a Bank Credit Agreement, which includes a $125.0 million
Term Facility and a $175.0 million Revolving Facility, which provides for
revolving loans and up to $50 million of letters of credit. The Revolving
Facility can be used to fund acquisitions, provide working capital, and for
other general corporate purposes. The Term Facility has a maturity of seven
years and is subject to mandatory quarterly prepayments of $0.3 million for the
first six years and quarterly payments of approximately $29.4 million in the
seventh year. Cash interest on the Term Facility is based on a leverage ratio.
At December 31, 1998, the applicable spread was LIBOR plus 3.75%. Payments of
principal and interest on the Term Facility are due quarterly each March, June,
September and December. The Revolving Facility terminates on July 8, 2003 and
interest is based on a leverage ratio. At December 31, 1998, the applicable
spread was LIBOR plus 3.00%. Availability under the Revolving Facility will
decrease by $21.4 million in May 1999 absent a signed definitive acquisition
agreement entered into prior to this date, and by $17.5 million on each of July
10, 2001 and July 10, 2002.

The Bank Credit Agreement is secured by a first-priority perfected lien on
substantially all of Insilco's assets, including a pledge of all of the stock of
Insilco's domestic subsidiaries and 65% of the stock of Insilco's foreign
subsidiaries. Payment of principal and interest on amounts borrowed under the
Bank Credit Agreement are guaranteed by substantially all of Insilco's domestic
subsidiaries. As of March 24, 1999, Insilco has approximately $83.0 million of
available funds under this agreement.

Future cash uses during fiscal 1999 include the purchase of Insilco's remaining
$1.5 million in outstanding 10 1/4% Notes. The Company, through Insilco, also
acquired the stock of EFI, a precision stamping operation, on January 25, 1999
for approximately $23.6 million including acquisition costs. EFI will be
integrated into the Technologies Segment. See Note 23 of the Notes to
Consolidated Financial Statements.

The Company expects its principal sources of liquidity to be from its operating
activities and funding from the Revolving Credit Facility. The Company further
expects that these sources will enable it to meet its long-term cash
requirements for working capital, capital expenditures, interest, taxes, debt
repayment, and future acquisitions for the foreseeable future.

Accumulated Deficit: At December 31, 1998, the Company had a stockholders'
deficit totaling $236.3 million, which is a result of both the 1998 merger and
1997 share repurchases previously described in this section.

MARKET RISK AND RISK MANAGEMENT

Foreign currency exchange rate movements create a degree of risk to the
Company's operations by affecting the U.S. dollar value of sales made in foreign
currencies and the U.S. dollar value of costs incurred in foreign currencies.
Foreign currency exchange rate movements also affect our competitive position,
as exchange rate changes may affect business practices and/or pricing strategies
of non-U.S. based competitors.

The Company's general policy is to use foreign currency borrowings as needed to
finance its foreign currency denominated assets. The Company uses such
borrowings to reduce its asset exposure to the effects of changes in exchange
rates - not as speculative investments.

As of December 31, 1998, the Company did not have any derivative instruments in
place for managing foreign currency exchange rate risks. Considering both the
anticipated cash flows from operations for the next quarter and the foreign
loans in place at year end, a hypothetical 10% weakening of the U.S. dollar
relative to all other currencies would not materially adversely affect expected
first quarter 1999 earnings or cash flows. This analysis is dependent on actual
foreign sales and costs during the next quarter occurring within 


                                       26

<PAGE>   27


10% of the budgeted forecasts. The effect of the hypothetical change in exchange
rates ignores the affect this movement may have on other variables including
competitive risk. If it were possible to quantify the competitive impact, the
results could well be different than the sensitivity effects noted above. In
addition, it is unlikely that all currencies would uniformly strengthen or
weaken relative to the U.S. dollar. In reality, some currencies may weaken while
others may strengthen.

The Company also is exposed to changes in interest rates primarily from its
long-term debt arrangements. As of December 31, 1998, the Company had no
interest rate derivative instruments to manage exposure to interest rate
changes.

A comparison of the net fair value of all interest sensitive financial
instruments using a hypothetical 100 basis point increase in interest rates
along the entire interest rate yield curve as of December 31, 1998 is as follows
(in thousands):

<TABLE>
<CAPTION>
                                                        Hypothetical
                                    Fair Market          Fair Market
Description of Security                Value                Value
-----------------------             -----------         ------------
<S>                                 <C>                 <C>

12% Senior Subordinated Notes
    due 2007                        $ 123,600             $ 117,852

14% Senior Discounts Notes
    due 2008                           62,100                57,518


</TABLE>


THE YEAR 2000 ISSUES

Many existing computer programs utilized globally use only two digits to
identify a year in the date field. These programs, if not corrected, could fail
or create erroneous results after the century date changes on January 1, 2000 or
when otherwise dealing with dates later than December 31, 1999. This "Year 2000"
issue is believed to affect virtually all companies and organizations, including
the Company.

The Company relies on computer-based technology and primarily utilizes a variety
of third-party hardware and software and to a minimal degree some proprietary
software. In addition to such information technology ("IT") systems, the
Company's operations rely on various non-IT equipment and systems that contain
embedded computer technology. Third parties with whom the Company has commercial
relationships, including raw materials suppliers and service providers (such as
banking and financial services, data processing services, telecommunications
services and utilities), are also highly reliant on computer-based technology.

In 1996, the Company commenced an assessment of the potential effects of the
Year 2000 issue on the Company's business, financial condition and results of
operations. In conjunction with such assessment, the Company developed and
implemented a "Year 2000" compliance program as described below.

Third-Party IT Systems. The majority of the Company's IT systems are third party
systems for which the Company has received Year 2000 compliant versions. The
Company does not expect any significant outlay of cash for these systems as all
of the third party systems are under current maintenance agreements which
provide for continuing operation including functions involving Year 2000. The
strategy instituted by the Company to identify and address Year 2000 issues
affecting third-party IT Systems includes contacting all third-party providers
of computer hardware and software to secure appropriate representations to the
effect that such hardware or software is or will timely be Year 2000 compliant.


                                       27


<PAGE>   28


Proprietary IT Systems. The Company does not rely heavily on Company developed
proprietary IT systems. Pursuant to the Company's Year 2000 compliance program,
the Company has examined its proprietary IT systems for Year 2000 problems. All
such systems that were identified as relating to a critical function and that
were not Year 2000 compliant are being fixed. The Company believes that nearly
all of its proprietary IT systems have been fixed and the Company is in the
process of testing the remediated systems for Year 2000 compliance.

Non-IT Systems. The Company has undertaken a review of its non-IT systems and is
in the process of fixing such systems that are within its control. The Company
expects to complete this remediation effort by April 30, 1999.

Non-IT Vendors and Suppliers. The Company procures its raw materials and
operating supplies from a vast network of vendors located both within and
outside the United States. As a part of its contingency planning effort, the
Company is continually assessing the Year 2000 readiness of its important
vendors in order to identify any significant exposures that may exist and
establish alternate sources or strategies where necessary.

Costs. The costs incurred to implement the Company's Year 2000 compliance
program have been immaterial to date and the Company presently expects to incur
less than $1.0 million of costs in the aggregate. All of the Company's Year 2000
compliance costs have been or are expected to be funded from the Company's
operating cash flow. The Company's Year 2000 compliance budget does not include
material amounts for hardware replacement because the Company has historically
employed a strategy to continually upgrade its business systems. Consequently,
the Company's Year 2000 budget has not required the diversion of funds from or
the postponement of the implementation of other planned IT projects.

Risks Associated With Year 2000 Issues. The Company's Year 2000 compliance
program is directed primarily towards ensuring that the Company will be able to
continue to perform three critical functions: (i) make and sell its products,
(ii) order and receive raw material and supplies, and (iii) pay its employees
and vendors. It is difficult, if not impossible, to assess with any degree of
accuracy the impact on any of these three areas of the failure of one or more
aspects of the Company's compliance program.

The novelty and complexity of the issues presented and the proposed solutions
therefore and the Company's dependence on the technical skills of employees and
independent contractors and on the representations and preparedness of third
parties are among the factors that could cause the Company's efforts to be less
than fully effective. Moreover, Year 2000 issues present a number of risks that
are beyond the Company's reasonable control, such as the failure of utility
companies to deliver electricity, the failure of telecommunications companies to
provide voice and data services, the failure of financial institutions to
process transactions and transfer funds, the failure of vendors to deliver
materials or perform services required by the Company and the collateral effects
on the Company of the effects of Year 2000 issues on the economy in general or
on the Company's customers in particular. Although the Company believes that its
Year 2000 compliance program is designed to appropriately identify and address
those Year 2000 issues that are subject to the Company's reasonable control,
there can be no assurance that the Company's efforts in this regard will be
fully effective or that Year 2000 issues will not have a material adverse effect
on the Company's business, financial condition or results of operations.

SEASONALITY AND INFLATION

The Company's specialty publishing segment is highly seasonal, with a majority
of sales occurring in the second and third quarter of the year. The Company
receives significant advance deposits from its Specialty 


                                       28


<PAGE>   29


Publishing customers in the first and fourth quarters of each year. The
Company's other segments are not highly seasonal. See "Item 1. Business -
Specialty Publishing."

The impact of inflation on the Company's operations has not been significant.
However, there can be no assurance that a high rate of inflation in the future
would not have an adverse effect on the Company's operating results.

       ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See discussion in Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations, "Market Risk and Risk Management".

               ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company, together with the reports
thereon of KPMG LLP (dated February 10, 1999 except as to the fourth paragraph
of Note 7, which is as of March 26, 1999) are set forth on pages F-1 through
F-38 hereof (see Item 14 of this Annual Report for the Index).

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

Not applicable.

                                    PART III

           ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item will be included under the captions
"Election of Directors," "Executive Officers" and "Section 16(a) Beneficial
Ownership Reporting Compliance" of the Company's Proxy Statement (the "Proxy
Statement") relating to the Company's 1999 Annual Meeting of Stockholders which
is expected to be held in July 1999 and is incorporated herein by reference. The
Company anticipates filing the Proxy Statement with the Securities and Exchange
commission in April 1999.

                         ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item will be included under the captions
"Director Compensation" and "Executive Compensation" in the Proxy Statement and
is incorporated herein by reference.

          ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                                   MANAGEMENT

The information required by this Item will be included under the captions
"Security Ownership of Certain Beneficial Owners" and "Security Ownership of
Directors and Executive Officers" in the Proxy Statement and is incorporated
herein by reference.

             ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item will be included under the captions
"Compensation Committee Interlocks and Insider Participation," "Election of
Directors," "Security Ownership of Certain Beneficial 


                                       29

<PAGE>   30


Owners," and "Security Ownership of Directors and Executive Officers" in the
Proxy Statement and is incorporated herein by reference.


                                       30
<PAGE>   31
                                    PART IV

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

(A)     THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:

(1)     Financial Statements

        -   Independent Auditors' Report

        -   Consolidated Balance Sheets

            -   December 31, 1998 
            -   December 31, 1997

        -   Consolidated Statements of Operations

            -   Year ended December 31, 1998

            -   Year ended December 31, 1997

            -   Year ended December 31, 1996

        -   Consolidated Statements of Stockholders' Equity (Deficit)

            -   For the years ended December 31, 1998, 1997 and 1996

        -   Consolidated Statements of Cash Flows

            -   Year ended December 31, 1998

            -   Year ended December 31, 1997

            -   Year ended December 31, 1996

        -   Notes to Consolidated Financial Statements

(2)     Financial Statement Schedules

        See Exhibit 99(a) - Schedule II - Valuation and Qualifying Accounts.

        All other schedules are omitted because of the absence of the
        conditions under which they are required or because the required
        information is included in financial statements or the notes thereto.


                                       31


<PAGE>   32


      (3) Exhibits:


   *2(a)   -    Agreement and Plan of Merger,  dated as of March 24, 1998, among
                Insilco, INR Holding Co., and Silkworm  Acquisition Corporation
                (Exhibit 10(n) to the  Registration  Statement on Form S-4 (File
                No. 333-51145) of Insilco).

   *2(b)   -    Amendment No. 1 to the Agreement and Plan of Merger,  dated June
                8, 1998,  among Insilco,  INR Holding Co. and Silkworm
                Acquisition  Corporation (Exhibit 10(r) to the Registration
                Statement on Form S-4 (File No. 333-51145) of Insilco).

   *3(a)   -    Certificate of  Incorporation  (Exhibit 3.1 to the Current
                Report on Form 8-K filed on August 18, 1998 (File No. 0-24813).

   *3(b)   -    Bylaws  incorporated  by reference to Exhibit 3.2 to the Current
                Report on Form 8-K filed on August 18, 1998 (File No. 0-24813).

   *4(a)   -    Investors' Agreement, dated as of August 17, 1998, among Insilco
                Holding Co. and the investors named therein (Exhibit 4.5 to the
                Registration Statement on Form S-1 (File No. 333-65039)).

   *4(b)   -    Indenture, dated as of November 9, 1998, between Insilco and the
                Trustee (Exhibit 4(a) to the Form 10-Q filed by Insilco on
                November 16, 1998 (File No. 0-22098)).

   *4(c)   -    First  Supplemental  Indenture,  dated as of December 21, 1998,
                between Insilco and the Trustee (Exhibit 4.3 to the Registration
                Statement on Form S-1 (File No. 333-71947) of Insilco).

   *4(d)   -    Warrant  Agreement, dated as of August 17, 1998, between
                Silkworm Acquisition  Corporation and National City Bank, as
                Warrant Agent  (Exhibit 4.1 to the  Registration  Statement on
                Form S-1 (File No. 333-65039)).

   *4(e)   -    Assumption  Agreement,  dated as of August 17, 1998,  between
                Insilco  Holding Co. and National City Bank, as Warrant Agent
                (Exhibit 4.2 to the  Registration  Statement on Form S-1 (File
                No. 333-65039)).

   *4(f)   -    Form of Class A  Warrant  (Exhibit  4.3 to the  Registration
                Statement  on Form S-1 (File No. 333-65039)).

   *4(g)   -    Certificate  of  Designation  with respect to Pay-in-kind  15%
                Senior  Exchangeable  Preferred Stock due 2010 (Exhibit 4.4 to
                the Registration Statement on Form S-1 (File No. 333-65039)).

   *4(h)   -    Indenture,  dated as of August 17,  1998, between  Silkworm
                Acquisition  Corporation  and the Trustee (Exhibit 4.5 to the
                Registration Statement on Form S-1 (File No. 333-65039)).

   *4(i)   -    First Supplemental Indenture, dated as of August 17, 1998,
                between Insilco Holding Co., and the Trustee (Exhibit 4.6 to the
                Registration Statement on Form S-1 (File No. 333-65039)).

   *4(j)    -   Indenture,  dated as of August 12, 1997,  between Insilco and
                the Trustee (Exhibit 4(j) to the Registration Statement on Form
                S-4 (File No. 333-36523) of Insilco).

                                       32

<PAGE>   33


   *4(k)    -   Form of New Note (included in Exhibit 4(j) above) (Exhibit 4(k)
                to the Registration  Statement on Form S-4 (File No. 333-36523)
                of Insilco).

   *4(l)    -   Purchase  Agreement,  dated as of August 7, 1997,  among
                Insilco  and  Goldman,  Sachs & Co., McDonald & Company
                Securities,  Inc. and Citicorp  Securities Inc. (the "Initial
                Purchasers") (Exhibit 4(l) to the Registration Statement on Form
                S-4 (File No. 333-36523) of Insilco).

   *4(m)    -   Exchange and Registration Rights Agreement, dated as of August
                12, 1997, between Insilco and the Initial Purchasers (Exhibit
                4(m) to the Registration Statement on Form S-4 (File No.
                333-36523) of Insilco).

   *4(n)    -   Warrant  Agreement, dated as of November 9, 1998, between
                Insilco Holding Co. and the Warrant Agent (Exhibit 4(a) to the
                Form 10-Q for the Quarter Ended September 30, 1998 (File No.
                0-24813)).

   *4(o)    -   Warrant and Registration Rights Agreement, dated as of November
                9, 1998, between Insilco Holding Co. and the Initial Purchaser
                (Exhibit 4(b) to the Form 10-Q for the Quarter Ended September
                30, 1998 (File No. 0-24813)).

   *4(p)    -   Exchange and Registration Rights Agreement, dated as of November
                9, 1998, between Insilco and DLJ (Exhibit 4(b) to the Form 10-Q
                of Insilco for the Quarter Ended September 30, 1998 (File No.
                0-22098)).

   4(q)     -   Second Supplemental Indenture, dated as of January 25, 1999
                between Insilco and the Trustee.

   *10(a)  -    Insilco Holding Co. Direct Investment Program (Exhibit 4(c) to
                the Registration  Statement on Form S-8 (File No. 333-61809)).**

   *10(b)  -    Insilco  Holding Co. Stock Option Plan  (Exhibit 4(d) to the
                Registration  Statement on Form S-8 (File No. 333-61809)).**

   *10(c)  -    Insilco  Holding  Co.  and  Insilco  Corporation  Equity  Unit
                Plan  (Exhibit  4(c)  to  the Registration Statement on Form S-8
                (File No. 333-61811)).**

   *10(d)  -    Credit Agreement, among Insilco and a syndicate of banks and
                other financial institutions led by Donaldson, Lufkin & Jenrette
                Securities Corporation, DLJ Capital Funding and The First
                National Bank of Chicago (Exhibit 10.4 to the Registration
                Statement on Form S-1 (File No. 333-71947) of Insilco).

   *10(e)  -    Purchase Agreement, between Insilco Corporation,  Insilco
                Holding Co. and Donaldson,  Lufkin & Jenrette Securities
                Corporation (Exhibit 10(a) to Form 10-Q Filed by Insilco on
                November 16, 1998 (File No. 0-22098)).

   *10(f)  -    Employment  Agreement  dated as of May 1, 1993  between  Insilco
                and Robert L.  Smialek,  as amended and restated  (Exhibit 10(k)
                to the Form 10/A,  Amendment No. 1 to Form 10 (File No. 0-22098)
                of Insilco).**


                                       33


<PAGE>   34


   *10(g)   -   Form of Indemnification Agreement adopted by Insilco as of July
                30, 1990, entered into between Insilco and certain of its
                officers and directors individually, together with a schedule
                identifying the other documents omitted and the material details
                in which such documents differ (Exhibit 10(n) to the Form 10
                (File No. 0-22098) of Insilco).

   *10(h)   -   Form for Income Protection Agreement adopted by Insilco as of
                December, 1996, entered into between Insilco and the officers
                identified in Exhibit 10(g) (Exhibit 10(h) of the Form 10-K of
                Insilco for the Year Ended December 31, 1996 (File No.
                0-22098)).

   *10(i)   -   Extension Agreement between Insilco and Robert L. Smialek
                dated May 1, 1996 (Exhibit 10(l) to the Form 10-K of Insilco for
                the Year Ended December 31, 1997 (File No. 0-22098)).**

   *10(j)   -   Second Extension Agreement between Insilco and Robert L.
                Smialek dated September 25, 1997 (Exhibit 10(m) to the Form 10-K
                of Insilco for the Year Ended December 31, 1997 (File No.
                0-22098)).**

   *21      -   Subsidiaries  of Insilco Holding Co.  (Exhibit 21 to the
                Registration  Statement on Form S-1 (File No. 333-65039)).

    23(a)   -   Consent of KPMG LLP.

    24      -   Power of  Attorney  of  officers  and  directors  of Insilco
                Holding  Co.  appearing  on the signature page hereof.

   *25(a)   -   Statement of Eligibility  and  Qualification  Under the Trust
                Indenture Act of 1939 (T-1) of The Bank of New York (bound
                separately)  (Exhibit 25 to the  Registration  Statement on Form
                S-4 (File No. 333-36523) of Insilco).

   *25(b)   -   Statement of  Eligibility  of Star Bank,  N.A. on Form T-1
                (Exhibit 25.1 to the  Registration Statement on Form S-1 (File
                No. 333-65039)).

     27     -   Financial Data Schedule.

     99(a)  -   Schedule II - Valuation and Qualifying Accounts.

*    Incorporated by reference, as indicated.

**   Designates management contracts and compensatory plans or arrangements in
     which directors or executive officers participate.


                                       34
<PAGE>   35


(B)       REPORTS ON FORM 8-K

          A report, dated October 15, 1998, on Form 8-K was pursuant to Items 5
          and 7 of that form.

          A report, dated October 29, 1998, on Form 8-K was filed pursuant to
          Items 5 and 7 of that form.

(C)       EXHIBITS

          The Exhibits to this report begin immediately following the
          Consolidated Financial Statements.

(D)       FINANCIAL STATEMENT SCHEDULES:

          See Exhibit 99(a) - Schedule II - Valuation and Qualifying Accounts.

       Note:  All other schedules called for under Regulation S-X not included
              herein have been omitted because they are not applicable, the
              required information is not material or the required information
              is included in the financial statements or notes thereto.


                                       35

<PAGE>   36
                                   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.


                                         INSILCO HOLDING CO.

Date: March 29, 1999                     By:  /s/ David A. Kauer
                                              ----------------------------------
                                              David A. Kauer
                                              Vice President and Chief Financial
                                              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 indicated on the date indicated.


<TABLE>
         <S>                        <C>                                           <C>
         Robert L. Smialek*         President, Chief Executive           )        March 29, 1999
         ---------------------
         Robert L. Smialek          Officer and Director                 )
                                    (Principal Executive Officer)        )

         David A. Kauer*            Vice President and Chief             )
         ----------------------
         David A. Kauer             Financial Officer                    )
                                    (Principal Accounting Officer)
         Thompson Dean*                                                  )
         ---------------------
         Thompson Dean              Director                             )

         William F. Dawson*                                              )
         ---------------------
         William F. Dawson          Director                             )

         Keith Palumbo*             Director                             )
         ----------------------
         Keith Palumbo                                                   )

         Randall E. Curran*         Director                             )
         ----------------------
         Randall E. Curran                                               )

         John F. Fort III*                                               )
         ----------------------
         John F. Fort III           Director                             )

         David Y. Howe*                                                  )
         ----------------------
         David Y. Howe              Director                             )
</TABLE>

       /s/ David A. Kauer
By:    ---------------------
       *David A. Kauer
       Attorney-in-Fact



                                       36
<PAGE>   37
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                          


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S>                                                             <C>
Independent Auditors' Report                                     F-2

Consolidated Balance Sheets                                      F-3
     - December 31, 1998
     - December 31, 1997

Consolidated Statements of Operations                            F-4 
     - Year ended December 31, 1998 
     - Year ended December 31, 1997 
     - Year ended December 31, 1996

Consolidated Statement of Stockholders' Equity (Deficit) 
     - For the years ended December 31, 1998, 1997 and 1996      F-5

Consolidated Statements of Cash Flows                            F-7 
     - Year ended December 31, 1998 
     - Year ended December 31, 1997 
     - Year ended December 31, 1996

Notes to Consolidated Financial Statements                       F-8
</TABLE>


                                      F-1


<PAGE>   38


                          Independent Auditors' Report

The Board of Directors and Stockholders
Insilco Holding Co.:

We have audited the accompanying consolidated financial statements of Insilco
Holding Co. and subsidiaries as listed in the accompanying index. In conjunction
with our audits of the consolidated financial statements, we also have audited
the financial statement schedule of valuation and qualifying accounts. These
consolidated financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and the financial statement
schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Insilco Holding Co.
and subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.



Columbus, Ohio                                              KPMG LLP 
February 10, 1999, except as 
to the fourth paragraph 
of Note 7, which 
is as of March 26, 1999

                                      F-2
<PAGE>   39

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                           

                           Consolidated Balance Sheets
                           December 31, 1998 and 1997
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                     Assets                                             1998      1997
                                                                                        ----      ----
<S>                                                                               <C>          <C>
Current assets:
  Cash and cash equivalents                                                          $ 7,404     10,651
  Trade receivables, net                                                              74,969     67,209
  Other receivables                                                                    4,337      3,477
  Receivables from related party                                                       4,882          -
  Inventories, net                                                                    64,565     60,718
  Deferred taxes                                                                       6,143        277
  Prepaid expenses and other current assets                                            4,387      2,716
                                                                                     -------     ------

     Total current assets                                                            166,687    145,048

Property, plant and equipment, net                                                   114,756    113,971
Deferred taxes                                                                         1,902      1,054
Other assets and deferred charges                                                     43,929     42,600
                                                                                     -------     ------

     Total assets                                                                   $327,274    302,673
                                                                                    ========    =======

                  Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
  Current portion of long-term debt                                                  $ 1,265      1,684
  Accounts payable                                                                    34,513     39,757
  Customer deposits                                                                   24,981     20,346
  Accrued expenses and other                                                          39,352     43,753
                                                                                     -------     ------

     Total current liabilities                                                       100,111    105,540

Long-term debt, excluding current portion                                            383,062    256,059
Other long-term obligations, excluding current portion                                46,329     43,402
15% Preferred Stock; 3,000,000 shares 
  authorized, 1,400,000 shares issued and outstanding at 
  December 31, 1998 (none at  December 31, 1997)                                      34,094          -
Stockholders' equity (deficit):
  Common stock, $.001 par value; 15,000,000 shares authorized; 
  1,384,614 shares issued and outstanding, 15,000,000 shares 
  authorized in 1997, 4,548,373 shares issued and 4,080,693 
  shares outstanding                                                                       1          5
  Treasury stock, at cost                                                                  -    (16,268)
  Additional paid-in capital                                                          63,890          -
  Accumulated deficit                                                               (295,115)   (82,756)
  Accumulated other comprehensive income                                              (5,098)    (3,309)
                                                                                     -------     ------

     Total stockholders' equity (deficit)                                           (236,322)  (102,328)
                                                                                     -------     ------

Commitments and contingencies (See Notes 10, 14 and 19)

     Total liabilities and stockholders' equity (deficit)                           $327,274    302,673
                                                                                    ========    =======

</TABLE>



See accompanying notes to consolidated financial statements.


                                      F-3

<PAGE>   40

                      INSILCO HOLDING CO. AND SUBSIDIARIES



                      Consolidated Statements of Operations
                  Years Ended December 31, 1998, 1997 and 1996
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                1998            1997              1996            
                                                                                ----            ----              ----
<S>                                                                        <C>               <C>                <C>    
Sales                                                                       $ 535,629         528,233            492,405
Cost of products sold                                                         383,269         370,845            344,912
Depreciation and amortization                                                  20,159          18,377             15,357
Selling, general and administrative expenses                                   91,488          87,909             82,203
Merger expenses                                                                25,529               -                  -
Severance and write-downs                                                       2,542               -              1,500
                                                                            ---------         -------            -------
     Operating income                                                          12,642          51,102             48,433
                                                                            ---------         -------            -------
Other income (expense):
  Interest expense                                                            (32,894)        (20,562)           (18,378)
  Interest income                                                                 979           2,837                724
  Equity in net income of Thermalex                                             2,850           2,647              2,922
  Other income, net                                                             3,027             794              4,784
                                                                            ---------         -------            -------
     Total other expense                                                      (26,038)        (14,284)            (9,948)
                                                                            ---------         -------            -------
  Income (loss) from continuing operations before
    income taxes and extraordinary item                                       (13,396)         36,818             38,485
Income tax benefit (expense)                                                    1,253         (13,404)           (13,272)
                                                                            ---------         -------            -------
  Income (loss) from continuing operations before
    extraordinary item                                                        (12,143)         23,414             25,213

Discontinued operations, net of tax:
  Income from operations                                                            -           1,170              8,741
  Gain on disposal                                                                  -          57,788              5,099
                                                                            ---------         -------            -------
  Income from discontinued operations                                               -          58,958             13,840
                                                                            ---------         -------            -------
  Income (loss) before extraordinary item                                     (12,143)         82,372             39,053

Extraordinary items, net of tax                                                (5,888)           (728)                 -
                                                                            ---------         -------            -------

  Net income (loss)                                                           (18,031)         81,644             39,053

Preferred stock accretion                                                      (2,044)              -                  -
                                                                            ---------         -------            -------
  Net income (loss) available to common                                      $(20,075)         81,644             39,053
                                                                            =========         =======            =======
Basic earnings (loss) available per common share:
  Income (loss) from continuing operations                                  $   (4.49)           3.25               2.65
  Discontinued operations                                                           -            8.19               1.45
  Extraordinary item                                                            (1.86)          (0.10)                 -
                                                                            ---------         -------            -------
  Basic net income (loss) per share                                         $   (6.35)          11.34               4.10
                                                                            =========         =======            =======

Diluted earnings (loss) available per common share:
  Income (loss) from continuing operations                                  $   (4.49)           3.19               2.55
  Discontinued operations                                                           -            8.03               1.40
  Extraordinary item                                                            (1.86)          (0.10)                 -
                                                                            ---------         -------            -------
  Diluted net income (loss) per share                                       $   (6.35)          11.12               3.95
                                                                            =========         =======            =======
</TABLE>



See accompanying notes to consolidated financial statements.


                                       F-4
<PAGE>   41







                      INSILCO HOLDING CO. AND SUBSIDIARIES

          Consolidated Statement of Stockholders' Equity (Deficit) For
                the Years Ended December 31, 1998, 1997 and 1996
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                                         Accumulated       Total
                                                                                            Additional       Other     Stockholders'
                                                      Common Stock    Treasury    Paid-in   Accumulated  Comprehensive    Equity
                                                    Par Value $.001     Stock     Capital     Deficit       Income       (Deficit)
                                                    ---------------   --------    -------     -------       -------      ---------

<S>                                                      <C>          <C>         <C>        <C>            <C>         <C>     
Balance at December 31, 1995                              $  10        (6,813)     67,192     (76,168)          -        (15,779)
Comprehensive income:
    Net income                                                -             -           -      39,053           -         39,053
    Other comprehensive income:
       Foreign currency translation adjustment                -             -           -           -        (244)          (244)
                                                                                                                                  

                                                             --       -------      ------     -------        ----         ------
    Total comprehensive income                                                                                            38,809
                                                             --       -------      ------     -------        ----         ------
    Tax benefit from reduction of valuation
    allowance for deferred tax assets                         -             -      10,237           -           -         10,237
    Purchase of treasury stock                                -        (3,932)          -           -           -         (3,932)
    Restricted stock                                          -             -       3,300           -           -          3,300
    Issuance of shares upon exercise of 
    stock options                                             -             -       1,071           -           -          1,071
    Reserved shares                                           -             -        (706)          -           -           (706)
    Tax benefit from exercise of stock options                -             -         402           -           -            402
                                                             --       -------      ------     -------        ----         ------
Balance at December 31, 1996                                 10       (10,745)     81,496     (37,115)       (244)        33,402

    Comprehensive income:
    Net income                                                -             -           -      81,644           -         81,644
    Other comprehensive income:
       Foreign currency translation                           -             -           -           -      (3,065)        (3,065)
    adjustment
                                                             --       -------      ------     -------        ----         ------
    Total comprehensive income                                                                                            78,579
                                                             --       -------      ------     -------        ----         ------
    Repurchase of shares                                     (5)            -     (92,710)   (127,285)          -       (220,000)
    Costs of Tender Offer                                     -             -        (889)          -           -           (889)
    Purchase of treasury stock                                -        (5,523)          -           -           -         (5,523)
    Restricted stock                                          -             -         571           -           -            571
    Issuance of shares upon exercise of 
    stock options                                             -             -       8,255           -           -          8,255
    Tax benefit from exercise of stock options                -             -       3,277           -           -          3,277
                                                             --       -------      ------     -------        ----         ------
Balance at December 31, 1997                                  5       (16,268)          -     (82,756)     (3,309)      (102,328)
</TABLE>



See accompanying notes to consolidated financial statements.

                                      F-5

<PAGE>   42


                      INSILCO HOLDING CO. AND SUBSIDIARIES

          Consolidated Statement of Stockholders' Equity (Deficit) For
                the Years Ended December 31, 1998, 1997 and 1996
                                 (In thousands)
                                   (continued)

<TABLE>
<CAPTION>
                                                                                                         Accumulated       Total
                                                                                            Additional       Other     Stockholders'
                                                      Common Stock    Treasury    Paid-in   Accumulated  Comprehensive    Equity
                                                    Par Value $.001     Stock     Capital     Deficit       Income       (Deficit)
                                                    ---------------   --------    -------     -------       -------      ---------
<S>                                                      <C>        <C>           <C>        <C>            <C>         <C>     
Balance at December 31, 1997                               5         (16,268)           -      (82,756)      (3,309)      (102,328)
  Comprehensive income:
      Net loss                                             -               -            -      (18,031)           -        (18,031)
      Other Comprehensive income: 
          Foreign currency                                 -               -            -            -           16             16
          translation adjustment
          Minimum pension
          liability adjustment, net of                                                                                             
          tax of $1,130                                    -               -            -            -       (1,805)        (1,805)
                                                          --         -------       ------      -------         ----         ------
  Total comprehensive income                                                                                               (19,820)
                                                                                                                  -        -------
  Cash merger consideration                                -               -            -     (180,241)           -       (180,241)
  Merger Eliminations (Note 1)                            (5)         16,268       (4,220)     (12,043)           -              -
  Accretion of preferred stock                             -               -            -       (1,994)           -         (1,994)
  Amortization of issuance discounts                       -               -            -          (50)           -            (50)
  Issuance of common stock                                 1               -       56,007            -            -         56,008
  Issuance of warrants                                     -               -        5,226            -            -          5,226
  Issuance of shares upon exercise of stock
  options                                                  -               -        3,281            -            -          3,281
  Issuance of equity units to management                   -               -        2,657            -            -          2,657
  Tax benefit from exercise of stock options               -               -          939            -            -            939
                                                          --         -------       ------      -------         ----         ------
Balance at December 31, 1998                             $ 1               -       63,890     (295,115)      (5,098)      (236,322)
                                                         ===         =======       ======     ========       ======       ======== 
</TABLE>


                                      F-6







<PAGE>   43

                      INSILCO HOLDING CO. AND SUBSIDIARIES



                      Consolidated Statements of Cash Flows
                  Years Ended December 31, 1998, 1997 and 1996
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                  1998         1997           1996
                                                                                  ----         ----           ----
<S>                                                                           <C>             <C>           <C>
Cash flows from operating activities:
         Net income (loss)                                                    $ (18,031)       81,644        39,053
         Adjustments to reconcile net income (loss) to net cash
          provided by operating activities:
         Depreciation and amortization                                           20,159        18,377        15,357
         Deferred tax expense (benefit)                                          (5,773)       11,679        11,667
         Other noncash charges and credits                                        8,993          (127)       (4,904)
         Changes in operating assets and liabilities:
         Receivables                                                             (7,224)       (1,297)       (3,370)
         Inventories                                                             (2,360)       (3,304)          791
         Payables and other                                                       4,668        10,171        (1,371)
         Discontinued operations                                                      -       (71,632)       (1,800)
                                                                                -------        ------       ------- 
         Net cash provided by operating                                             432        45,511        55,423
         activities
                                                                                -------        ------       ------- 
Cash flows from investing activities:
         Capital expenditures                                                   (20,155)      (23,583)      (20,009)
         Acquisitions of businesses, net of cash acquired                        (2,308)            -       (37,726)
         Other investing activities                                                (903)        6,190         8,704
         Proceeds from divestitures, net                                              -       112,610        21,818
         Discontinued operations                                                      -             -        (2,570)
                                                                                -------        ------       ------- 
         Net cash provided by (used in) investing                               (23,366)       95,217       (29,783)
                                                                                -------        ------       ------- 
         activities

Cash flows from financing activities:
         Cash merger consideration                                             (180,241)            -             -
         Sale (retirement) of 10 1/4% Notes                                    (148,474)      150,000             -
         Borrowings (repayments) of Revolving Facility                          (41,498)       64,759             -
         Debt issuance and tender costs                                         (16,394)      (10,689)            -
         Payment of prepetition liabilities                                      (2,735)       (2,811)       (2,862)
         Funds deposited in excess of retired 10 1/4% Notes                      (2,032)            -             -
         Borrowing (retirement) of Term Facility                                123,825      (117,246)      (26,330)
         Proceeds from 12% Notes and warrants                                   120,000             -             -
         Proceeds from sale of 14% Notes and warrants                            70,205             -             -
         Issuance of common stock                                                56,008             -             -
         Issuance of preferred stock and warrants                                35,000             -             -
         Proceeds from stock option exercise                                      3,281         4,618         1,071
         Issuance of equity units to management                                   2,657             -             -
         Repurchase of shares                                                         -      (220,000)            -
         Purchase of treasury stock                                                   -        (1,887)       (3,932)
                                                                                -------        ------       ------- 
         Net cash provided by (used in) financing                                19,602      (133,256)      (32,053)
         activities
                                                                                -------        ------       ------- 
Effect of exchange rate changes on cash                                              85          (302)            -
                                                                                -------        ------       ------- 

         Net increase (decrease) in cash and cash                                (3,247)        7,170        (6,413)
         equivalents

Cash and cash equivalents at beginning of period                                 10,651         3,481         9,894
                                                                                -------        ------       ------- 
Cash and cash equivalents at end of period                                        7,404        10,651         3,481
                                                                                =======        ======       ======= 
Supplemental information - cash paid for:
         Interest, net of capitalized amount                                  $  31,744        13,305        17,820
                                                                                =======        ======       ======= 
         Income taxes paid (refunded)                                         $  (4,908)        7,062         2,081
                                                                                =======        ======       ======= 
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-7

<PAGE>   44

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                        December 31, 1998, 1997 and 1996

(1)  History of the Company

     Insilco Holding Co. ("Holdings" or the "Company"), a Delaware corporation,
     is a diversified producer of automotive, telecommunications and electronics
     components and is a specialty publisher of student yearbooks. On August 17,
     1998, a series of transactions involving the Company was completed. These
     transactions included, among other things, the formation by Insilco Holding
     Co. ("Holdings" or the "Company") (then a wholly owned subsidiary of
     Insilco) of a wholly owned subsidiary ("ReorgSub"), followed by the merger
     of ReorgSub with and into Insilco (the "Reorganization Merger"), pursuant
     to which each stockholder of Insilco had his or her shares of Insilco
     converted into the same number of shares of Holdings and the right to
     receive $0.01 per share in cash, and Holdings became the parent of Insilco.

     Promptly following the Reorganization Merger, a second merger took place
     pursuant to which Silkworm Acquisition Corporation ("Silkworm"), an
     affiliate DLJMB, merged with and into Holdings (the "Merger," and together
     with the Reorganization Merger, the "Mergers") and each share of Holdings
     Common Stock was converted into the right to receive $43.47 in cash and
     0.03378 of a share of Holdings Common Stock. Thus, as a result of the
     Mergers, each stockholder of Insilco, in respect of each of his or her
     shares, received $43.48 in cash and retained 0.03378 of a share of Holdings
     Common Stock. Concurrently with the consummation of the Mergers, the DLJMB
     Funds purchased 1,400,000 shares of Holdings 15% Senior Exchangeable
     Preferred Stock due 2012 (the "PIK Preferred Stock"), and warrants to
     purchase 65,603 shares of Holdings Common Stock at an exercise price of
     $0.01 per share.

     Following the Mergers, (i) Insilco's existing stockholders retained, in the
     aggregate, approximately 10.1% (9.4% on a fully diluted basis) of the
     outstanding shares of Holdings Common Stock; (ii) the DLJMB Funds held
     approximately 69.0% (69.8% on a fully diluted basis) of the outstanding
     shares of Holdings Common Stock; (iii) 399 Venture Partners Inc., an
     affiliate of Citibank, N.A. ("CVC"), purchased shares of Silkworm which in
     the Merger were converted into approximately 19.3% (17.8% on a fully
     diluted basis) of the outstanding shares of Holdings Common Stock; and (iv)
     management of the Company purchased approximately 1.7% (1.5% on a fully
     diluted basis) of the outstanding shares of Holdings Common Stock.

     Immediately prior to the effectiveness of the Reorganization Merger, each
     outstanding option to acquire shares of the common stock of Insilco granted
     to employees and directors, whether or not vested (the "Options") was
     canceled and in lieu thereof, each holder of an Option received a cash
     payment in an amount equal to (x) the excess, if any, of $45.00 over the
     exercise price of the Option multiplied by (y) the number of shares subject
     to the Option, less applicable withholding taxes (the "Option Cash
     Payments"). Certain holders of such Options elected to utilize amounts
     otherwise receivable by them to purchase equity or equity units of
     Holdings.

     The Company incurred $25,529,000 of costs related to the Merger in 1998.

     Discontinued Operations

     On March 5, 1997, the Company completed the sale of its Office Products
     Business, a significant line of business within the Company's Office
     Products/Specialty Publishing Group, with the

                                      F-8

<PAGE>   45

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

     divestiture of its traditional office products business (the "Rolodex
     Business") for $112,610,000, net of transaction costs, which resulted in a
     net gain of $57,788,000, net of taxes of $37,213,000. The divestiture of
     the Rolodex Business was preceded in 1996 by the divestiture of the Rolodex
     electronics product line ("Rolodex Electronics") and the Company's computer
     accessories business, Curtis Manufacturing Co., Inc. ("Curtis"). The
     proceeds from these sales aggregated $21,818,000.

     The accompanying consolidated statements of operations and cash flows are
     reclassified to account for the sale of the Office Products Business as a
     discontinued operation. Revenues associated with the discontinued Office
     Products Business for the years 1997 and 1996 were $10,797,000 and
     $80,069,000, respectively. At December 31, 1996, the current and
     non-current net assets of the Office Products Business were $6,531,000 and
     $8,934,000, respectively.

     Acquisitions

     In 1996, the Company acquired Great Lake, Inc. ("Great Lake"), which serves
     the automotive, heavy truck and industrial manufacturing radiator
     replacement market and the automotive aluminum tube business of Helmut
     Lingemann GmbH & Co. (the "Lingemann Business") for approximately
     $37,726,000 in the aggregate including transaction fees and expenses. The
     Lingemann transactions include the purchase of stock of Lingemann's German
     subsidiary, ARUP Alu-Rohr und-Profil GmbH, and the automotive aluminum tube
     business assets of its Duncan, South Carolina based Helima-Helvetion
     International, Inc. This cash transaction was financed principally from
     borrowings under the Company's prior bank credit agreement (See Note 7).

     These acquisitions have been accounted for as purchases and, accordingly,
     the purchase prices have been allocated to the assets and liabilities
     acquired based on their fair values at the acquisition dates. The operating
     results of the businesses acquired have been included for the period
     subsequent to their acquisition dates. (See Note 22 for pro forma results).
     The fair value of the assets acquired totaled $47,478,000 and the
     liabilities assumed totaled $9,752,000.

(2)  Summary of Significant Accounting Policies

          Principles of Consolidation

          The consolidated financial statements include the financial statements
          of the Company and its wholly owned subsidiaries. The Company's
          investments in companies for which the Company does not have
          operational control are accounted for under the equity method. All
          significant intercompany balances and transactions have been
          eliminated.

          Pro Forma Results of Operations

          In 1998 the Company completed the Mergers (See Note 1). In addition,
          during 1997, the Company completed a Share Repurchase of approximately
          59% of its outstanding shares partially with the proceeds from the
          divestiture of its traditional office products business (See Note 1)
          and partially through the issuance of subordinated notes and
          refinancing of its bank credit agreement (See Note 7). These
          transactions affect the comparability of the Company's financial
          position, results of operations and cash flows for 1998 compared to
          prior periods. As a result of these transactions, the Company has
          presented pro forma results of operations for 1998 and 1997 as if all
          of these transactions except the divestiture of the Office Products


                                      F-9
<PAGE>   46

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

          Business (which is being accounted for as a discontinued operation)
          occurred at the beginning of the respective periods in Note 22.

          Cash Equivalents

          Cash equivalents include time deposits and highly liquid investments
          with original maturities of three months or less.

          Trade Receivables

          Trade receivables are presented net of allowances for doubtful
          accounts and sales returns of $2,780,000 and $2,132,000 at December
          31, 1998 and 1997, respectively.

          Inventories

          Inventories are valued at the lower of cost or market. Cost is
          generally determined using the first-in, first-out cost method.

          Property, Plant and Equipment

          Property, plant and equipment are stated at cost. Depreciation of
          plant and equipment is calculated on the straight-line method over the
          assets' estimated useful lives, which is 25 years for new buildings
          and ranges from 3 to 9 years for machinery and equipment.

          Deferred Financing Costs

          Deferred financing costs are being amortized using the effective
          interest method over the life of the related debt.

          Goodwill

          Goodwill represents the excess of cost of net assets acquired in
          business combinations over their fair values. It is amortized on a
          straight-line basis over estimated periods to be benefited (not
          exceeding 40 years). The recovery of the carrying value of goodwill is
          periodically evaluated in relation to the operating performance and
          future undiscounted net cash flows of the related businesses acquired.

          Interest Rate Hedges

          The Company periodically uses interest rate hedges to limit its
          exposure to the interest rate risk associated with its floating rate
          long-term bank debt. Unamortized premium related to purchased interest
          rate caps is included in other assets in the balance sheet and is
          amortized using the interest method over the life of the related
          agreements. Amounts received under cap agreements and net amounts
          received (or paid) under swap agreements are recorded as a reduction
          (addition) to interest expense. As of December 31, 1998, the Company
          had no interest rate derivative instruments to manage exposure to
          interest changes.

                                      F-10

<PAGE>   47

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

          Environmental Remediation and Compliance

          Environmental remediation and compliance expenditures are expensed or
          capitalized in accordance with generally accepted accounting
          principles. Liabilities are recorded when it is probable the
          obligations have been incurred and the amounts can be reasonably
          estimated.

          Fair Value of Financial Instruments

          Fair value of cash, accounts receivable, accounts payable and accrued
          liabilities approximate book value at December 31, 1998. Fair value of
          debt is based upon market value, if traded, or discounted at the
          estimated rate the Company would incur currently on similar debt (See
          Note 8).

          Income Taxes

          Income taxes are accounted for under the asset and liability method.
          Deferred tax assets and liabilities are determined based upon
          differences between the financial reporting and tax basis of assets
          and liabilities and are measured by applying enacted tax rates and
          laws to taxable years in which such differences are expected to
          reverse.

          Earnings Per Share

          The Company accounts for earnings per share ("EPS") under Statement of
          Financial Accounting Standards No. 128 ("SFAS 128") "Earnings per
          Share". Under SFAS 128, the Company computes two earnings per share
          amounts - basic EPS and EPS assuming dilution. Basic EPS is calculated
          based on the weighted average number of shares of common stock
          outstanding for the period. EPS assuming dilution is based on the
          weighted average number of shares of common stock outstanding for the
          period, including common stock equivalents which reflect the dilutive
          effect of stock options granted to employees and directors.

          Estimates

          In conformity with generally accepted accounting principles, the
          preparation of our financial statements requires management to make
          estimates and assumptions that affect the amounts reported in the
          financial statements and therefore actual results may ultimately
          differ from those estimates.

          Reclassifications

          Certain 1997 and 1996 amounts have been reclassified to conform with
          1998 presentation.

          Impact of Recently Issued Accounting Standards

          In January 1998, the Company adopted Statement No. 130 ("SFAS 130")
          "Reporting Comprehensive Income". SFAS 130 establishes standards for
          reporting and display of comprehensive income in the financial
          statements. Comprehensive income is the total of net income and most
          other non-owner changes in equity. In addition, in January 1998, the
          Company adopted Statement No. 132 ("SFAS 132"), "Employers'
          Disclosures About Pensions


                                      F-11
<PAGE>   48

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

          and Other Post-retirement Benefits", which revises employer disclosure
          about pension plans and other post-retirement benefits. SFAS 132 does
          not change the method of accounting for such plans. Prior year amounts
          in the notes to the consolidated financial statements have been
          reclassified to conform to the requirements of SFAS 132.

          On January 1, 1998, the Company adopted the Financial Accounting
          Standards Board's Statement of Financial Accounting Standards No. 131,
          "Disclosures about Segments of an Enterprise and Related Information"
          ("SFAS 131"). SFAS 131 superseded FASB Statement No. 14, "Financial
          Reporting for Segments of a Business Enterprise". SFAS 131 establishes
          standards for reporting information about operating segments in annual
          financial statements and interim financial reports issued to
          shareholders. It also establishes standards for related disclosures
          about products and services, geographic areas, and major customers.
          The adoption of SFAS 131 did not affect results of operations or
          financial position, but did affect the disclosure of segment
          information (See Note 20).

          In June 1998, the FASB issued Statement No. 133, "Accounting for
          Derivative Instruments and Hedging Activities", which is required to
          be adopted in years beginning after June 15, 1999. The Statement
          permits early adoption as of the beginning of any fiscal quarter after
          its issuance. The Company expects to adopt the new Statement effective
          January 1, 2000. The Statement will require companies to recognize all
          derivatives on the balance sheet at fair value. Derivatives that are
          not hedges must be adjusted to fair value through income. If a
          derivative is a hedge, depending on the nature of the hedge, changes
          in the fair value of the derivative will either be offset against the
          change in fair value of the hedged asset, liability, or firm
          commitment 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 will be
          immediately recognized in earnings. The Company does not anticipate
          that the adoption of this Statement will have a significant effect on
          its results of operations or financial position.

(3)  Inventories

     A summary of inventories at December 31 follows (in thousands):


<TABLE>
<CAPTION>
                                                     1998                    1997
                                                     ----                    ----
        <S>                                      <C>                       <C>   
         Raw materials and supplies               $ 27,238                  25,396
         Work in process                            23,559                  23,427
         Finished goods                             13,768                  11,895
                                                    ------                  ------

                                                  $ 64,565                  60,718
                                                    ======                  ======
</TABLE>


                                      F-12



<PAGE>   49

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(4)  Property, Plant and Equipment

     A summary of property, plant and equipment at December 31 follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                    1998                      1997
                                                                    ----                      ----
        <S>                                                    <C>                        <C>  
         Land                                                    $   6,285                   6,267
         Buildings                                                  37,311                  33,718
         Machinery and equipment                                   151,714                 137,310
                                                                   -------                 -------

                                                                   195,310                 177,295
                  Less accumulated depreciation                    (80,554)                (63,324)
                                                                   -------                 -------
                                                                 $ 114,756                 113,971
                                                                   =======                 =======
</TABLE>

(5)  Other Assets

     A summary of other assets at December 31 follows (in thousands):
<TABLE>
<CAPTION>
                                                                   1998                1997
                                                                   ----                ----
        <S>                                                    <C>                   <C>   
         Goodwill, net                                          $ 13,566              13,408
         Equity investment in Thermalex                            8,412               9,736
         Deferred financing costs                                 14,085               9,246
         Cash surrender value of life insurance                    1,758               4,636
         Other                                                     6,108               5,574
                                                                   -----               -----
                                                                $ 43,929              42,600
                                                                 =======              ======
</TABLE>

     Thermalex, Inc. ("Thermalex") is a joint venture, formed in 1985 between a
     subsidiary of the Company and Mitsubishi Aluminum, Ltd., which sells
     aluminum extruded products to the automobile industry. The Company received
     $1,324,000 and $1,461,000 of dividend distributions from Thermalex in 1998
     and 1997, respectively.

     Sales for Thermalex for the years ended December 31, 1998, 1997 and 1996
     were $49,547,000, $47,152,000 and $48,057,000, respectively. Net income for
     the years ended December 31, 1998, 1997 and 1996 was $5,699,000, $5,294,000
     and $5,844,000, respectively. Total assets were $35,717,000 and $36,348,000
     at December 31, 1998 and 1997, respectively. Stockholders' equity was
     $16,828,000 and $19,475,000 at December 31, 1998 and 1997, respectively.

(6)  Accrued Expenses and Other

     A summary of accrued expenses and other at December 31 follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                           1998                1997
                                                                           ----                ----
        <S>                                                            <C>                   <C>  
         Salaries and wages payable                                     $  7,977              9,445
         Pension                                                           8,837              5,523
         Accrued interest payable                                          4,227              8,038
         Current portion of the long term obligations                      1,945              5,393
         Accrued taxes payable                                             1,623              1,112
         Other accrued expenses                                           14,743             14,242
                                                                          ------             ------
                                                                        $ 39,352             43,753
                                                                         =======             ======
</TABLE>

                                      F-13
<PAGE>   50
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


(7)  Long-term Debt and Warrants

     A summary of long-term debt at December 31 follows (in thousands):

<TABLE>
<CAPTION>
                                                                      1998                     1997
                                                                      ----                     ----
        <S>                                                       <C>                       <C>       
         Term Facility                                            $  125,000                       -
         12% Senior Subordinated Notes                               119,747                       -
         14% Senior Discount Notes                                    71,918                       -
         Revolving Facility                                           44,922                  87,500
         Alternative currency borrowings                              21,000                  18,348
         10 1/4% Senior Subordinated Notes                             1,526                 150,000
         Miscellaneous                                                   214                   1,895
                                                                      ------                  ------
                                                                     384,327                 257,743
                  Less current portion                               (1,265)                 (1,684)
                                                                      ------                  ------
                                                                  $  383,602                 256,059
                                                                     =======                 =======
</TABLE>

 
     On August 12, 1998, the Company issued and sold $138,000,000 principal
     amount at maturity ($70,204,740 initial accreted value) of Holdings' 14%
     Senior Discount Notes due 2008 (the "14% Notes") and detachable warrants to
     purchase 44,850 shares of Holdings' Common Stock. The 14% Notes will
     accrete at a rate of 14%, compounded semi-annually, to par by August 15,
     2003. Commencing August 15, 2003, the 14% Notes bear interest at a rate of
     14% per annum, payable semi-annually in cash arrears on February 15 and
     August 15 of each year, commencing on February 15, 2004.

     The 14% Notes are not redeemable prior to August 15, 2003. Thereafter, they
     are subject to redemption for 107.000% of the accreted value from August
     15, 2003 to August 14, 2004, 104.667% from August 15, 2004 to August 14,
     2005, 102.333% from August 15, 2005 to August 14, 2006 and 100.000% on or
     after August 15, 2006, plus any accrued and unpaid interest from August 15,
     2003 to the redemption date. As of December 31, 1998, all of the 138,000
     warrants to purchase 44,850 shares of the Company's Common Stock at a
     purchase price of $0.01 per share remained outstanding and expire on August
     15, 2008.

     The indentures governing the 14% Notes contain certain covenants, which
     limit the Company's ability to (i) incur additional indebtedness; (ii) make
     restricted payments (including dividends); (iii) enter into certain
     transactions with affiliates; (iv) create certain liens; (v) sell certain
     assets; and (vi) merge, consolidate or sell substantially all of the
     Company's assets.

     As a result of the Merger (See Note 1), Insilco was required to make an
     Offer to Purchase, as defined in the indenture relating to the 10 1/4%
     Notes (the "10 1/4% Note Indenture"), for the entire $150 million of
     outstanding 10 1/4% Notes, which were issued on August 12, 1997, at 101% of
     their aggregate principal amount, plus accrued interest. Through March 26,
     1999, Insilco repurchased $149,974,000 of the 10 1/4% Notes.

     On November 9, 1998, the Company completed the sale of $120 million of
     Insilco 12% Senior Subordinated Notes due 2007 (the "12% Notes") with
     120,000 warrants to purchase 62,400 shares of Holdings common stock at $45
     per share. The net proceeds of approximately $116.4 million, after payment
     of $3.6 million in underwriting fees to Donaldson, Lufkin & Jenrette
     Securities Corporation ("DLJSC") and other expenses, was used (along with
     borrowings from the credit facilities) to fund the repurchase of the 10
     1/4% Notes. As of December 31, 1998, all of the 120,000 warrants to
     purchase 62,400 shares of the Company's Common Stock at a purchase price of
     $45.00 per share remained outstanding and expire on August 15, 2007.


                                      F-14
<PAGE>   51

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

     On November 24, 1998, the Company amended and restated Insilco's Bank
     Credit Agreement ("Bank Credit Agreement"). The Bank Credit Agreement
     provides for two credit facilities (the "Credit Facilities"): a $175
     million, 4.8 year senior secured revolving loan ("Revolving Facility") and
     a $125 million, 7 year senior secured amortizing term loan ("Term
     Facility").

     In 1998, the Company recorded an extraordinary charge of $5,888,000, (net
     of a tax benefit of $3,958,000) related to the write-off of deferred
     financing costs associated with its 1997 Bank Credit Agreement and 10 1/4%
     Notes.

     The Revolving Facility provides for a $50 million sublimit for issuance of
     letters of credit and a $40 million sublimit for alternative currency
     borrowings. The Revolving Facility is permanently reduced by $17.5 million
     per year in July 2001 and July 2002.

     The Term Facility is subject to mandatory quarterly prepayments of $312,500
     for the first six years and quarterly payments of approximately $29.4
     million in the seventh year.

     Interest accrues under the Credit Facilities at floating rates calculated
     with respect to either the London Interbank Offered Rate ("LIBOR") or The
     First National Bank of Chicago's Base Rate, plus an applicable margin. The
     margin, in turn, fluctuates based on the leverage ratio (as defined in the
     Bank Credit Agreement). The Company also pays an unused commitment fee,
     which also fluctuates based upon the leverage ratio of the Company and is
     based upon availability under the Revolving Facility. At December 31, 1998,
     the applicable margin for the Term Facility and the Revolving Facility were
     LIBOR plus 3.75% and LIBOR plus 3.00%, respectively. The unused commitment
     fee at December 31, 1998 was 0.625%. The applicable margins and unused
     commitment fee are fixed through May 1999 and thereafter are determined by
     the Company's leverage ratio.

     Both the Term Facility and Revolving Facility are subject to mandatory
     prepayments due to, but not limited to, 100% of the net cash proceeds from
     assets sales and issuance of debt and 50% of the net cash proceeds from the
     issuance of equity.

     The Credit Facilities are guaranteed by Insilco and by all of Insilco's
     present and future domestic subsidiaries. The obligations thereunder are
     secured by (i) all of the common stock of the Company; (ii) all or a
     substantial portion of the common stock or other interests in the Company's
     present and future subsidiaries; (iii) the present and future property and
     assets, including all accounts receivable, inventory, equipment, fixtures,
     patents, trademarks and specified real property of the Company and its
     present and future domestic subsidiaries (subject to certain qualifications
     and exceptions); and, (iv) a collateral assignment of intercompany notes
     and junior security agreements securing all obligations of the domestic
     subsidiaries to the Company.

     The Credit Facilities contain certain consolidated financial covenants
     including, but not limited to, covenants related to maximum leverage ratio,
     minimum fixed charge coverage ratio, minimum interest coverage ratio, and a
     limit on annual capital expenditures. The Credit Facilities also contain
     certain negative covenants typical of credit agreements of this type
     including, but not limited to a prohibition on the ability of the Company
     and its domestic subsidiaries to incur additional indebtedness in excess of
     certain agreed upon amounts, the ability to make investments other than
     permitted investments, and restricts the Company and its subsidiaries from
     paying any dividends, redeem or repurchase or acquire any of the Company or
     Holdings shares or pay any principal,

                                      F-15
<PAGE>   52


                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     premium or interest (in excess of certain agreed upon amounts) on any
     subordinated obligations.

     The Company was in compliance with the covenants of its Credit Facilities
     as of December 31, 1998.

     As of December 31, 1998, under the sublimit for alternative currency
     borrowings, the Company had borrowed $21.0 million (35.0 million German
     Deutsche Marks). The Company's alternative currency borrowing is designed
     to hedge the Company's net investment in its German operations. The change,
     if any, to the net investment as a result of foreign currency fluctuations
     is included in stockholders' equity as a foreign currency translation
     adjustment. The alternative currency borrowing is denominated in German
     Deutsche Marks and bears interest based on one to six month German LIBOR
     rates plus an applicable margin based on the Company's leverage ratio (such
     LIBOR rates approximated 3.22% to 3.25% at December 31, 1998).

     In 1997, the Company refinanced its then existing debt under a six year
     $200 million amended and restated credit agreement (the "1997 Bank Credit
     Agreement") which provided for the 1997 Credit Facility.

     In 1997, proceeds from the 1997 Bank Credit Agreement were used to prepay
     amounts outstanding under the prior bank credit agreement. As a result of
     the prepayment, the Company recorded an extraordinary charge of $728,000
     (net of a tax benefit of $465,000) due to expensing the related unamortized
     debt financing costs.

(8)  Fair Value of Financial Instruments

     The estimated fair value at December 31 of financial instruments, other
     than current assets and liabilities, follow (in thousands):


<TABLE>
<CAPTION>
                                                                    1998                              1997 
                                                          --------------------------       --------------------------
                                                                           Estimated                        Estimated
                                                          Book Value      Fair Value       Book Value      Fair Value
                                                          ----------      ----------       ----------      ----------
 <S>                                                      <C>               <C>             <C>             <C>
        Debt:
                 12% Senior Subordinated Notes            $ 119,747          123,600               -                -
                 14% Senior Discount Notes                   71,918           62,100               -                -
                 10 1/4% Senior Subordinated  
                  Notes                                       1,526            1,541       $ 150,000          154,500
                 Bank revolving credit facility              65,922           65,922         105,848          105,848
                 Bank term loan                             125,000          125,000               -                -
                 Miscellaneous                                  214              214           1,895            1,895
                                                            -------          -------         -------          -------
                                                          $ 384,327          378,377       $ 257,743          262,243
                                                            =======          =======         =======          =======
       Hedges:
                 Interest rate                            $       -                -       $       -              423
                                                            =======          =======         =======          =======
</TABLE>


     The Company is exposed to market risk for changes in interest rates, but
     has no off-balance sheet risk of accounting loss. The Company manages
     counterparty credit risk by entering into derivative transactions with high
     quality financial institutions that, because of their credit profile, are
     expected to perform under the terms associated with such transactions.


                                      F-16
<PAGE>   53

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


(9)  Dividend Restrictions

     The Company is a holding company and its ability to make payments in
     respect of the Holding Company Senior Discount Notes is dependent upon the
     receipt of dividends or other distributions from its direct and indirect
     subsidiaries. Insilco and its subsidiaries are parties to the Credit
     Facilities and the 12% Note indenture and Insilco is party to the 12% Note
     indenture, each of which imposes substantial restrictions on Insilco's
     ability to pay dividends or make other distributions to the Company. Any
     payment of dividends or other distributions will be subject to certain
     financial conditions set forth in such indenture and is subject to certain
     prohibitions contained in the Credit Facilities. Under the most restrictive
     covenants, $5.0 million was free of limitations on the payment of dividends
     or other distributions at December 31, 1998.

(10) Other Long-Term Liabilities

     A summary of other long-term liabilities at December 31 follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                             1998                1997
                                                                             ----                ----
        <S>                                                              <C>                 <C>
        Post-retirement benefits, other than pensions (Note 12)           $ 22,263              22,191
        Prepetition and other tax liabilities                               16,165              15,762
        Environmental liabilities                                            7,351               8,625
        Deferred compensation and other                                      2,495               2,217
                                                                           -------             -------
                                                                            48,274              48,795
                 Less current portion                                       (1,945)             (5,393)
                                                                           -------             -------
                                                                          $ 46,329              43,402
                                                                           =======             =======
</TABLE>

     Prepetition and Other Tax Liabilities

     On April 1, 1993, the Company and certain of its subsidiaries emerged from
     Chapter 11 of the United States Bankruptcy Code (the "Chapter 11 Cases")
     pursuant to a plan of reorganization. The Chapter 11 Cases were commenced
     on January 13, 1991. The Company entered into an agreement with the
     Internal Revenue Service ("IRS") settling Federal income tax claims filed
     in the Chapter 11 Cases for open taxable years through 1990. In addition to
     this agreement, the tax liabilities include prepetition state tax claim
     settlements, negotiated payment terms on certain foreign prepetition tax
     liabilities, and an estimate of the Company's obligation for curative
     action required by the IRS to cure certain operational defects in one of
     the Company's defined contribution plans.

     Environmental Liabilities

     The Company's operations are subject to extensive Federal, state and local
     laws and regulations relating to the generation, storage, handling,
     emission, transportation and discharge of materials into the environment.
     The Company has a program for monitoring its compliance with applicable
     environmental regulations, the interpretation of which often is subjective.
     This program includes, but is not limited to, regular reviews of the
     Company operations' obligations to comply with environmental laws and
     regulations in order to determine the adequacy of the recorded liability
     for remediation activities.

                                      F-17
<PAGE>   54
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     The environmental liabilities included in other long-term obligations
     represent the estimate of cash obligations that will be required in future
     years for these environmental remediation activities. The Company has
     estimated the exposure and accrued liability to be approximately $7,351,000
     relating to these environmental matters at December 31, 1998. These
     liabilities are undiscounted and do not assume any possible recoveries from
     insurance coverage or claims which the Company may have against third
     parties. The estimate is based upon in-house engineering expertise and the
     professional services of outside consulting and engineering firms. Because
     of uncertainty associated with the estimation of these liabilities and
     potential regulatory changes, it is reasonably possible that these
     estimated liabilities could change in the near term but it is not expected
     that the effect of any such change would be material to the consolidated
     financial statements in the near term.

(11) Preferred Stock and Warrants

     On August 12, 1998, the Company issued and sold $73,000,000 principal
     amount at maturity ($35,000,000 initial accreted value) of the Company's
     15% Senior Exchangeable Preferred Stock Due 2010 ("PIK Preferred Stock")
     and detachable warrants to purchase 65,603 shares of the Company's Common
     Stock. As of December 31, 1998, all of the 65,603 warrants to purchase
     65,603 shares of the Company's Common Stock at a purchase price of $0.001
     per share remained outstanding and expire August 1, 2010.

     The Company has authorized 3,000,000 shares of PIK Preferred Stock, par
     value $0.001 per share. Each share of PIK Preferred Stock accretes
     cumulative, quarterly dividends at a compound rate of 15% per annum. Prior
     to August 1, 2003, dividends on the PIK Preferred Stock are payable in
     additional shares of PIK Preferred Stock. After August 1, 2003, dividends
     are payable in cash. Shares of PIK Preferred Stock have a liquidation
     preference equal to the sum of $25 plus, subject to certain conditions,
     accreted dividends. The PIK Preferred Stock is subject to redemption at the
     option of the Company at any time, at 115.00% of liquidation preference
     prior to August 1, 2003, at 107.50% of liquidation preference from August
     1, 2003 to July 31, 2004, at 105.00% of liquidation preference from August
     1, 2004 to July 31, 2005, at 102.50% of liquidation preference from August
     1, 2005 to July 31, 2006, and at 100.00% of liquidation preference
     thereafter.

     The PIK Preferred Stock is non-voting and is mandatorily redeemable on
     August 1, 2010.

     On January 31, 1999, the Company accreted $2.5 million toward the payment
     of dividends on the PIK Preferred Stock.


(12) Pension Plans and Post-retirement Benefits

     Pension Plans

     The Company has defined benefit pension plans covering certain of its
     employees. The benefits under these plans are based primarily on employees'
     years of service and compensation near retirement. The Company's funding
     policy is consistent with the funding requirements of Federal laws and
     regulations. Plan assets consist principally of equity investments,
     government and corporate debt securities and real estate investments. The
     Company also contributes to various multi-employer plans sponsored by
     bargaining units for its union employees.

                                      F-18
<PAGE>   55
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     A summary of the plans' funded status reconciled with amounts recognized in
     the consolidated balance sheet at December 31 follows (in thousands):


<TABLE>
<CAPTION>

                                                                  1998                           1997
                                                      ---------------------------      ---------------------------               
                                                        Assets        Accumulated        Assets        Accumulated
                                                        Exceed          Benefits         Exceed          Benefits
                                                      Accumulated        Exceed        Accumulated        Exceed
                                                        Benefits          Assets          Benefits         Assets
                                                        --------          ------          --------         ------
      <S>                                            <C>                <C>             <C>             <C>
       Change in benefit obligation:

       Benefit obligation at beginning of
         year                                          $ 67,312          23,564           66,824          12,979
       Service cost                                       2,241             808            1,967             352
       Interest cost                                      4,562           1,655            4,743             895
       Amendments                                             -               -                -             475
       Actuarial (gain) loss                               (658)          1,904           10,412           1,563
       Benefits paid                                     (7,141)         (1,362)          (8,464)           (870)
                                                         ------          ------           ------          ------
      Benefit obligation at end of year                $ 66,316          26,569           75,482          15,394
                                                         ------          ------           ------          ------
       Change in plan assets:

       Fair value of plan assets at beginning
        of year                                        $ 78,440          19,535           82,046           9,718
       Actual return on assets                            3,274             786           13,091           1,597
       Employer contribution                                 77             781              215             641
       Benefits paid                                     (7,141)         (1,362)          (8,464)           (870)
                                                         ------          ------           ------          ------
      Fair value of plan assets at end of year           74,650          19,740           86,888          11,086
                                                         ------          ------           ------          ------
       Funded status                                      8,334          (6,829)          11,406         (4,308)
       Unrecognized net actuarial (gain) loss           (10,299)          2,131          (13,073)          (414)
       Unrecognized prior service cost                   (1,136)          1,738           (1,188)         2,054
                                                         ------          ------           ------          ------
      Accrued benefit cost                             $ (3,101)         (2,960)          (2,855)        (2,668)
                                                        =======          ======           ======         ====== 
      Amounts recognized in the statement of
      financial position consist of:
      Accrued benefit liability                        $ (3,101)         (5,736)          (2,855)        (3,674)
      Intangible asset                                        -             971                -          1,006
      Accumulated other comprehensive
      income                                                  -           1,805                -              -
                                                         ------          ------           ------          ------
      Net amount recognized                            $ (3,101)         (2,960)          (2,855)        (2,668)
                                                        =======          ======           ======          ===== 
</TABLE>

                                      F-19
<PAGE>   56
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     The components of pension cost follow (in thousands):


<TABLE>
<CAPTION>

                                                                              1998         1997         1996
         <S>                                                               <C>            <C>          <C>  
          Service cost                                                      $  3,049       2,320        2,162
          Interest cost                                                        6,217       5,639        5,745
          Actual return on assets                                             (8,135)     (6,826)      (6,564)
          Net amortization and deferral                                          263          86           97
          Recognized net actuarial loss (gain)                                     2        (208)        (142)
                                                                             -------       -----       ------
          Net pension cost                                                  $  1,396       1,011        1,298
                                                                             =======       =====        =====
</TABLE>

     In addition, the Company recognized pension costs of $740,000 in 1998,
     $597,000 in 1997 and $880,000 in 1996 related to contributions to
     multi-employer plans.

     The assumptions used in accounting for the pension plans as of December 31
     follow:

<TABLE>
<CAPTION>
                                                                   1998            1997
                                                                   ----            ----
         <S>                                                      <C>             <C>  
          Discount rates                                           7.00%           7.25%
          Rates of increase in compensation levels                 4.50%           4.50%
          Expected long-term rate of return on assets              9.00%           9.00%
</TABLE>

     In addition to the defined benefit plans described above, the Company
     sponsors a qualified defined contribution 401(k) plan, which covers
     substantially all non-union employees of the Company and its subsidiaries,
     and which covers union employees at one of the Company's subsidiaries. The
     Company matches 50% of non-union participants' voluntary contributions up
     to a maximum of 3% of the participant's compensation. The Company's expense
     was approximately $821,000 in 1998, $819,000 in 1997 and $738,000 in 1996.

     Post-retirement benefits, other than pensions

     The Company maintains nine post-retirement health care and life insurance
     benefit plans, four of which cover approximately 500 present retirees (the
     "Retiree Plans") and five of which cover certain retirees and current
     employees of four operating units (the "Open Plans"). The Company pays
     benefits under the plans when due and does not fund its plan obligations as
     they accrue. The Company's accrued post-retirement benefit cost is
     attributable to the Retiree Plans and one of the Open Plans, in which
     approximately 100 retirees and 300 current employees were participants. It
     has been assumed that plan participant contributions, if any, under these
     five plans will increase as a result of increases in medical costs. The
     other Open Plans have been, and are assumed will continue to be, fully
     self-funded by their participants.

                                      F-20
<PAGE>   57

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

     The components of net periodic post-retirement benefit cost follow (in
     thousands):


<TABLE>
<CAPTION>
                                                              1998            1997            1996
                                                              ----            ----            ----
        <S>                                              <C>                 <C>            <C>
          Service cost                                     $  384               400            492
          Interest cost                                     1,104             1,099          1,154
          Amortization of prior service cost                 (352)             (352)          (274)
          Recognized net actuarial gain                       (45)              (85)           (91)
                                                           ------             -----          -----
                                                           $1,091             1,062          1,281
                                                           ======             =====          =====
</TABLE>



     A summary of the plans' status reconciled with amounts recognized in the
     consolidated balance sheet at December 31 follows (in thousands):

<TABLE>
<CAPTION>
          Change in benefit obligation:                           1998           1997
                                                                  ----           ----
        <S>                                                  <C>               <C>   
          Benefit obligation at beginning of year             $ 16,848          14,570
          Service cost                                             384             400
          Interest cost                                          1,104           1,099
          Actuarial gain (loss)                                   (620)          1,762
          Benefits paid                                         (1,019)           (983)
                                                                ------          ------

               Benefit obligation at end of year                16,697          16,848
                                                                ------          ------

          Funded status                                        (16,697)        (16,848)
          Unrecognized net actuarial gain                       (1,493)           (918)
          Unrecognized prior service cost                       (4,073)         (4,425)
                                                               -------         -------
                   Accrued benefit cost                       $(22,263)        (22,191)
                                                               =======         =======
</TABLE>

     At December 31, 1998 and 1997, the weighted-average discount rates used in
     determining the accumulated post-retirement benefit obligation were 7.00%
     and 7.25%, respectively. The recorded healthcare cost trend rate assumed in
     measuring the accumulated post-retirement benefit obligation was 7.5% in
     1999, declining to an ultimate rate of 4.5% in 2011 and thereafter. Assumed
     healthcare cost trend rates have a significant effect on the amounts
     reported for the healthcare plan. A one-percentage point change in assumed
     healthcare cost trend rates in 1998 would have the following effects:


<TABLE>
<CAPTION>
                                                                                 1-Percentage       1-Percentage
                                                                               Point Increase     Point Decrease
                                                                               --------------     --------------
      <S>                                                                       <C>               <C>  
       Effect on total of service and interest cost components                     $  255             (250)
       Effect on post-retirement benefit obligation                                 3,264           (2,025)
</TABLE>


                                      F-21
<PAGE>   58

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(13) Stock-Based Compensation Plans

     In connection with the Mergers, the Company adopted on August 17, 1998, the
     following plans: the Equity Unit Plan, Direct Investment Program, and the
     Stock Option Plan. Following is a description of each respective plan.

     Equity Unit Plan

     The Equity Unit Plan allowed members of management of the Company to
     purchase Equity Units, which are considered share equivalents of Holdings
     stock. The purchase price per unit was $45.00. Participants were allowed to
     use either deferred compensation or the deferral of future compensation to
     satisfy the purchase price of the units. The value of the units is
     determined under an Earnings Before Interest, Taxes, Depreciation and
     Amortization ("EBITDA") formula or by market-related value if the actual
     common shares of Holdings are listed or quoted for trading on a national
     exchange or NASDAQ and the aggregate market value held by non-affiliates is
     $25,0000,000 or greater. The total number of units available for purchase
     under this plan is 88,194. As of December 31, 1998 the number of units
     actually purchased was 77,457. Upon the occurrence of a Significant Event,
     (as defined in the Equity Unit Plan), the Company is obligated to pay the
     participant, at the Company's discretion in cash, common shares, or a
     combination of both, the value of any units purchased less any purchase
     price that has not been paid. If the value of the units is less than the
     amount of remaining purchase price the participant is obligated to satisfy
     the difference or the Company has the right to offset any amounts owed the
     participant against the remaining purchase price.

     Direct Investment Program

     The Direct Investment Program allowed members of management of the Company
     to purchase actual Holdings shares of common stock at a price of $45.00 per
     share. There are certain restrictions on the sale or transfer of these
     shares upon the occurrence of a Significant Event such as termination,
     future recapitalization or other defined situations. The total number of
     shares available for purchase by management was 22,916 shares, with 22,361
     shares actually purchased and outstanding as of December 31, 1998.

     Stock Options

     The Insilco Holding Co. Stock Option Plan provides for the issuance of no
     more than 200,000 shares of Holdings common stock to eligible employees of
     the Company. As of December 31, 1998, the Company has 200,000 shares
     available for future awards under the plan.

     Prior to the Mergers, the Company had the 1993 Long-term Incentive Plan, as
     amended, and the 1993 Nonemployee Director Stock Incentive Plan which
     provided for the issuance of no more than 2,000,000 and 360,000,
     respectively, shares of common stock to eligible employees and nonemployee
     directors. In connection with the Mergers, each of the 607,751 outstanding
     options whether or not vested was canceled and in lieu thereof, each holder
     of an option received a cash payment in an amount equal to the excess, if
     any, of $45.00 over the exercise price of the option multiplied the number
     of shares subject to the option, less applicable withholding taxes.

     Under Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
     "Accounting for Stock-Based Compensation", companies can either record
     expense based on the fair value of stock-based


                                      F-22
<PAGE>   59
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     compensation upon issuance or elect to remain under the "APB Opinion No.
     25" method whereby no compensation cost is recognized upon grant if certain
     conditions are met. The Company is continuing to account for its
     stock-based compensation under APB Opinion No. 25. Had the Company
     determined compensation cost based on the fair value at the grant date for
     its stock options granted in 1998, 1997 and 1996 under SFAS 123, the
     Company's net income and earnings per share would have approximated the pro
     forma amounts below:

<TABLE>
<CAPTION>

                                                              1998         1997      1996
                                                              ----         ----      ----
    <S>                               <C>                 <C>            <C>        <C>
     Net income (loss)
     available to common               As reported         $ (20,075)     81,644     39,053
                                         Pro forma           (20,118)     81,069     38,748

     Basic earnings per share
     available to common               As reported             (6.35)      11.34       4.10
                                         Pro forma             (6.36)      11.26       4.07

     Diluted earnings per share
     available to common               As reported             (6.35)      11.12      3.95
                                         Pro forma             (6.36)      11.06      3.92
</TABLE>


     The effects of applying SFAS 123 in this pro forma disclosure are not
     indicative of future amounts. SFAS 123 does not apply to grants prior to
     1995, and additional awards in the future are anticipated.

     A summary of the options granted follows:

<TABLE>
<CAPTION>
                                                                               Weighted
                                                               Number of        Average
                                                                 Shares          Price  
                                                                 ------          -----  
    <S>                                                       <C>              <C>   
     Options outstanding December 31, 1995                     1,064,003        $22.07
              Granted                                            102,900         34.82
              Forfeited                                         (36,670)         26.69
              Exercised                                         (59,668)         17.95
                                                               ---------

     Options outstanding December 31, 1996                     1,070,565         23.36
              Granted                                            151,500         36.87
              Forfeited                                         (30,938)         24.79
              Exercised                                        (450,860)         18.27
                                                               ---------

     Options outstanding December 31, 1997                       740,267         29.17

              Granted                                             15,500         33.02
              Forfeited                                         (39,067)         35.17
              Exercised                                        (108,949)         24.07
              Cancelled at Merger Date                         (607,751)         30.04
                                                               ---------
     Options outstanding December 31, 1998                            -                         
                                                               =========   
     Options exercisable at December 31:
              1996                                               682,681         21.45
              1997                                               421,033         27.18
              1998                                                     -             -
</TABLE>

                                      F-23
<PAGE>   60

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

     The per share weighted-average fair value of stock options granted during
     1998, 1997 and 1996 was $12.84, $13.87 and $19.20, respectively, on the
     date of grant using the Black Scholes option-pricing model with the
     following weighted-average assumptions: 1998 expected dividend yield 0.0%,
     risk-free interest rate of 5.18%, and an expected life of 4.00 years.

(14) Income Tax Expense

     The components of total income tax expense (benefit) follow (in thousands):


<TABLE>
<CAPTION>
   Total income taxes:                          1998             1997            1996
                                                ----             ----            ----
   <S>                                     <C>                <C>              <C>
   From continuing operations before
   extraordinary item:
      Current:
      Federal                               $    206               588             563
      State and local                             20               515             745
      Foreign                                    336               622             297
                                              ------            ------          ------
                                                 562             1,725           1,605
                                              ------            ------          ------
      Deferred:
      Federal                                 (1,605)           10,203          10,033
      State and local                           (430)              988             882
      Foreign                                    220               488             752
                                              ------            ------          ------
                                              (1,815)           11,679          11,667
                                              ------            ------          ------
      Total from continuing operations 
      before extraordinary item               (1,253)           13,404          13,272
   Discontinued operations                         -            38,250            (462)
   Extraordinary item                         (3,958)             (465)              -
   Stockholders' equity                         (941)           (3,277)           (402)
                                              ------            ------          ------
   Total income taxes                      $  (6,152)           47,912          12,408
                                              ======            ======          ======
</TABLE>


     The significant components of deferred income tax expense (benefit)
     attributable to income from continuing operations follow (in thousands):


<TABLE>
<CAPTION>
                                                                               1998             1997            1996
                                                                               ----             ----            ----
     <S>                                                                   <C>                 <C>            <C>
     Deferred tax expense (benefit) exclusive of the
     effects of other components                                            $ (1,841)           11,679          12,093
     Changes in the valuation allowance for deferred
     tax assets allocated to income tax expense                                   26                 -            (426)
                                                                              ------            ------          ------
                                                                            $ (1,815)           11,679          11,667
                                                                              =======           ======          ======
</TABLE>

                                      F-24
<PAGE>   61

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

     Pretax income (loss) from continuing operations by domestic and foreign
     sources follows (in thousands):

<TABLE>
<CAPTION>
                                                       1998              1997            1996
                                                       ----              ----            ----
     <S>                                           <C>                 <C>             <C>   
      Domestic                                      $(17,596)           33,577          34,606
      Foreign                                          4,200             3,241           3,879
                                                     -------            ------          ------
                                                    $(13,396)           36,818          38,485
                                                     =======            ======          ======
</TABLE>

     Income tax expense (benefit) attributable to income from continuing
     operations differs from the amount computed by applying the Federal
     statutory rate to pretax income due to the following (in thousands):


<TABLE>
<CAPTION>
                                                                               1998             1997            1996
                                                                               ----             ----            ----
         <S>                                                              <C>                 <C>             <C>   
          Computed statutory tax expense                                   $ (4,688)           12,886          13,470
          State and local taxes                                                (410)            1,323           1,422
          Equity in earnings of affiliates                                     (798)             (733)           (818)
          Merger fees                                                         4,039                 -               -
          Foreign tax rate differential                                         535              (373)           (296)
          Other, net                                                             43               301             (80)
          Valuation allowance                                                    26                 -            (426)
                                                                           --------            ------          ------
              Income tax expense (benefit)                                 $ (1,253)           13,404          13,272
                                                                           ========            ======          ======
</TABLE>
 
       The tax effects of temporary differences that give rise to significant
       portions of the deferred tax assets and deferred tax liabilities at
       December 31 follow (in thousands):

<TABLE>
<CAPTION>
                                                                            1998             1997
                                                                            ----             ----
         <S>                                                          <C>              <C>
          Deferred tax assets:
                   Net operating loss carryforwards                     $    24,728     $     9,526
                   Accrued liabilities                                       13,212          13,882
                   Pension and other post-retirement benefits                11,426          11,026
                   Tax credits                                                9,639           8,877
                   Other                                                        650             215
                                                                             ------          ------
                   Total gross deferred tax assets                           59,655          43,526
                        Less valuation allowance                            (36,506)        (29,870)
                                                                             ------          ------
                                                                             23,149          13,656
          Deferred tax liabilities:
                   Plant and equipment                                      (14,364)        (11,472)
                   Other                                                       (740)           (853)
                                                                             ------          ------
                      Total gross deferred tax liabilities                  (15,104)        (12,325)
                                                                            -------          ------
                        Net deferred tax asset                          $     8,045     $     1,331
                                                                            =======         =======
</TABLE>
 
     The net reduction in the valuation allowance for deferred tax assets for
     the year ended December 31, 1997 was $4,246,000. Recognition, if any, of
     tax benefits subsequent to December 31, 1998 relating to unrecognized
     deferred tax assets are expected to be allocated to the consolidated
     statements of operations and additional paid-in capital in the amounts of
     $20,931,000 and


                                      F-25
<PAGE>   62
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

     $15,575,000, respectively. At December 31, 1998, the Company had Federal
     net operating loss carryforwards of approximately $52,852,000 which begin
     to expire in 2007.

     In order to fully realize the net deferred tax assets recognized, the
     Company will need to generate future taxable income. Combined cumulative
     taxable income, before utilization of net operating loss carryforwards for
     1996 and 1997 approximated $45 million. Based upon an evaluation of
     historical and projected future taxable income, the Company believes it is
     more likely than not that it will generate sufficient future taxable income
     to realize its net deferred tax asset of $8,045,000 at December 31, 1998.
     The amount of deferred tax assets considered realizable, however, could be
     reduced if estimates of future taxable income are reduced.

     The Company and its domestic subsidiaries file a consolidated U.S. Federal
     income tax return. The IRS is presently examining the consolidated Federal
     income tax returns for tax years 1991 through 1996. Management believes
     that the ultimate outcome of this examination will not have a material
     adverse effect on the financial condition, results of operations or
     liquidity of the Company.

(15) Severance and Write-downs

     In 1998, the Company incurred charges for severance expenses totaling
     $2,342,000 related to workforce reductions and write-downs of $200,000
     related to lease cancellations.

(16) Other Income

     Other income for 1996 included a favorable adjustment of $2,200,000 related
     to the Company's environmental liabilities following completion of a site
     clean-up for an amount less than previously estimated.


                                      F-26
<PAGE>   63

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(17) Earnings per share

     The components of basic and diluted earnings per share were as follows:

<TABLE>
<CAPTION>
                                                                   1998               1997            1996
                                                                   ----               ----            ----
<S>                                                           <C>                  <C>              <C>   
Net income (loss)                                              $    (18,031)           81,644          39,053
Preferred stock dividends                                            (2,044)                -               -
                                                               ------------         ---------       ---------
  Net income (loss) available for common stockholders          $    (20,075)           81,644          39,053
                                                               ------------         ---------       ---------
Average outstanding shares of common stock                        3,160,967         7,200,103       9,517,123
Dilutive effect of stock options                                          -           144,942         374,508
                                                               ------------         ---------       ---------
  Common stock and common stock equivalents                       3,160,967         7,345,045       9,891,631
                                                               ============         =========       =========
Earnings (loss) per share:
   Basic                                                       $      (6.35)            11.34            4.10
                                                               ============         =========       =========
   Diluted                                                     $      (6.35)            11.12            3.95
                                                               ============         =========       =========
</TABLE>


(18) Related Party Transactions

     As of December 31, 1998, the Company had a dividend receivable of
     $2,850,000 from its Thermalex Joint Venture and a receivable from DLJSC of
     $2,032,000 for funds deposited in excess of the retired 10 1/4% Notes,
     which are included in Receivables from Related Parties.

     In connection with the sale of the 12% Notes, the Company paid $3,600,000
     in underwriting fees to DLJSC. In addition, the Company paid DLJSC fees of
     approximately $3,181,000 for services as Lead Arranger and Syndication
     Agent in connection with the Company's amended and restated Bank Credit
     Agreement. In connection with the Mergers, Donaldson Lufkin & Jenrette
     Capital Funding received $1,750,000 in fees from the Company to provide a
     backstop credit facility and the Company reimbursed DLJSC approximately
     $184,000 for expenses.

     The Company paid DLJSC an advisory fee of $3,500,000 in connection with the
     Mergers. The Company also paid an underwriting fee of approximately
     $2,457,000 to DLJSC for the sale and distribution of the 14% Senior
     Discount Notes and a fee of $1,100,000 to DLJ Bridge Finance, Inc. to
     secure a bridge loan facility to backstop the issuance of the Discount
     Notes.

     Prior to the Mergers in 1998, Water Street Corporate Recovery Fund I, L.P.
     ("Water Street"), an affiliate of Goldman, Sachs & Co. ("Goldman Sachs"),
     beneficially owned approximately 45% (62% prior to the Share Repurchase) of
     the Company's common stock. Neither Holdings nor the Company is aware of
     any transaction or of any currently proposed transaction in which Goldman
     Sachs has any material direct or indirect interest as a result of its
     ownership position in the Company,

                                      F-27
<PAGE>   64
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     except as follows:

     Goldman Sachs advised the Company in connection with the Mergers and
     received a fee of $2.0 million upon the consummation of the Mergers. In the
     Mergers, Water Street received approximately $81.0 million and retained
     62,962 shares of Holdings. Holdings entered into a Registration Rights
     Agreement with Water Street in which Water Street has certain registration
     rights with respect to such 62,962 shares.

     During 1997, the Company paid Goldman Sachs $1,996,000 in investment
     banking fees and expenses related to the sale of the Rolodex Business,
     $2,042,000 of fees in connection with the refinancing and issuance of the
     Notes and $204,000 for services rendered in connection with the Share
     Repurchase. During 1997, the Company paid Goldman Sachs $3,094,000 in
     underwriting fees related to the issuance of the 10 1/4% Notes.

     As discussed in Note 7, the Company entered into the 1997 Bank Credit
     Agreement and Goldman Sachs Credit Partners L.P., an affiliate of Goldman
     Sachs, had an initial participating interest of $66,667,000. Goldman Sachs
     Credit Partners L.P. received $583,000 from the agent bank for its portion
     of the arrangement fee paid by the Company in 1997.

     During 1996, the Company paid Goldman Sachs $1,000,000 in transaction fees
     in connection with the purchase of Lingemann (See Note 1). In connection
     with such services, the Company provided for the indemnification of Goldman
     Sachs against various liabilities, including liabilities under the Federal
     securities laws.

(19) Commitments and Contingencies

     Rental expense for operating leases totaled $4,625,000, $4,283,000 and
     $3,291,000 for the years ended December 31, 1998, 1997 and 1996,
     respectively. These leases primarily relate to production facilities.
     Rental income received for subleases for operating leases totaled, $260,000
     in 1998, $248,000 in 1997 and none in 1996.

     Future minimum lease payments under contractually noncancellable operating
     leases (with initial lease terms in excess of one year) for years
     subsequent to December 31, 1998 are as follows: 1999, $4,409,000; 2000,
     $3,785,000; 2001, $2,746,000; 2002, $1,920,000; 2003, $1,319,000; and
     thereafter, $1,675,000. Future minimum rental income to be received under
     noncancellable subleases for years subsequent to December 31, 1998 are as
     follows: 1999, $260,000; 2000, $260,000; 2001, $260,000; 2002, $22,000; and
     thereafter, none.

     The Company is implicated in various claims and legal actions arising in
     the ordinary course of business. Those claims or liabilities not subject to
     Bankruptcy Court litigation will be addressed in the ordinary course of
     business and be paid in cash as expenses are incurred.

     In the opinion of management, the ultimate disposition of the matters
     discussed above will not have a material adverse effect on the Company's
     consolidated financial position, results of operations or liquidity.

                                      F-28


<PAGE>   65
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(20) Segment Data

     Description of Segments

     The Company provides a broad spectrum of products through three business
     segments: automotive components, technologies related components, and
     specialty publishing.

     The Company's Automotive Components Segment provides products and services
     to automotive OEMs and suppliers. These products include heat-transfer
     products and related tubing, clutch plates for automatic transmissions,
     suspension parts for vibration-reducing assemblies and engine mounts used
     by automotive manufacturers and suppliers, railroad locomotive and other
     heavy industrial equipment manufacturers and suppliers. Revenues from one
     of the "Big 3" domestic automobile manufacturers accounted for
     approximately 23%, 28%, and 29% of the Company's Automotive Component
     Segment revenues for 1998, 1997, and 1996, respectively.

     Through its Technologies Segment, the Company provides a broad range of
     telecommunication and electrical component products and services to the
     computer networking, telephone digital switching, main frame computer,
     automotive and medical equipment markets. The products include high-speed
     data connectors and systems, off-the-shelf and custom power transformers,
     precision stampings and wire-formed parts, and custom cable and wire
     assemblies used by computer networking, telecommunications, computer,
     automotive and medical equipment OEMs and suppliers. Two telecommunications
     OEMs directly or indirectly accounted for approximately 24%, 26%, and 24%
     of the Company's Technologies Segment revenues for 1998, 1997, and 1996,
     respectively.

     The Specialty Publishing Segment provides student yearbooks and other
     specialty publishing services through the Company's wholly owned
     subsidiary, Taylor Publishing Company ("Taylor"). Taylor is primarily
     engaged in the contract design and printing of student yearbooks, which
     accounted for approximately 88% of its annual revenues. Taylor markets its
     yearbook services through commissioned independent sales representatives.

     The Company has included in its Other Segment two operating units that fall
     below the quantitative reporting thresholds and do not meet all the
     criteria for aggregation with the Company's reportable segments. These
     operations are a manufacturer of high speed welded tube mills and other
     machinery and equipment for automotive suppliers and OEMs and a welded
     stainless steel tubing manufacturer that provides tubing and tubing
     products to distributors, recreational marine and transportation markets.

     Measurement of Segment Profit or Loss and Segment Assets

     The Company evaluates performance and allocates resources to its operating
     segments based on profit or loss from operations before certain severance
     costs and write-downs, other income or expense, interest and income taxes.
     The accounting policies of the reportable segments are the same as those
     described in Note 2, "Significant Accounting Policies." The Company has
     intra-segment sales and transfers, which are recorded at cost or, if agreed
     upon, a price comparable to unaffiliated customer sales. These
     intra-segment sales and related profits are eliminated in consolidation and
     are not presented in the segment disclosure. Identifiable assets are those
     used by each segment in its operations. Corporate assets consist primarily
     of cash, deferred financing fees and deferred tax assets.

                                      F-29
<PAGE>   66

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     Factors Used to Identify the Enterprise's Reportable Segments

     The Company's reportable segments are business units that offer different
     products. The reportable segments are each managed separately because they
     manufacture and distribute distinct products with different production
     processes. Reportable segments were determined by using a management
     approach and are consistent with the basis and manner in which the
     Company's management internally disaggregates financial information for the
     purposes of assisting in making internal operating decisions.

     Operations within segments have been aggregated on the basis of similar
     economic characteristics, products or services, purposes or end uses,
     production processes, geographic marketing areas and methods, distribution
     methods, and regulatory environments. Due to the diverse nature of the
     Company's products, consideration has been given to ensure that the
     aggregation of the Company's operations helps users better understand the
     Company's performance and assess its future cash flows.

                                      F-30
<PAGE>   67
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     Summary financial information by business segment is as follows (in
     thousands):
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31, 
                                                                            ------------------------------------- 
      Net Sales:                                                              1998          1997            1996       
                                                                              ----          ----            ----       
     <S>                                                                  <C>             <C>            <C>    
               Automotive Components                                       $ 213,365       193,839        169,280
               Technologies                                                  189,781       198,941        183,663
               Specialty Publishing                                          101,325        98,222         99,020
               Other                                                          31,158        37,231         40,442
                                                                             -------        ------         ------
                                                                           $ 535,629       528,233        492,405
                                                                             =======       =======        =======
      Operating income:

               Automotive Components                                       $  23,015        21,859         21,722
               Technologies                                                   21,169        26,734         27,604
               Specialty Publishing                                            4,945         7,299          5,136
               Other                                                           1,290         4,748          5,175
               Unallocated amounts:
                        Corporate expenses                                    (7,752)       (9,138)        (9,704)
                        Significant legal expenses                            (1,954)         (400)             -
                        Severance and write-downs                             (2,542)            -         (1,500)
                        Merger fees                                          (25,529)            -              -
                                                                             -------        ------         ------
                                 Total operating income                       12,642        51,102         48,433

               Interest expense                                              (32,894)      (20,562)       (18,378)
               Interest income                                                   979         2,837            724
               Equity in net income of Thermalex                               2,850         2,647          2,922
               Other income, net                                               3,027           794          4,784
                                                                             -------        ------         ------
                        Income (loss) from continuing
                         operations before income taxes
                         and extraordinary item                            $ (13,396)       36,818         38,485
                                                                             =======       =======        =======
      Depreciation and amortization expense:

               Automotive Components                                       $   8,508         8,104          5,883
               Technologies                                                    7,216         6,159          5,531
               Specialty Publishing                                            3,319         2,930          2,786
               Other                                                           1,044         1,095          1,073
               Corporate                                                          72            89             84
                                                                             -------        ------         ------
                        Total                                              $  20,159        18,377         15,357
                                                                             =======       =======        =======
      Capital expenditures:

               Automotive Components                                       $   9,132        10,531          6,747
               Technologies                                                    7,926         8,166          9,597
               Specialty Publishing                                            2,197         3,161          2,876
               Other                                                             850         1,663            700
               Corporate                                                          50            62             89
                                                                             -------        ------         ------
                        Total                                              $  20,155        23,583         20,009
                                                                             =======       =======        =======
</TABLE>

                                      F-31
<PAGE>   68
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     A summary of identifiable assets by segment at December 31 follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                              1998          1997
                                                                              ----          ----
              <S>                                                         <C>             <C>    
               Automotive Components                                       $ 135,525       117,602
               Technologies                                                   96,742        87,252
               Specialty Publishing                                           42,073        42,767
               Other                                                          17,342        27,245
               Corporate                                                      35,592        27,807
                                                                              ------       -------

                                 Total                                     $ 327,274       302,673
                                                                             =======       =======
</TABLE>

     A summary of long-lived assets by geographic region is as follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                                1998          1997
                                                                                ----          ----
               <S>                                                        <C>             <C>    
               United States                                               $ 113,293       113,322
               Germany                                                        15,029        14,057
                                                                             -------       -------
                                 Total                                     $ 128,322       127,379
                                                                             =======       =======
</TABLE>

     Summary of export sales by geographic region is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                               1998          1997            1996
                                                                               ----          ----            ----
      <S>                                                                  <C>             <C>            <C>   
      Europe                                                               $  22,838        21,193         20,584
      Asia                                                                     8,829        14,007         16,708
      Canada                                                                   7,692         9,758          7,752
      Mexico                                                                   3,005         4,292          6,660
      Other                                                                    4,335         6,155          6,449
                                                                              ------        ------         ------
                                 Total                                     $  46,699        55,405         58,153
                                                                             =======        ======         ======
</TABLE>

     Net sales are attributed to countries based on the location of customers.

     Major Customers

     Revenues from one of the "Big 3" domestic automobile manufacturers
     accounted for approximately 9%, 10%, and 10% of the Company's consolidated
     revenues for 1998, 1997, and 1996, respectively.


                                      F-32

<PAGE>   69

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

(21) Quarterly Financial Information (unaudited)

     A summary of quarterly financial information follows (in thousands):

<TABLE>
<CAPTION>
                 1998
                 ----
                                                      Dec. 31(1)         Sept. 30(2)        June 30(3)         March 31
                                                      ----------         -----------        ----------         --------
      <S>                                             <C>                 <C>               <C>              <C>    
      Sales                                            $   113,241          135,065           170,018          117,305
      Gross profit                                          25,252           32,873            49,644           28,318

      Income (loss) before extraordinary item               (2,135)         (17,222)            4,433            2,781
      Extraordinary item                                    (5,888)               -                 -                -
                                                            ------          -------             -----            -----
      Net income (loss)                                $    (8,023)         (17,222)            4,433            2,781
                                                            ======          =======             =====            =====
</TABLE>

<TABLE>
<CAPTION>

                 1997
                 ----
                                                          Dec. 31         Sept. 30(4)         June 30        March 31(5)
                                                          -------         -----------         -------        -----------
      <S>                                             <C>                 <C>               <C>              <C>    
      Sales                                            $   120,624          131,394           169,671          106,544
      Gross profit                                          29,508           34,269            52,170           26,011

      Income from continuing
       operations before extraordinary item                  3,531            4,315            11,207            4,361
      Discontinued operations                                    -                -                 -           58,958
      Extraordinary item                                         -             (728)                -                -
                                                            ------          -------            ------           ------
      Net income                                       $     3,531            3,587            11,207           63,319
                                                            ======          =======            ======           ======
</TABLE>

     (1)  Includes a pretax extraordinary loss of $ 9,846,000 related to the
          extinguishment of debt.

     (2)  Includes $19,549,000 of expenses related to the Mergers (See Note 1).

     (3)  Includes $1,341,000 of expenses related to the Mergers (See Note 1).

     (4)  Includes a pretax extraordinary loss of $1,193,000 related to the
          extinguishment of debt (See Note 7).

     (5)  Includes a pretax gain on the sale of the Rolodex Business totaling
          $95,001,000.

(22) Pro Forma Results of Operations (unaudited)

     Set forth below is certain unaudited pro forma condensed consolidated
     financial information of the Company based upon historical consolidated
     financial statements of the Company that has been adjusted to give effect
     to the Refinancing (as defined below), the Mergers, including the Merger
     Financing and application of the proceeds thereof (See Note 1). In
     addition, the operating results for 1997 have been adjusted to give effect
     to the 1997 Transactions. A summary of these adjustments follows.

     The Refinancing includes the following transactions: (i) the issuance of
     the 12% Notes which generated gross proceeds to the Company of
     approximately $120.0 million; (ii) the repurchase of the 10 1/4% Notes at a
     purchase price of 101% of principal amount plus accrued and unpaid
     interest; (iii) the execution and delivery of the New Credit Facility and
     borrowings thereunder to refinance the 1997 Credit Facility and to purchase
     the 10 1/4% Notes at a purchase price of 101% of principal amount plus
     accrued and unpaid interest; (iv) payment of fees and expenses in
     connection with the

                                      F-33
<PAGE>   70
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     offering of the Notes, the New Credit Facilities and the purchase of the 10
     1/4% Notes.

     The Reorganization Merger was accounted for as a reorganization of entities
     under common control, and had no impact on the historical basis of the
     assets or liabilities of the Company. The Merger was accounted for as a
     recapitalization and had no impact on the historical basis of the assets or
     liabilities of the Company.

     The Mergers included the following transactions: (i) the issuance of the
     Holdings Senior Discount Notes which generated gross proceeds of
     approximately $70.2 million, and new borrowings under the Company's 1997
     Credit Facility of approximately $43.1 million, of which $26.8 million was
     paid as a dividend from Insilco to Holdings to fund a portion of the Merger
     Consideration; (ii) the initial capitalization of Silkworm through the
     issuance of 1,245,138 shares of Silkworm common stock for $56.1 million and
     the issuance of 1,400,000 shares of PIK Preferred Stock and warrants to
     purchase 65,603 shares of Holdings Common Stock for aggregate consideration
     of $35.0 million; (iii) payment of the Merger Consideration for each share
     of the Company's common stock outstanding immediately prior to the Mergers
     (4,145,372 shares) consisting of $43.48 in cash and 0.03378 of a share of
     Holdings; (iv) payment of fees and expenses associated with the issuance of
     the Holdings Senior Discount Notes, the waiver of certain Events of Default
     under the Existing Credit Facility, and the Mergers; and (v) vesting of all
     outstanding options and payment of the Option Cash Proceeds (and applicable
     withholding taxes) and payments pursuant to employment related agreements.

     The 1997 Transactions consisted of the following: (i) the Company entered
     into the 1997 Credit Facility on July 3, 1997; (ii) on August 12, 1997, the
     Company issued $150 million aggregate principal amount of the 10 1/4%
     Notes; (iii) on July 10, 1997, the Company, using the proceeds of its sale
     of the Rolodex Business, purchased an aggregate of 2,857,142 shares for
     $110 million; and (iv) on August 12, 1997, the Company completed a tender
     offer pursuant to which it purchased an additional 2,857,142 shares of
     common stock for $110 million. The purchase of shares of common stock of
     the Company in the tender offer was paid for with proceeds received through
     the issuance by the Company of the 10 1/4% Notes.

     The unaudited pro forma condensed consolidated income statements have been
     prepared as if the Refinancing, the Mergers and the 1997 Transactions all
     occurred on January 1 of the relevant period; however, the expenses
     directly related to the aforementioned transactions (other than interest
     expense) are excluded from the unaudited pro forma condensed consolidated
     income statements. The Unaudited Pro Forma Condensed Consolidated Financial
     Data are based on certain assumptions and estimates, and therefore do not
     purport to be indicative of the results that would have been obtained had
     the transactions been completed as of such dates or indicative of future
     results of operations and financial position.

                                      F-34
<PAGE>   71

                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

         Unaudited Pro Forma Condensed Consolidated Statement of Income
                          Year Ended December 31, 1998
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                             Merger       Refinancing
                                                            Historical    Adjustments     Adjustments       Pro Forma
                                                            ----------    -----------     -----------       ---------
<S>                                                         <C>          <C>               <C>              <C>    
Net sales                                                   $ 535,629                                        535,629
Cost of goods sold                                            383,269                                        383,269
Depreciation and amortization                                  20,159                                         20,159
Selling, general and administrative expenses                  119,559     (25,529)(1)                         94,030
                                                              -------      ------            ------          ------- 
  Operating income                                             12,642      25,529                 -           38,171
                                                                               

Interest expense                                              (32,894)     (8,752)(2)        (4,167)(3)      (45,813)
Interest income                                                   979                                            979
Equity in net income of Thermalex                               2,850                                          2,850
Other income, net                                               3,027                                          3,027
                                                              -------      ------            ------          ------- 
  Income (loss) from continuing operations
  before income taxes and extraordinary item                  (13,396)     16,777            (4,167)            (786)

Income tax benefit (expense)                                    1,253      (6,710)(1)          
                                                                            3,744(4)          1,604(4)          (109)
                                                              -------      ------            ------          ------- 
  Income (loss) from continuing
  operations before extraordinary item                      $ (12,143)     13,811            (2,563)            (895)
                                                                               
Preferred stock dividend                                       (2,044)     (3,651)                -           (5,695)
                                                              -------      ------            ------          ------- 
                                                                                          
  Income (loss) to common from continuing
  operations before extraordinary item                      $ (14,187)     10,160            (2,563)          (6,590)
                                                              =======      ======            ======           ====== 

Earnings (loss) from continuing operations per share
Basic                                                        $  (4.49)                                         (4.16)
Basic shares                                                    3,161                                          1,583
Diluted                                                      $  (4.49)                                         (4.16)
Diluted shares                                                  3,161                                          1,583
</TABLE>

                                      F-35
<PAGE>   72
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

         Unaudited Pro Forma Condensed Consolidated Statement of Income
                          Year Ended December 31, 1997
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                              1997               Merger          Refinancing
                                             Historical    Transactions       Adjustments        Adjustments     Pro Forma
                                             ----------    ------------       -----------        -----------     ---------
<S>                                           <C>          <C>                <C>               <C>              <C>    
Net sales                                     $528,233                                                             528,233
Cost of goods sold                             370,845                                                             370,845
Depreciation and amortization                   18,377                                                              18,377
Selling, general and administrative
expenses                                        87,909                                                              87,909
                                                ------      ------              ------            ------             -----

         Operating income                       51,102                               -                 -            51,102

Interest expense                               (20,562)     (8,879)(5)         (13,621)(2)        (4,683)(3)       (47,745)
Interest income                                  2,837      (2,091)(5)                                                 746
Equity in net income of Thermalex                2,647                                                               2,647
Other income, net                                  794                                                                 794
                                                ------      ------              ------            ------             -----
  Income (loss) from continuing
  operations before income taxes                36,818     (10,970)            (13,621)           (4,683)            7,544
                                                                

Income tax expense                             (13,404)      4,223(5)            4,181(4)          1,803(4)         (3,197)
                                                ------      ------              ------             ------            -----
                                                                                  

  Income (loss) from
  continuing operations                        23,414      (6,747)              (9,440)           (2,880)            4,347
                                                                               

Preferred stock dividend                             -           -              (5,695)                -            (5,695)
                                                ------      ------              ------            ------             -----
  Income (loss) to common from
  continuing operations before
  extraordinary item                          $ 23,414      (6,747)            (15,135)           (2,880)           (1,348)
                                              ========      ======             =======             =====            ====== 

Earnings (loss) from continuing
operations per share
         Basic                                $   3.25                                                               (0.85)
         Basic shares                            7,200                                                               1,583
         Diluted                              $   3.19                                                               (0.85)
         Diluted shares                          7,345                                                               1,583

</TABLE>


                                      F-36
<PAGE>   73
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

The Notes to the Unaudited Pro Forma Condensed Consolidated Statements of Income
follow:

     (1)  To exclude nonrecurring Merger expenses and the related income tax
          effect recorded in the year ended December 31, 1998.

     (2)  To record the incremental interest expense for the years ended
          December 31 1997 and 1998 as follows: (i) $3.1 million and $2.0
          million, respectively, increase in interest expense associated with
          the Company $43.1 million incremental borrowings under the 1997 Credit
          Facility in connection with the Merger, (ii) $10.2 million and $6.5
          million, respectively, in increased interest expense associated with
          the 14% Discount Notes issued at Holdings to finance the Merger and
          (iii) amortization of Holdings debt issuance costs over the 10 year
          term of the 14% Discount notes under the effective interest method.

     (3)  To record the net increase in interest expense for the years ended
          December 31, 1997 and 1998 as follows: (i) $1.8 million and $1.8
          million, respectively, increase in interest expense associated with
          the increase in LIBOR spreads from 125 basis points ("bps") under the
          1997 Credit Facility to a spread of 375 bps for the Term Loan Facility
          under the New Credit Facility and to a spread of 300 bps for the
          Revolving Credit Facility and based on an assumed LIBOR rate of 4.98%
          thereunder, (ii) $3.3 million and $2.9 million increase in interest
          expense related to the additional borrowings under the 1997 Revolving
          Credit Facility, incurred in connection with the Refinancing, (iii)
          and $14.4 million and $12.6 increase in interest expense relating to
          the issuance of the 12% Notes offset by a $15.4 million and $13.6
          million reduction in interest expense relating to the repayment of the
          10 1/4% Notes and the amortization expense relating to the issuance of
          the 12% Notes and the New Credit Facility partially offset by a
          reduction in amortization expense relating to the repurchase of the 10
          1/4% Notes and the 1997 Credit Facility.

     (4)  To record the tax benefit of the transaction at the statutory rate of
          each respective entity. Statutory tax rates used to calculate the tax
          benefit of (i) Insilco Corporation was 38.5% (35.0% federal rate and
          an estimated 3.5% average state rate) and (ii) Holdings was
          approximately 28.4%, which is the 35.0% federal tax rate adjusted for
          the non-deductible portion of accreted interest on the 14% Discount
          Notes due to excess Original Issue Discount ("OID") over the allowable
          yield to maturity.

     (5)  To record the effect on interest expense and the related income tax
          effect of (i) the purchase on July 10, 1997 of 2,857,142 shares at
          $38.50 per share in cash for an aggregate purchase price of $110.0
          million, (ii) the entering into of the 1997 Credit Facility on July 3,
          1997 and the issuance and sale of $150.0 million aggregate principal
          amount of the 10 1/4% Notes on August 12, 1997, and (iii) the purchase
          on August 12, 1997 of 2,857,142 shares at $38.50 per share in cash for
          an aggregate purchase price of $110.0 million, as if the
          aforementioned transactions had occurred as of the beginning of the
          periods presented. Statutory tax rates used to calculate the income
          tax effect was 38.5% (35.0% federal rate and an estimated 3.5% average
          state rate).

(23) Subsequent Event

     On January 25, 1999, the Company purchased the stock of Eyelets for
     Industries, Inc. and EFI Metal Forming, Inc., collectively referred to as
     EFI, a precision stamping manufacturer for the battery,

                                      F-37
<PAGE>   74
                      INSILCO HOLDING CO. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements


     electrical, electronic and automotive markets. EFI has operations in
     Connecticut and Texas.

     The initial purchase price of $23,600,000, including estimated costs
     incurred directly related to the transaction, has not yet been allocated
     and is pending appraisals of property, plant and equipment, actuarial
     valuations of retiree medical benefits, and estimated costs of plans to
     exit certain EFI activities. The Company expects to have these items
     quantified within one year of the date of acquisition. The acquisition will
     be accounted for as a purchase and the Company is currently determining the
     appropriate period for amortizing any resulting goodwill from this
     transaction. The acquisition did not result in a significant business
     combination within the definition provided by the Securities and Exchange
     Commission and therefore, pro forma financial information has not been
     presented.


                                      F-38
<PAGE>   75

                                 EXHIBIT LISTING


  *2(a)     -   Agreement and Plan of Merger, dated as of March 24, 1998,
                among Insilco, INR Holding Co., and Silkworm Acquisition
                Corporation (Exhibit 10(n) to the Registration Statement on Form
                S-4 (File No. 333-51145) of Insilco).

  *2(b)     -   Amendment No. 1 to the Agreement and Plan of Merger, dated
                June 8, 1998, among Insilco, INR Holding Co. and Silkworm
                Acquisition Corporation (Exhibit 10(r) to the Registration
                Statement on Form S-4 (File No. 333-51145) of Insilco).

  *3(a)     -   Certificate of Incorporation (Exhibit 3.1 to the Current
                Report on Form 8-K filed on August 18, 1998 (File No. 0-24813)).

  *3(b)     -   Bylaws incorporated by reference to Exhibit 3.2 to the Current
                Report on Form 8-K filed on August 18, 1998 (File No. 0-24813).

  *4(a)     -   Investors' Agreement, dated as of August 17, 1998, among
                Insilco Holding Co. and the investors named therein (Exhibit 4.5
                to the Registration Statement on Form S-1 (File No. 333-65039)).

  *4(b)     -   Indenture, dated as of November 9, 1998, between Insilco and
                the Trustee (Exhibit 4(a) to the Form 10-Q filed by Insilco on
                November 16, 1998 (File No. 0-22098)).

  *4(c)     -   First Supplemental Indenture, dated as of December 21, 1998,
                between Insilco and the Trustee (Exhibit 4.3 to the Registration
                Statement on Form S-1 (File No. 333-71947) of Insilco).

  *4(d)     -   Warrant Agreement, dated as of August 17, 1998, between Silkworm
                Acquisition Corporation and National City Bank, as Warrant Agent
                (Exhibit 4.1 to the Registration Statement on Form S-1 (File No.
                333-65039)).

  *4(e)     -   Assumption Agreement, dated as of August 17, 1998, between
                Insilco Holding Co. and National City Bank, as Warrant Agent
                (Exhibit 4.2 to the Registration Statement on Form S-1 (File No.
                333-65039)).

  *4(f)     -   Form of Class A Warrant (Exhibit 4.3 to the Registration
                Statement on Form S-1 (File No. 333-65039)).

  *4(g)     -   Certificate of Designation with respect to Pay-in-kind 15%
                Senior Exchangeable Preferred Stock due 2010 (Exhibit 4.4 to the
                Registration Statement on Form S-1 (File No. 333-65039)).

  *4(h)     -   Indenture, dated as of August 17, 1998, between Silkworm
                Acquisition Corporation and the Trustee (Exhibit 4.5 to the
                Registration Statement on Form S-1 (File No. 333- 65039)).

  *4(i)     -   First Supplemental Indenture, dated as of August 17, 1998,
                between Insilco Holding Co., and the Trustee (Exhibit 4.6 to the
                Registration Statement on Form S-1 (File No. 333-65039)).



<PAGE>   76




 *4(j)      -   Indenture, dated as of August 12, 1997, between Insilco and
                the Trustee (Exhibit 4(j) to the Registration Statement on Form
                S-4 (File No. 333-36523) of Insilco).

 *4(k)      -   Form of New Note (included in Exhibit 4(j) above) (Exhibit
                4(k) to the Registration Statement on Form S-4 (File No.
                333-36523) of Insilco).

 *4(l)      -   Purchase Agreement, dated as of August 7, 1997, among Insilco
                and Goldman, Sachs & Co., McDonald & Company Securities, Inc.
                and Citicorp Securities Inc. (the "Initial Purchasers") (Exhibit
                4(l) to the Registration Statement on Form S-4 (File No.
                333-36523) of Insilco).


 *4(m)      -   Exchange and Registration Rights Agreement, dated as of August
                12, 1997, between Insilco and the Initial Purchasers (Exhibit
                4(m) to the Registration Statement on Form S-4 (File No.
                333-36523) of Insilco).

 *4(n)      -   Warrant Agreement dated as of November 9, 1998, between Insilco
                Holding Co. and the Warrant Agent (Exhibit 4(a) to the Form 10-Q
                for the quarter ended September 30, 1998 (File No. 0-24813)).

 *4(o)      -   Warrant and Registration Rights Agreement, dated as of November
                9, 1998, between Insilco Holding Co. and the Initial Purchaser
                (Exhibit 4(b) to the Form 10-Q for the Quarter Ended September
                30, 1998 (File No. 0-24813)).

 *4(p)      -   Exchange and Registration Rights Agreement, dated as of November
                9, 1998, between Insilco and DLJ (Exhibit 4(b) to the Form 10-Q
                of Insilco for the Quarter Ended September 30, 1998 (File No.
                0-22098)).

 *4(q)      -   Second Supplemental Indenture, dated as of January 25, 1999 
                between Insilco and the Trustee.

 *10(a)     -   Insilco Holding Co. Direct Investment Program (Exhibit 4(c) to
                the Registration Statement on Form S-8 (File No. 333-61809)).**

 *10(b)     -   Insilco Holding Co. Stock Option Plan (Exhibit 4(d) to the
                Registration Statement on Form S-8 (File No. 333-61809)).**

 *10(c)     -   Insilco Holding Co. and Insilco Corporation Equity Unit Plan
                (Exhibit 4(c) to the Registration Statement on Form S-8 (File
                No. 333-61811)).**

 *10(d)     -   Credit Agreement, among Insilco and a syndicate of banks
                and other financial institutions led by Donaldson, Lufkin &
                Jenrette Securities Corporation, DLJ Capital Funding and
                The First National Bank of Chicago (Exhibit 10.4 to the
                Registration Statement on Form S-1 (File No. 333-71947)
                of Insilco).

 *10(e)     -   Purchase Agreement, between Insilco Corporation, Insilco Holding
                Co. and Donaldson, Lufkin & Jenrette Securities Corporation
                (Exhibit 10(a) to Form 10-Q filed by Insilco on November 16,
                1998 (File No. 0-22098)).

 *10(f)     -   Employment Agreement dated as of May 1, 1993 between Insilco
                and Robert L. Smialek, as amended and restated (Exhibit 10(k) to
                the Form 10/A, Amendment No. 1 to Form 10 (File No. 0-22098) of
                Insilco).**



<PAGE>   77



 *10(g)     -   Form of Indemnification Agreement adopted by Insilco as of
                July 30, 1990, entered into between Insilco and certain of its
                officers and directors individually, together with a schedule
                identifying the other documents omitted and the material details
                in which such documents differ (Exhibit 10(n) to the Form 10
                (File No. 0-22098) of Insilco).

 *10(h)     -   Form for Income Protection Agreement adopted by Insilco as of
                December, 1996, entered into between Insilco and the officers
                identified in Exhibit 10(g) (Exhibit 10(h) of the Form 10-K of
                Insilco for the Year Ended December 31, 1996 (File No. 0-
                22098)).

 *10(i)     -   Extension Agreement between Insilco and Robert L. Smialek
                dated May 1, 1996 (Exhibit 10(l) to the Form 10-K of Insilco for
                the year ended December 31, 1997 (File No. 0-22098)).

 *10(j)     -   Second Extension Agreement between Insilco and Robert L.
                Smialek dated September 25, 1997 (Exhibit 10(m) to the Form 10-K
                of Insilco for the Year Ended December 31, 1997 (File No.
                0-22098)).**

 *21        -   Subsidiaries of Insilco Holding Co. (Exhibit 21 to the
                Registration Statement on Form S-1 (File No. 333-65039)).

  23(a)     -   Consent of KPMG LLP.

  24        -   Power of Attorney of officers and directors of Insilco Holding
                Co. appearing on the signature page hereof.

 *25(a)     -   Statement of Eligibility and Qualification Under the Trust
                Indenture Act of 1939 (T-1) of The Bank of New York (bound
                separately) (Exhibit 25 to the Registration Statement on Form
                S-4 (File No. 333-36523) of Insilco).

 *25(b)     -   Statement of Eligibility of Star Bank, N.A. on Form T-1
                (Exhibit 25.1 to the Registration Statement on Form S-1 (File
                No. 333-65039)).

  27        -   Financial Data Schedule.

  99(a)     -   Schedule II - Valuation and Qualifying Accounts.

* Incorporated by reference, as indicated.

** Designates management contracts and compensatory plans or arrangements in 
   which directors or executive officers participate.