Exhibit 13

                           GIANT CEMENT HOLDING, INC.

                               1998 ANNUAL REPORT

                                 TO SHAREHOLDERS

<PAGE>

                                 Company Profile






Giant Cement Holding,  Inc. (Nasdaq:  GCHI), through its subsidiaries,  Keystone
Cement  Company in  Pennsylvania  and Giant  Cement  Company in South  Carolina,
manufactures  and sells a complete line of portland and masonry  cements used in
residential,   commercial  and  infrastructure  construction  applications.  The
Company is the 15th  largest  producer of cement in the United  States.  Its two
cement  manufacturing  facilities are fully  integrated,  from limestone  mining
through   cement   production,   and  serve  the  growing   South-Atlantic   and
Middle-Atlantic  regions of the United States.  Its  subsidiary,  Giant Resource
Recovery,  is a pioneer in the development of innovative,  environmentally sound
methods for the reuse of waste materials in the manufacturing of cement.  Today,
Giant Cement Holding is one of the largest users of  waste-derived  fuels in the
cement industry.

Building on the synergies that exist between its core cement  manufacturing  and
resource recovery  operations,  the Company acquired Solite Corporation on April
30, 1998. Solite, a vertically  integrated company based in Richmond,  Virginia,
expands Giant Cement Holding's product lines in both  construction  products and
resource  recovery  and is also a highly  complementary  geographical  fit. As a
result of the  Solite  acquisition,  Giant  Cement  Holding  is now the  largest
lightweight  aggregate  supplier on the East Coast and the  largest  provider of
resource  recovery  fuel  burning  services  nationwide,  as well as the  fourth
largest cement producer in its East Coast markets.

The  Company's  financial  objective  is to  generate  superior  returns for its
shareholders.  Its efforts to maximize shareholder value has yielded a five year
average return on assets and equity of 13.2% and 21.8%, respectively.




Table of Contents
Financial Highlights, 1
Letter To Shareholders, 2
Business Review, 4
Consolidated Financial Statements, 7
Notes to Consolidated Financial Statements, 11
Report of Independent Accountants, 24
Management's Discussion and Analysis, 25
Corporate Information, 32
Directors and Officers, 34


<PAGE>



                FIVE-YEAR SUMMARY OF CONSOLIDATED FINANCIAL DATA

                                  1998      1997      1996      1995      1994
                                  ----      ----      ----      ----      ----
                                 (Amounts in thousands, except per share data)
Income statement data:
  Total revenues              $154,109   $116,888  $110,198   $100,185 $ 90,802
  Gross profit                  39,398     35,132    32,380     27,314   20,443
  Operating income              25,382     26,409    24,539     19,767   13,752
  Net income                    16,819     16,085    15,421     12,715    9,195

Earnings per common share:
  Basic                       $   1.81   $   1.70  $   1.57   $  1.27  $    .92
  Diluted                     $   1.77   $   1.69  $   1.57   $  1.27  $    .92
  Cash dividends                   -         -         -          -        -
  Weighted average common
   shares outstanding            9,277      9,459     9,833     9,990    10,000

Balance sheet and other data:
  Working capital             $ 36,351   $ 29,778  $ 26,706  $ 17,539  $ 20,513
  Total assets                 175,182    128,600   118,616   111,714    90,525
  Long-term debt                32,603     10,549    11,751    15,525     8,403
  Shareholders' equity         102,294     87,645    77,128    64,614    54,203
  Return on beginning of 
   year shareholders' equity    19.2%       20.9%     23.9%     23.5%     21.7%



1
<PAGE>


To Our Shareholders:

Our 1998 revenue  growth of 31.8% to $154.1  million  represents  another record
year of strong top-line performance for Giant Cement Holding,  Inc. While we are
pleased with this accomplishment and the solid underlying business  fundamentals
in all of our operations,  our bottom-line results for the year were impacted by
increased  costs,  primarily  related to  reduced  waste  fuel  utilization  and
increased maintenance costs. As a result, our 1998 net income was $16.8 million,
or $1.77 per  diluted  share,  compared to $16.1  million,  or $1.69 per diluted
share (after special charges of $0.18 per share) in 1997.

Clearly,  1998  earnings  levels do not  reflect the profit  potential  of Giant
Cement Holding.  In 1996 and 1997, we held our cost increases to less than 1% on
average.  This, along with record sales volume,  generated margins at the higher
end of the range of our  industry.  While we strongly  believe  that 1998 was an
aberration,  we want to assure  shareholders  that we are entering 1999 with our
priorities clearly established.  Very simply, our efforts are sharply focused on
bringing more of our sales dollars to the bottom line.

On  April  30,  1998,  we saw the  consummation  of our  acquisition  of  Solite
Corporation,  which began  contributing to our top and bottom line  immediately.
Solite is an excellent  addition to Giant Cement Holding,  representing a highly
strategic  fit  from  both  a  construction   products  and  resource   recovery
perspective.  The  robust  showing  of our  core  business,  plus  a very  solid
contribution from Solite of approximately $36 million, pushed revenues up to new
record levels.  In fact, 1998  represented our sixth  consecutive year of record
revenues and earnings.

We were also pleased with the settlement of the environmental action at Keystone
and the amount of insurance recovery under the Company's  business  interruption
policy.  In July  of  1998,  we  received  notification  from  the  Pennsylvania
Department  of  Environmental  Protection  that the Company  would be allowed to
resume the use of alternative  fuels at its Keystone  cement plant. Of note, the
Company had not used resource  recovery  fuels at Keystone for more than half of
1998.

Our resource  recovery  operations  not only  represent an additional  source of
revenue for the Company,  but also complement our cement production by providing
us with a  low-cost  source of fuel.  Accordingly,  the loss of the  alternative
fuels program at Keystone and the reduction in solid waste fuels processed,  due
to the  installation  of Giant's new shredder,  increased our production  costs.
This  impacted  our profit  margins,  especially  in the first half of the year.
While the  start-up of our waste fuel  operations  at Keystone  was more gradual
than anticipated, we are pleased to say that as of December 1998, this plant had
resumed historical  utilization levels of resource recovery fuels. This said, we
are  optimistic  that our solid fuel program at Giant will grow 40% in volume in
1999.

Our balance sheet remains  healthy.  At December 31, 1998, our current ratio was
2.4, reflecting working capital of $36.4 million.  Shareholders'  equity totaled
$102.3 million,  up 17% from year-end 1997.  Even after the Solite  acquisition,
long-term  debt is only  32% of  shareholders'  equity.  In  December  1998,  we
announced that the Company had completed its fourth $5 million share  repurchase
program and that the Board of Directors has authorized an additional $10 million
for the  repurchase of the  Company's  common  stock.  This action  reflects our
belief that the Company's shares continue to represent an attractive  investment
for the  Company.  Since our initial  public  offering in  September  1994,  the
Company has  repurchased  over one million  shares,  or 10%, of its  outstanding
common stock.

3
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Our  primary  financial  objective  is to  generate  superior  returns  for  our
shareholders.  To achieve this, our strategy is to capitalize on strong industry
fundamentals by adding incremental  capacity and making selective  complimentary
acquisitions. Additionally, we intend to continue to aggressively repurchase the
Company's shares and prudently manage our debt levels. Historically, our efforts
to maximize  shareholder value have yielded a five-year average return on equity
of 21.8%.

We are very optimistic about the Company's growth potential in 1999 for a number
of  reasons.  Demand for cement in the United  States  continues  to outpace the
industry's production capacity. The combination of a strong domestic economy and
the  passage  of the  Transportation  Equity Act for the 21st  Century  (TEA 21)
should fuel the use of both cement and lightweight aggregate in the residential,
commercial and infrastructure  construction  markets.  Due to favorable industry
trends and the strength of our markets,  the rapidly growing  South-Atlantic and
Middle-Atlantic  regions of the eastern United States,  we expect to be sold out
at all of our cement and lightweight aggregate  manufacturing plants.  Moreover,
we expect that a $3 per ton price increase we instituted in the  Middle-Atlantic
region,  effective April 1, 1999, will positively  impact this year's  financial
performance.

The Solite acquisition should increasingly  contribute to the Company's revenues
and earnings in 1999 as we continue to add value to this  business.  As a result
of this acquisition,  in addition to being the fourth largest cement producer in
our East Coast markets, we are now the largest lightweight aggregate supplier on
the East Coast and the  largest  provider  of  resource  recovery  fuel  burning
services nationwide.

With the Keystone  plant back to historical  levels in its  utilization of waste
fuels, we also expect a strong resource recovery  performance in 1999. Moreover,
our annual  winter  maintenance  program  has  effectively  addressed  the small
maintenance  problems that negatively impacted the Company in the second half of
1998.  Also,  we expect that the Company will be able to eliminate its purchases
of clinker at its Keystone plant as a result of increased production in 1999.

As a result of these  factors,  our cement  costs per ton  should  return to our
normally low levels in 1999, down significantly from the cost per ton registered
in 1998. In summary,  we continue to have great  confidence  in the  fundamental
operating  and  business  strengths  of  Giant  Cement  Holding  and the  growth
prospects of our industry.

In closing,  I want to thank our  shareholders,  our customers and our employees
for their continued  support.  I look forward to reporting on our progress as we
continue to build on our success in 1999.








Gary Pechota
Chairman, President and Chief Executive Officer
March 8, 1999

3
<PAGE>


Building on Our Synergies:

At Giant Cement  Holding,  our core  operations  consist of three key elements -
Cement, Construction Products and Resource Recovery.  Importantly, the synergies
that exist between these operations has historically enabled us to be one of the
lowest cost producers in the cement industry. As a result, the Company generates
one of the highest operating margins among cement producers.

Cement Production
Giant Cement  Holding,  through its  subsidiaries,  Keystone  Cement  Company in
Pennsylvania and Giant Cement Company in South Carolina,  manufactures and sells
over 1.5 million tons of high-quality cement annually.

The  Company's  revenues from cement sales rose to $107 million in 1998, up 5.6%
from the $101 million reported in 1997. This solid growth in our cement business
reflects both higher shipping volume, up 2%, and an increase in average pricing,
up 3%.

Strong Industry Fundamentals
Cement consumption in the United States hit new highs for the eighth consecutive
year,  reaching an estimated  108 million  tons in 1998,  up 37% from 79 million
tons in 1991.  Strong  domestic  cement  consumption is expected to be driven by
increased  public  infrastructure  spending and high levels of  residential  and
commercial construction.  Significantly, Congress' passage of The Transportation
and  Efficiency  Act (TEA 21) will increase  highway  spending by 44% nationally
through the year 2003.  In our key markets  this funding  increase  will be even
more substantial.

At the same  time,  U.S.  production  capacity  has  remained  relatively  flat,
totaling  approximately 88 million tons in 1998, up only slightly in the past 15
years. In fact, U.S. cement demand has exceeded production capacity for the past
six years and is expected to continue to do so for the foreseeable future. These
capacity  constraints include stiff anti-dumping  tariffs levied against foreign
producers,  the  government's  strict  criteria  for issuing new permits and the
three-to-five year average period for permitting and constructing a new plant.

We will see an increase in U.S. capacity over the next five years.  However, the
TEA 21 bill  itself,  will offset much of the new  capacity,  keeping  favorable
supply/demand drivers in place for the foreseeable future.

Strategies for Growth
Our  business  strategies  to  capitalize  on strong  fundamentals  include  the
addition of incremental capacity and making selective, low-risk acquisitions.

At Giant, we have invested more than $65 million into facility upgrades over the
past four years.  These  investments  have  increased  our  capacity by removing
production  bottlenecks,   modernizing  and  automating  our  production  lines,
reducing  power and labor costs and  increasing  the uptime of our  systems.  In
1999, our annual winter  maintenance  program focused on upgrading  equipment at

4
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both of our  cement  plants.  Capital  expenditures  of $14  million in 1999 are
expected to enable the Company to further increase cement production.

Going forward,  we have earmarked an additional $30 million to be spent over the
next two years to make  additional  upgrades to our plants and equipment.  These
capital  improvements  will include further  automation of our manufacturing and
distribution  facilities  to improve  our  efficiency,  throughput  and  process
uptime.

Since 1992,  our cement  production  has risen 15%, from 1.3 million tons to 1.5
million  tons.  In addition,  our recently  announced $3 per ton price  increase
instituted in our Middle-Atlantic region effective April 1, 1999, is expected to
benefit our financial performance.

Resource Recovery:

Giant Cement Holding began using waste as a fuel  substitute in the late 1970's,
when the cost of energy exploded because of the Middle East oil embargo. Today's
resource  recovery program has become an integral part of our operations,  while
serving as a  significant  source of  revenues  in its own right.  As such,  our
resource recovery operations continue to significantly add to our profitability.

Reduced Costs and Added Revenues
At our cement and lightweight aggregate plants,  resource recovery plays a major
role in the manufacturing  process.  As a matter of fact, Keystone pioneered the
development of recycling and resource  recovery programs in the cement industry,
and today Giant Cement Holding is the industry  leader in the field of recycling
and reuse of waste fuel.  Giant is one of only two U.S. cement plants  permitted
to store and  utilize  bulk  solid  waste-derived  fuels.  As a result,  we burn
approximately  160,000  tons of high-BTU  waste-derived  fuels in place of coal,
which in turn is used to fuel our  cement  operations.  Of note,  we do not burn
PCB's, pesticides or medical waste.

Our resource recovery operations continue to reduce our cement production costs.
Even though our fuel costs rose in 1998 as a result of the temporary curtailment
of waste fuel  operations  at our  Keystone  facility,  our fuel costs  remained
significantly below the industry average.  With Keystone back on line, we expect
further cost reduction from our fuel operations in 1999.

Whereas the cement industry  averages fuel costs of between  $3.50-$4.00 per ton
of clinker (a key component of cement),  in 1997 Giant Cement  Holding  actually
eliminated its fuel cost as a result of our resource recovery  business.  How is
this  possible?  Not only do we burn  waste in place of coal to fuel our  cement
kilns, but we realize additional revenues from our resource recovery operations,
as we are paid  for  providing  our  waste-derived  fuel  suppliers  a  disposal
alternative to incineration.

Leading Market Position
At present,  we are the market leader in the resource  recovery field with a 20%
share of the U.S. market, and with an even higher market share on the East Coast
- a position we expect to maintain  going forward.  Importantly,  throughout the

5
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United States, there are only 22 cement and lightweight aggregate  manufacturing
facilities that have E.P.A. permits to operate resource recovery operations,  of
which Giant owns five. Significantly, it is unlikely that any additional permits
will be granted in the foreseeable  future.  This serves as an effective barrier
to entry and helps solidify our leading position in the industry.

Environmentally,  the  recycling and reuse of wastes as raw material and fuel in
the cement  industry is among the best  technologies  for reducing land disposal
and  incineration  of  industrial  wastes.  Long  residence  times  and  extreme
temperatures  (3,500(Degree)  F) completely  destroy organic  components,  while
inorganic components bond with the cement molecule.

The Solite Acquisition:

Our  acquisition of Solite  Corporation,  a leading  South-Atlantic  lightweight
aggregate producer,  block producer and resource recovery company,  further adds
to the synergies in our operations.

Solite,   with  operations  in  Virginia  and  North  Carolina,   brought  three
lightweight  aggregate  manufacturing  facilities with their associated resource
recovery  operations,  five  concrete  block  plants and a waste  treatment  and
blending facility into the Giant fold. The lightweight  aggregate  manufacturing
facilities  have a  combined  production  capacity  of  600,000  tons,  which is
marketed  throughout the eastern region of the United States to block producers,
construction contractors and road builders. The concrete block facilities have a
combined production capacity of 18 million blocks, which are marketed to masonry
and construction contractors and building material dealers.

The Solite acquisition expands our product lines in existing and new markets and
improves upon our already leading-edge resource recovery capabilities.  As such,
Solite is expected to continue to be accretive to earnings in 1999 and beyond.

How We Make Cement:

To make cement, raw materials containing calcium,  silica,  alumina and iron are
required in exact proportions.  These raw materials - usually limestone, ash and
sand - are  finely  ground  and  mixed  with  water to form a  substance  called
"slurry."  The  slurry  is then fed into the  upper  end of the kiln and  slowly
passes  through three  distinct  temperature  zones ranging from  400(Degree) to
3500(Degree) Fahrenheit.

As the slurry is heated in the  kilns,  the water is  vaporized  and a series of
chemical  reactions  occur that make a glass  crystalline  product called cement
"clinker."

After  cooling,  this  clinker is mixed  with  about 5% gypsum,  which acts as a
setting agent and ground to a very fine powder which is portland cement. Masonry
cement is composed of approximately 50% clinker, 45% limestone and 5% gypsum.

6
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                                            GIANT CEMENT HOLDING, INC.
                                         CONSOLIDATED STATEMENTS OF INCOME

For the years ended December 31,                  1998        1997        1996
                                           (In thousands, except per share data)
Revenues:

Product sales                                  $128,774    $100,988   $ 96,186
Resource recovery services                       25,335      15,900     14,012
                                               --------    --------   --------
     Total revenues                             154,109     116,888    110,198

Costs and expenses:

Cost of sales and services                      114,711      81,756     77,818
Selling, general and administrative              14,016       7,523      7,841
Acquisition related expenses                          -       1,200          -
                                               --------    --------   -------- 
     Operating income                            25,382      26,409     24,539

Other income (expense):

Interest expense                                 (1,970)       (966)    (1,141)
Other, net                                        2,053      (1,031)       298
                                               --------    --------   --------
     Income before income taxes                  25,465      24,412     23,696
Provision for income taxes                        8,646       8,327      8,275
                                               --------    --------   --------
     Net income                                $ 16,819    $ 16,085   $ 15,421
                                               ========    ========   ========

Earnings per common share:
     Basic                                     $    1.81   $   1.70   $   1.57
     Diluted                                   $    1.77   $   1.69   $   1.57

Weighted average common shares outstanding         9,277      9,459      9,833





          See accompanying notes to consolidated financial statements.
7
<PAGE>

                           GIANT CEMENT HOLDING, INC.
                           CONSOLIDATED BALANCE SHEETS


December 31,                                                    1998      1997
                                                      (All amounts in thousands)
ASSETS
Current assets:
  Cash and cash equivalents                                 $  6,623   $ 12,674
  Accounts receivable, less allowances of $1,980
      in 1998 and $1,325 in 1997                              23,772     14,927
  Inventories                                                 24,729     19,238
  Deferred income taxes                                        4,428      1,286
  Other current assets                                         3,254      2,366
                                                            --------   --------
      Total current assets                                    62,806     50,491

Property, plant and equipment, net                            98,366     75,631
Permits, net                                                   8,695      1,977
Deferred charges and other assets                              5,315        501
                                                            --------   --------
      Total assets                                          $175,182   $128,600
                                                            ========   ========

LIABILITIES
Current liabilities:
  Accounts payable                                          $ 15,464  $  11,567
  Accrued expenses                                             7,660      8,258
  Current maturities of long-term debt                         3,331        888
                                                            --------   --------
      Total current liabilities                               26,455     20,713

Long-term debt, net of current maturities                     29,272      9,661
Accrued pension and postretirement benefits                    6,081      2,907
Deferred income taxes                                         11,080      7,674
                                                            --------   --------
      Total liabilities                                       72,888     40,955
                                                            --------   --------

Contingencies (Note 13)

SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value; 2.0 million shares
  authorized, none issued                                          -          -
Common stock, $.01 par value; 20.0 million shares
  authorized, 10.0 million shares issued                         100        100
Capital in excess of par value                                45,076     41,317
Retained earnings                                             74,939     58,120
                                                            --------   --------
                                                             120,115     99,537
Less: Treasury stock, at cost; 809 shares in 1998, 675  
        shares in 1997                                        17,099     11,247
      Accumulated other comprehensive income:
        Minimum pension liability                                722        645
                                                            --------   --------
      Total shareholders' equity                             102,294     87,645
                                                            --------   --------
      Total liabilities and shareholders' equity            $175,182   $128,600
                                                            ========   ========





          See accompanying notes to consolidated financial statements.
8
<PAGE>

                           GIANT CEMENT HOLDING, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,                       1998      1997      1996
                                                       ----      ----      ----
                                                     (All amounts in thousands)
OPERATIONS:
Net income                                          $ 16,819  $ 16,085 $ 15,421
Depreciation and depletion                            12,269    10,189    9,031
Deferred income taxes                                    560       609    1,023
Amortization of deferred charges and other               660       485      431
Changes in operating assets and liabilities:
     Receivables                                      (2,839)      (30)  (2,340)
     Inventories                                         297    (1,582)    (554)
     Other current assets and deferred charges        (4,089)   (2,810)  (1,291)
     Accounts payable                                 (4,634)    1,958    2,110
     Accrued expenses                                 (3,819)      656   (1,538)
                                                    --------  -------- --------
         Net cash provided by operations              15,224    25,560   22,293

INVESTING:
Purchases of property, plant and equipment           (17,085)  (15,362)  (9,819)
Proceeds from sales of property, plant and equipment     845         -        -
Cash acquired in Solite acquisition                    1,347         -        - 
                                                    --------  -------- --------
         Net cash used by investing                  (14,893)  (15,362)  (9,819)
                                                    --------  -------- --------
FINANCING:
Repayment of long-term debt                          (21,544)   (1,202) (12,059)
Proceeds from long-term debt                          24,446         -    8,285
Proceeds from short-term borrowings                    1,000     2,500    3,000
Repayment of short-term borrowings                    (1,000)   (2,500)  (5,279)
Purchases of treasury shares                          (9,453)   (7,241)  (4,091)
Other                                                    169       487        -
                                                    --------  -------- --------
         Net cash used by financing                   (6,382)   (7,956) (10,144)
                                                    --------  -------- --------
         Increase (decrease) in cash         
           and cash equivalents                       (6,051)    2,242    2,330
CASH AND CASH EQUIVALENTS:
Beginning of period                                   12,674    10,432    8,102
                                                    --------  -------- --------
End of period                                       $  6,623  $ 12,674 $ 10,432
                                                    ========  ======== ========

SUPPLEMENTAL INFORMATION:
Cash paid for:
     Interest (net of capitalized interest of 
      $0 in 1998 and 1997 and $53 in 1996)          $  1,865  $  1,003 $  1,141
     Income taxes                                      9,324     8,540    6,987
Non-cash investing and financing activities:
     Assets financed by notes and accounts payable     1,906     1,268    2,096

          See accompanying notes to consolidated financial statements.
9

<PAGE>


                                            GIANT CEMENT HOLDING, INC.
                                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>


                                                 Common Stock                                    
                                                                                            Accumulated
                                        Shares           Capital in                            Other
                                                 Par     Excess of   Retained    Treasury  Comprehensive
                                  Outstanding   Value    Par Value   Earnings      Stock       Income          Total
                                                            (All amounts in thousands)
<S>                                    <C>      <C>       <C>         <C>       <C>          <C>             <C>
                                       
Balance, January 1, 1996               9,937    $ 100     $40,985     $26,614   $   (616)    $(2,469)        $ 64,614

Comprehensive income:
  Net income for 1996                                                  15,421
  Minimum pension liability adjustment,
    net of $501 deferred income taxes                                                            931
       Total comprehensive income                                                                              16,352
Issuance of treasury shares               22                   37                    216                          253
Purchase of treasury shares             (295)                                     (4,091)                      (4,091)
                                       -----    -----     -------     -------   --------     -------         --------

Balance, December 31, 1996             9,664      100      41,022      42,035     (4,491)     (1,538)          77,128

Comprehensive income:
  Net income for 1997                                                  16,085
  Minimum pension liability adjustment,
    net of $481 deferred income taxes                                                            893
       Total comprehensive income                                                                              16,978
Exercise of employee stock options        35                  130                    357                          487
Tax benefit of stock options                                   84                                                  84
Issuance of treasury shares               13                   81                    128                          209
Purchase of treasury shares             (387)                                     (7,241)                      (7,241)
                                       -----    -----     -------     -------   --------     -------         --------

Balance, December 31, 1997             9,325      100      41,317      58,120    (11,247)       (645)          87,645

Comprehensive income:
  Net income for 1998                                                  16,819
  Minimum pension liability adjustment,
    net of $42 deferred income taxes                                                             (77)
       Total comprehensive income                                                                              16,742
Exercise of employee stock options        12                    6                    163                          169
Tax benefit of stock options                                   48                                                  48
Issuance of treasury shares for
 acquisition                             250                3,705                  3,438                        7,143
Purchase of treasury shares             (396)                                     (9,453)                      (9,453)
                                       -----    -----     -------     -------   --------     -------         --------

Balance, December 31, 1998             9,191    $ 100     $45,076     $74,939   $(17,099)    $  (722)        $102,294
                                       =====    =====     =======     =======   ========     =======         ========
</TABLE>




          See accompanying notes to consolidated financial statements.

10
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         AND PRINCIPLES OF CONSOLIDATION

1.   Basis of Presentation and Principles of Consolidation:

The consolidated financial statements include the financial position, results of
operations  and cash flows of Giant  Cement  Holding,  Inc. and its wholly owned
subsidiaries,   Giant  Cement  Company   ("Giant"),   Keystone   Cement  Company
("Keystone"),  Giant Resource  Recovery  Company,  Inc.  ("GRR") for all periods
presented and Solite  Corporation and its wholly-owned  subsidiaries  ("Solite")
from its  acquisition  date of April 30,  1998.  Where  referred to herein,  the
"Company" includes these subsidiaries. All significant intercompany transactions
and balances have been eliminated.

2.   Significant Accounting Policies:

The Company and its subsidiaries are involved in two business segments comprised
of the domestic manufacture and sale of portland and masonry cements and related
aggregates and the domestic manufacture and sale of other construction  products
(lightweight   aggregate  and  lightweight  block)  in  the  South-Atlantic  and
Middle-Atlantic  regions of the United  States.  The Company is also involved in
waste  recycling  and  resource   recovery,   utilizing   industrial   waste  as
supplemental fuels in its cement and lightweight aggregate kilns.

Cash Equivalents:
For  purposes  of the  consolidated  statements  of cash  flows,  highly  liquid
securities with an original maturity date of three months or less are considered
cash  equivalents.  Cash equivalents are recorded at market value and consist of
short-term U.S. Government obligations and repurchase agreements  collateralized
by short-term U.S. Government obligations.

Inventories:
Inventories are carried at the lower of average cost or market.

Property, Plant and Equipment:
Property,   plant  and  equipment  are  stated  at  cost.   Major  renewals  and
improvements  are capitalized,  while  maintenance and repairs are expensed when
incurred.   Depreciation  is  computed  over  the  estimated   useful  lives  of
depreciable assets using the straight-line method.

Useful lives for property and equipment are as follows:

                   Buildings and improvements              10 - 50 years
                   Machinery and equipment                  3 - 25 years
                   Office furniture and equipment           5 - 10 years

Depletion of the cost of quarry  property is based upon the tonnage  quarried in
relation to the estimated total tonnage available.

11
<PAGE>

Permits and Deferred Charges:
Permit  costs  are  incurred  to  obtain   multi-year   operating  permits  upon
certification  of compliance  with  environmental  regulations.  Deferred permit
certification costs are amortized over the period benefited,  presently three to
ten years.  Hazardous waste storage and burning  permits  obtained in the Solite
acquisition  are being  amortized over a 40-year  period (see Note 3).  Deferred
charges include debt issuance costs.  Debt issuance costs are amortized over the
life of the related  debt.  The loan cost  amortization  is included in interest
expense in the consolidated statements of income.

Income Taxes:
Income taxes are accounted for using the liability method. Accordingly, deferred
tax assets or liabilities  are  established  for temporary  differences  between
financial  and tax  reporting  bases and are  subsequently  adjusted  to reflect
changes in tax rates  expected  to be in effect when the  temporary  differences
reverse.

Environmental Liabilities:
The Company evaluates environmental  contingencies and, if appropriate,  accrues
the estimated  cost by charging  income for the gross  liability for all matters
where a future loss is probable and reasonably estimable. If it is probable that
the Company will be  indemnified  and/or  recover all or a portion of a probable
loss,  and the amount of such  recovery  is  reasonably  estimable,  the Company
accrues the related  asset on a gross  basis.  The Company  utilizes  all of the
information  available  to it to  estimate  the  range or amount of loss and the
timing of loss payments.

Revenue Recognition:
The Company derives revenues from product sales and resource recovery  services.
Revenues for product sales are  recognized in the period in which the product is
shipped to customers.  Revenues for resource recovery services are recognized in
the  period  in which the  service  is  provided  or the  waste-derived  fuel is
utilized. Inventories of waste-derived fuel are immaterial.

Estimates:
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities,  the  disclosure  of
contingent assets and liabilities at the date of the financial  statements,  and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.  Significant estimates include
asset lives,  environmental  contingencies  and discount  rates and  assumptions
related to pension and other postretirement obligations.

New Accounting Pronouncements:

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," ("SFAS 130"). Comprehensive
income consists of net income and changes in the minimum  pension  liability and
is  presented  in the  Consolidated  Statements  of  Shareholders'  Equity.  The
adoption  of SFAS 130 had no impact on total  shareholders'  equity.  Prior year
financial  statements have been  reclassified to conform to the  requirements of
SFAS 130.

12
<PAGE>

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards   No.  132,   "Employers'   Disclosures   about   Pensions  and  Other
Postretirement  Benefits," ("SFAS 132"). SFAS 132 revises employers' disclosures
about pension and other  postretirement  benefit  plans.  It does not change the
measurement or recognition of these plans.

In June of 1998, the Financial  Accounting  Standards Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and Hedging Activities," which is effective in fiscal years beginning after June
15, 1999.  This statement  establishes  accounting  and reporting  standards for
derivative  instruments,  including certain derivative  instruments  embedded in
other contracts, and for hedging activities. Based on its operations at December
31, 1998,  management  does not expect this standard will have a material effect
on the Company's consolidated financial statements upon adoption.

3.   Acquisition:

On April 30, 1998, the Company  acquired Solite and certain of its  subsidiaries
in  exchange  for  325,000  shares of the  Company's  common  stock.  The Solite
transaction included three lightweight aggregate  manufacturing  facilities with
their associated resource recovery operations, five concrete block plants, and a
waste treatment and blending facility. The terms of the transaction included the
assumption  of  approximately  $19.9  million of  Solite's  long-term  debt,  in
addition to other liabilities.  Under the terms of the purchase  agreement,  the
Company  issued  175,000  of its  treasury  shares,  which  were  valued at $5.0
million,  or $28.57 per share, the fair market value on the date of acquisition.
The  remaining  150,000  shares of common  stock  were  placed  in  escrow.  The
conditions for issuance of the first 75,000 shares held in escrow were satisfied
in February 1999, based upon an arbitration ruling. Those shares were treated as
issued as of December 31, 1998 and the purchase  price  increased  $2.1 million.
The remaining  75,000 shares,  which are included in the 809,000 treasury shares
held at  December  31,  1998,  will be issued  one-half  on April  30,  2000 and
one-half on April 30, 2001, subject to Solite satisfying the  indemnification of
certain representations and warranties in the acquisition agreement. In 1997, as
a result of  significant  uncertainty  as to its  ability  to obtain  regulatory
clearance  to  consummate  the Solite  acquisition,  the Company  expensed  $1.2
million of costs incurred in connection with the acquisition.

The  acquisition  has been  accounted  for as a purchase and,  accordingly,  the
operating  results of Solite have been  included in the  Company's  consolidated
financial  statements since the date of acquisition.  The purchase price of $7.4
million is based upon the 250,000  shares of the  Company's  common stock issued
and $300,000 in acquisition costs, which, including $36.7 million of liabilities
assumed, was primarily allocated $17.3 million to property, plant and equipment,
$17.6  million to current  assets and $6.2 million to  identifiable  intangibles
(hazardous waste storage and burning permits),  which are being amortized over a
40-period. The purchase price will be increased if any of the remaining escrowed
shares are issued.

The following unaudited pro forma financial  information assumes the acquisition
had occurred on January 1 of each period (in thousands, except per share data):

13
<PAGE>

                                                1998                   1997
                                                ----                   ----

     Net sales                              $170,538               $169,058
     Net income                               13,833                 17,888
     Earnings per share - basic             $   1.47               $   1.84

The pro forma results are not necessarily indicative of what actually would have
occurred if the  acquisition  had been  completed as of the beginning of each of
the  periods   presented,   nor  are  they  necessarily   indicative  of  future
consolidated results. The results of Solite for the 12 months ended December 31,
1998, which are included in the pro forma results above for that period, include
nonrecurring pretax charges of $4.6 million, or $0.33 per basic common share, to
reduce the  carrying  values of certain  assets to fair  market  value as of the
acquisition date.

4.   Inventories:

At December 31:                                 1998                   1997
                                                ----                   ----
                                                      (In thousands)
      Finished goods                        $  6,602               $  4,131
      In process                               2,773                  1,322
      Raw materials                            2,127                  2,178
      Supplies, repair parts and coal         13,227                 11,607
                                            --------               --------
                                            $ 24,729               $ 19,238
                                            ========               ========

5.   Property, Plant and Equipment:

At December 31 (at cost):
                                                1998                   1997
                                                ----                   ----
                                                      (In thousands)
      Land and quarries                     $  5,312               $  2,335
      Buildings                               15,972                 11,025
      Machinery and equipment                176,702                152,736
      Projects in process                      3,689                  1,981
                                            --------               --------
                                             201,675                168,077
      Less accumulated depreciation
        and depletion                        103,309                 92,446
                                            --------               --------
                                            $ 98,366               $ 75,631
                                            ========               ========

6.   Accrued Expenses:

 At December 31:                                1998                   1997
                                                ----                   ----
                                                      (In thousands)
      Compensation                          $  2,740               $  2,429
      Pension plan contributions                 434                  2,394
      Other                                    4,486                  3,435
                                            --------               --------
                                            $  7,660               $  8,258
                                            ========               ========

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<PAGE>

7.   Debt:

 Long-term debt consists of the following at December 31: 
                                                1998                   1997
                                                ----                   ----
                                                      (In thousands)
      Credit Facility borrowings            $ 31,046               $  8,159
      Term loan                                1,333                  2,048
      Other                                      224                    342
                                            --------               --------
                                              32,603                 10,549
      Less current maturities                  3,331                    888
                                            --------               --------
      Long-term debt, net of 
        current maturities                  $ 29,272               $  9,661
                                            ========              =========

On April 30, 1998,  the Company  increased  the  borrowing  limits on its Credit
Facility to $46 million,  consisting of $30 million of revolving  credit,  a $12
million term loan and $4 million to provide for letters of credit. The increased
Credit  Facility was used to refinance  the $19.9 million of debt assumed in the
Solite  acquisition.  Advances  under the Credit  Facility  bear interest at the
lesser of LIBOR plus 1.50% or the bank's base rate minus 1.25% (6.5% at December
31, 1998).  Borrowings under the Credit Facility are  collateralized by eligible
accounts  receivable,  inventories  and  certain  equipment,  as  defined in the
agreement.  At December  31, 1998,  the total  outstanding  under the  revolving
credit and the term loan was $20.4 million and $10.6 million,  respectively. The
Company is required to reduce  outstanding  revolving credit borrowings to $20.0
million  for a  period  of 30 days  annually.  At  December  31,  1998,  amounts
outstanding and available  under the Credit  Facility  totaled $31.0 million and
$9.7 million, respectively.

An  additional  Term Loan bears  interest at 8.4%  annually and matures in 2000.
Property,  plant and  equipment  having  an  aggregate  net book  value of $36.3
million have been pledged as collateral under the Term Loan Agreement.

The Company's Credit Facility and Term Loan impose  restrictions with respect to
the  maintenance  of  financial  ratios  and net  worth of the  Company  and its
subsidiaries.  The most  restrictive  covenants  currently  require  maintaining
tangible net worth (as defined) totaling $84.2 million. As of December 31, 1998,
the Company was in compliance with these covenants.

Aggregate maturities of long-term debt are as follows: 1999 - $3.3 million, 2000
- $3.2 million, 2001 - $2.4 million, 2002 - $22.9 million, 2003 - $800,000.

8.   Stock Option Plans:

The Company has an Employee  Stock  Option  Plan (the  "Employee  Plan"),  which
authorizes  the  Stock  Option  Committee  of the  Board of  Directors  to grant
incentive or  non-qualified  stock options for the purchase of up to 1.0 million
shares  of  common  stock to key  employees.  Additionally,  the  Company  has a
Directors Stock Option Plan for  non-employee  directors (the "Director  Plan"),
which provides for an initial grant of  non-qualified  options for 10,000 shares
of common  stock and  thereafter  an annual grant for 5,000  shares.  Options to
purchase up to 300,000  shares of Common Stock may be granted under the Director
Plan.  The  exercise  price under each stock  option plan is equal to the market
price at the date of grant,  and at December 31, 1998,  exercise  prices  ranged
from $11.88 to $28.50.

15
<PAGE>


The following table  summarizes the changes in the number of shares under option
pursuant to the plans described above.

                                                                     Weighted
                                                         Number      Average
                                                       of Shares  Exercise Price
Outstanding at January 1, 1996 (207,000 exercisable)     301,000      $13.96
      Granted                                             71,000       12.24
      Canceled                                             5,000       14.00
                                                           -----
Outstanding at December 31, 1996 (332,000 exercisable)   367,000       13.63
      Granted                                            126,000       16.30
      Exercised                                           35,000       13.85
      Canceled                                             1,000       11.88
                                                           -----
Outstanding at December 31, 1997 (390,000 exercisable)   457,000       14.35
      Granted                                            183,000       23.72
      Exercised                                           12,000       14.73
      Canceled                                            14,000       25.09
                                                          ------
Outstanding at December 31, 1998 (516,000 exercisable)   614,000      $16.89
                                                         =======

As permitted by Statement of Financial Accounting Standards No. 123, "Accounting
For Stock-Based Compensation," ("SFAS 123"), the Company has chosen to apply APB
Opinion No. 25 and related  interpretations  in accounting  for its stock option
plans. Accordingly, no compensation cost has been recognized for options granted
under the plans.  Had  compensation  cost for the plans been determined based on
the fair value at the grant  dates for awards  under the plans  consistent  with
SFAS 123, the pro forma impact on the  Company's net income and basic net income
per share would be as follows:

(In thousands, except per share data)      1998           1997          1996
                                           ----           ----          ----
Net earnings - as reported               $16,819       $16,085        $15,421
Net earnings - pro forma                  16,123        15,759         15,304
Basic earnings per share - as reported   $  1.81       $  1.70        $  1.57
Basic earnings per share - pro forma     $  1.74       $  1.67        $  1.56

The fair value of each option grant was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following assumptions:

                                           1998           1997          1996
                                           ----           ----          ----
    Expected dividend yield                   -              -             -
    Expected stock price volatility         35%           30%            30%
    Risk-free interest rate                4.6%          5.5%           5.5%
    Expected life of options             5 years       5 years       5 years

In  accordance  with SFAS 123, the fair value  approach to valuing stock options

16
<PAGE>

used for pro forma  presentation  has not been applied to stock options  granted
prior to January 1, 1995. The compensation  cost calculated under the fair value
approach is recognized over the vesting period of the stock options.

9.   Income Taxes:

The provision (credit) for income taxes is comprised of the following:

                                                   1998      1997        1996
                                                   ----      ----        ----
    (In thousands)
    Current:       Federal                     $  6,927   $  7,838    $  6,951
                   State                            802        317         761
    Deferred:      Federal                          780        107         847
                   State                            137         65        (284)
                                               --------   --------    --------
                                               $  8,646   $  8,327    $  8,275
                                               ========   ========    ========

The following is a  reconciliation  between the federal  income tax rate and the
Company's effective income tax rate:

                                                   1998      1997        1996
                                                   ----      ----        ----
    Statutory tax rate                             35.0%     35.0%       35.0%
    State income taxes, net of federal benefit      2.3       1.5         1.3
    Excess depletion for tax purposes              (3.5)     (2.9)       (2.8)
    Other, net                                      0.2       0.5         1.4
                                                   ----      ----        ----
    Effective rate                                 34.0%     34.1%       34.9%
                                                   ====      ====        ====

Cumulative gross deferred tax assets and liabilities  relate to the following at
December 31:

                                                       1998        1997
                                                       ----        ----
    (In thousands)
    Tax credit and loss carryforwards               $ 2,858        $     - 
    Pension and postretirement benefits                 425          1,080
    Inventories                                       2,464              -
    Allowances for discounts and doubtful
      accounts and other liabilities                  3,236          1,615
    Other                                               313            223
                                                    -------        -------
          Gross deferred tax assets                   9,296          2,918
                                                    -------        -------
    Depreciation                                     11,270          7,634
    Permits                                           2,504              -
    Other                                             2,174          1,672
                                                    -------        -------
          Gross deferred tax liabilities             15,948          9,306
                                                    -------        -------
          Net deferred tax liability                  6,652          6,388
    Deferred tax asset-current                        4,428          1,286
                                                    -------        -------
    Deferred tax liability-non-current              $11,080        $ 7,674
                                                    =======        =======


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<PAGE>


10.  Pension Plans and Other Postretirement Benefits:

The  Company  maintains  noncontributory,  defined  benefit  pension  plans  for
substantially all employees.  The Company also provides  postretirement  medical
and life insurance for certain eligible employee groups.  The following provides
a reconciliation  of benefit  obligations,  plan assets and funded status of the
plans at December 31, 1998:

                                                                      Other
                                                                 Postretirement
                                               Pension Benefits      Benefits
                                                 1998     1997    1998     1997
                                                 ----     ----    ----     ----
                                                           (In thousands)
Change in benefit obligation:
  Benefit obligations at beginning of the year $34,815 $33,233  $14,226 $15,342
  Obligation assumed - Solite                   13,788       -        -       -
  Service cost                                     861     518      315     285
  Interest cost                                  2,936   2,448    1,041     981
  Amendments                                       394      45       26       -
  Actuarial loss (gain)                          1,146   1,964      494  (1,240)
  Benefits paid                                 (3,639) (3,393)  (1,043) (1,142)
                                               ------- -------  ------- -------
  Benefit obligation at end of year             50,301  34,815   15,059  14,226
                                               ------- -------  ------- -------

Change in plan assets:
  Fair value of plan assets at
   beginning of year                            33,795  27,852        -       -
  Plan assets acquired - Solite                 16,014       -        -       -
  Actual return on plan assets                   3,465   6,563        -       -
  Company contribution                           2,200   2,773        -       -
  Benefits paid                                 (3,639) (3,393)       -       -
                                               ------- -------  ------- -------
Fair value of plan assets at end of year        51,835  33,795        -       -
                                               ------- -------  ------- -------
Funded status                                    1,534  (1,020) (15,059)(14,226)
Unrecognized actuarial loss                      2,045     631    1,104   1,129
Unrecognized net transition obligation (asset)    (300)   (355)   8,080   8,657
Unrecognized prior service cost                  1,460   1,236      483       -
                                               ------- -------  ------- -------
Prepaid (accrued) benefit cost                 $ 4,739 $   492  $(5,392)$(4,440)
                                               ======= =======  ======= =======

Amounts recognized in the statement of 
  financial position consist of:
  Prepaid benefit cost                         $ 4,739 $   492  $     - $     -
  Accrued benefit liability                          -       -   (5,392) (4,440)
  Intangible asset                                (625)   (303)       -       -
  Accumulated other comprehensive income        (1,111)   (992)       -       -
                                               ------- -------  ------- -------
Prepaid (accrued) benefit cost                 $ 3,003 $  (803) $(5,392)$(4,440)
                                               ======= =======  ======= =======


18
<PAGE>



    Assumptions as of December 31:
        Discount rate                            6.75%    7.25%    6.75%   7.25%
        Expected return on plan assets           9.25%    9.25%
        Rate of compensation increase            4.25%    4.50%

    Net periodic  pension and other  postretirement  benefit  costs  include the
following components:

                                                            Other Postretirement
                                      Pension Benefits            Benefits
                                      ----------------            --------
                                    1998     1997    1996    1998    1997   1996
                                    ----     ----    ----    ----    ----   ----
                                                  (In thousands)
 Service cost                     $  861   $  518  $  500  $  315  $  285 $  261
 Interest cost                     2,936    2,448   2,433   1,041     981    991
 Expected return on plan assets   (2,754)  (6,562) (2,863)      -       -      -
 Amortization of transition
   obligation                        (56)     (56)    (56)    577     577    577
 Amortization of prior service 
   cost                              170      145     142      18       -      -
 Recognized actuarial (gain) loss   (978)   4,160     631      44       -      8
                                  ------   ------  ------  ------  ------ ------
 Net periodic benefit cost        $  179   $  653  $  787  $1,995  $1,843 $1,837
                                  ======   ======  ======  ======  ====== ======

Pension:
The projected benefit obligation, accumulated benefit obligation, and fair value
of plan assets for the pension plans with  accumulated  benefit  obligations  in
excess of plan  assets were $14.1  million,  $13.4  million  and $11.0  million,
respectively, as of December 31, 1998 and $13.4 million, $12.6 million and $10.2
million,  respectively, at December 31, 1997. Plan assets consist principally of
listed stocks and bonds and mutual funds.

The  Company  also  maintains  tax  deferred  profit-sharing  plans for  certain
eligible  employee groups.  Expenses related to the plans,  which are based upon
pretax income were $672,000 for 1998, $656,000 for 1997 and $612,000 for 1996.

The Company  acquired  Solite on April 30, 1998,  increasing the pension benefit
obligation  by  $13.8  million,  including  $1.3  million  in  early  retirement
benefits, and increasing the related plan assets by $16.0 million.

Other Postretirement Benefits:
The Company  accrues these  postretirement  medical and life insurance  benefits
over an employee's employment career. The Company funds these costs as incurred.
Benefit  payments totaled $1.0 million in 1998 and $1.1 million in both 1997 and
1996.

The assumed health care cost trend rate at December 31, 1998 and 1997 was 8% for
both years,  declining gradually to a rate of 5% in 2001. Increasing the assumed
trend rate for health  care costs by one  percentage  point would  increase  the
total APBO $1.7 million and increase the related  expense  $224,000.  Decreasing
the  assumed  trend rate for health  care costs by one  percentage  point  would
decrease the total APBO $2.4 million and decrease the related expense $223,000.

19
<PAGE>

11.  Leases:

The Company leases office space,  warehouse  space and equipment under operating
leases which have remaining  terms in excess of one year.  The leases  generally
include renewal options.  Total rental expense for the years 1998, 1997 and 1996
amounted to $4.8 million, $2.4 million and $2.2 million, respectively.

Future minimum rental  commitments under  noncancelable  leases with a remaining
term  in  excess  of one  year  as of  December  31,  1998  are as  follows  (in
thousands):

                       1999                   $  3,275
                       2000                      2,644
                       2001                      2,010
                       2002                      1,189
                       2003                        734
                       Thereafter                2,917

12.  Treasury Stock:

In December 1998, the Company's Board of Directors  approved a plan to expend up
to $10.0  million  for the  repurchase  of shares of the  Company's  outstanding
common stock over a 12-month  period.  During 1996,  1997 and 1998,  the Company
repurchased 1,078,000 shares of its common stock at a cost of $21.4 million.

13.  Contingencies:

The Company's  operations  and  properties are subject to extensive and changing
federal, state and local laws (including common law), regulations and ordinances
relating to noise and dust suppression, air and water quality, as well as to the
handling,  treatment,  storage and disposal of wastes ("Environmental Laws"). In
connection  with  the  Company's  quarry  sites  and  utilization  of  hazardous
waste-derived  fuel,  Environmental  Laws  require  certain  permits  and  other
authorizations  mandating  procedures  under  which the Company  shall  operate.
Environmental Laws also provide significant penalties for violators,  as well as
liabilities  and costs of  cleaning up  releases  of  hazardous  wastes into the
environment.  Violations of mandated procedures under operating permits, even if
immaterial or unintentional, may result in fines, shutdowns, remedial actions or
revocation of such  permits,  the loss of any one of which could have a material
adverse effect on the Company's results of operations.

In December 1997, the resource recovery operation at Keystone experienced a fire
at its waste fuel storage tank farm and, as a result,  suspended the utilization
of waste fuel until July 1998. There were no injuries and no known environmental
damage.  Under the terms of an agreement  with the  Pennsylvania  Department  of
Environmental  Protection,  Keystone will pay a fine of $488,000 in installments

20
<PAGE>

over a 10-year  period,  substantially  all of which was  accrued  in the fourth
quarter of 1997 and the remainder of which is included in accrued expenses as of
December 31, 1998.

The Company is involved in various administrative  matters or litigation.  While
the final resolution of any matter may have an impact on the Company's financial
results for a particular reporting period, management believes that the ultimate
disposition of these matters will not have a materially  adverse effect upon the
financial position of the Company.

14.  Earnings per Share:

Statement of  Financial  Accounting  Standards  No. 128,  "Earnings  Per Share,"
("SFAS 128"),  establishes  standards for computing and presenting  earnings per
share information.  As required,  the Company adopted the provisions of SFAS 128
in its year-end 1997  financial  statements.  Basic earnings per share of common
stock are  determined by dividing net income  applicable to common shares by the
weighted average number of common shares  outstanding  during each year. Diluted
earnings per share  reflect the  potential  dilution  that could occur  assuming
exercise of all issued and unexercised  stock options.  A reconciliation  of the
net income and numbers of shares used in  computing  basic and diluted  earnings
per share is as follows:

                                                      1998     1997     1996
                                                      ----     ----     ----
                                           (In thousands, except per share data)
Basic earnings per share:
    Net income                                     $16,819   $16,085   $15,421
    Weighted average common shares outstanding 
      for the year                                   9,277     9,459     9,833
                                                   -------   -------   -------

Basic earnings per share of common stock           $  1.81   $  1.70   $  1.57
                                                   =======   =======   =======

Diluted earnings per share:
    Net income                                     $16,819   $16,085   $15,421
    Weighted average common shares outstanding 
      for the year                                   9,277     9,459     9,833
    Increase in shares which would result from:
       Exercise of stock options *                     237        83         -
                                                   -------   -------   -------
    Weighted average common shares, assuming
       conversion of the above securities            9,514     9,542     9,833
                                                   -------   -------   -------

    Diluted earnings per share of common stock     $  1.77   $  1.69   $  1.57
                                                   =======   =======   =======

*Antidilutive in 1996.

15.  Segment and Related Information:

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 131,
"Disclosures  About Segments of an Enterprise and Related  Information,"  ("SFAS
131"), effective December 31, 1998.

21
<PAGE>

The Company operates in two business segments: Cement and Construction Products.
The  Company's  segments  are  strategic  business  units that  offer  different
products and  services.  They are managed  separately  based on the  fundamental
differences in their operations.

The Cement  segment  consists of Giant,  Keystone  and GRR.  The Cement  segment
manufactures  and sells a complete line of portland and masonry  cements used in
residential,   commercial  and  infrastructure  construction  applications.  Its
manufacturing  facilities are fully  integrated  from  limestone  mining through
cement production and serve the South-Atlantic and the  Middle-Atlantic  regions
of the United States. Revenues are derived from the sales of products, primarily
cement and, to a much lesser extent,  construction  aggregates,  as well as from
the provision of resource recovery services.  Resource recovery services revenue
is primarily  derived from third  parties that pay the Company to utilize  their
waste as fuel, which  additionally  reduces the cost of traditional fossil fuels
used  in  the  manufacture  of  cement.  Due  to the  nature  of  the  Company's
operations,  the utilization of waste fuels is inseparable  from the manufacture
of cement.

The  Construction  Products  segment  consists  of Solite and its  wholly  owned
subsidiaries  (see Note 3). The Construction  Products segment  manufactures and
sells construction  materials to the residential,  commercial and infrastructure
construction  markets in the  South-Atlantic  region of the United  States.  The
principal  product is  "Solite(R),"  a lightweight  aggregate  primarily used in
lightweight  concrete masonry blocks.  Other products and services include sand,
gravel,  lightweight  block and resource  recovery  services.  Resource recovery
services  provide  waste-derived  fuels for use in the production of lightweight
aggregate as well as recycling, blending and storage services. Due to the nature
of the Company's operations,  the utilization of waste fuels is inseparable from
the manufacture of lightweight aggregate.

The accounting  policies of the segments are the same as those  described in the
summary of significant  accounting  policies.  All intersegment sales prices are
market based. The Company evaluates  performance based on the operating earnings
of the respective  business units. All of the Company's  segments operate solely
in the United States.

Summarized financial information concerning the Company's reportable segments is
shown in the following  table.  The "Other"  column  includes  corporate-related
items and income and expense not allocated to reportable segments.

22
<PAGE>

                                           Construction
                                   Cement    Products        Other       Total
     Revenues - external:
          1998                   $118,518    $35,591       $           $154,109
          1997                    116,888          -                    116,888
          1996                    110,198          -                    110,198
     Revenues - intersegment:
          1998                      2,131          -                      2,131
          1997                          -          -                          -
          1996                          -          -                          -
     Operating income:
          1998                     22,541      3,950       (1,109)       25,382
          1997                     28,710          -       (2,301)       26,409
          1996                     25,576          -       (1,037)       24,539
     Depreciation, depletion and
     amortization:
          1998                     11,433      1,444           52        12,929
          1997                     10,622          -           52        10,674
          1996                      9,458          -            4         9,462
     Total assets:
          1998                    119,403     43,365       12,414       175,182
          1997                    120,501          -        8,099       128,600
     Capital expenditures:
          1998                     14,570      2,513            2        17,085
          1997                     15,355          -            7        15,362
          1996                      9,783          -           36         9,819


23
<PAGE>


                        Report of Independent Accountants


February 12, 1999

To the Board of Directors and Shareholders of GIANT CEMENT HOLDING, INC.

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements of income,  shareholders' equity and cash flows present
fairly,  in all  material  respects,  the  financial  position  of Giant  Cement
Holding,  Inc.  and its  subsidiaries  at December  31,  1998 and 1997,  and the
results of their  operations and their cash flows for each of the three years in
the period ended  December 31,  1998,  in  conformity  with  generally  accepted
accounting principles.  These financial statements are the responsibility of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements based on our audits. We conducted our audits in accordance
with  generally  accepted  auditing  standards  which  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,  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 the
opinion expressed above.




PricewaterhouseCoopers LLP

Charlotte, North Carolina


24
<PAGE>


Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations

General

On April 30, 1998, the Company  acquired  Solite  Corporation.  The  acquisition
included  three  lightweight  aggregate   manufacturing   facilities  and  their
associated  resource  recovery  operations,   five  lightweight  concrete  block
manufacturing  facilities and a  waste-derived  fuel  processing  facility.  The
Solite  operations  acquired  constitute  the  Company's  construction  products
segment.  Refer to Notes 3 and 15 for a discussion  of the  acquisition  and the
Company's reporting segments.

The Company's cement and construction  products  operations are directly related
to the  construction  industry.  The  regional  markets  in  which  the  Company
operates,  the Middle-Atlantic and South-Atlantic  regions, are highly cyclical,
experiencing peaks and valleys in demand  corresponding to regional and national
construction  cycles.  Additionally,  the demand  for  cement  and  construction
products is seasonal because construction  activity diminishes during the winter
months  of  December,   January  and  February.   The  seasonal  impact  can  be
particularly  acute in the Company's  Middle-Atlantic  market. In addition,  the
Company performs a substantial  portion of its routine annual major  maintenance
projects during the period of low plant utilization, typically the first quarter
of its fiscal year, which results in significant  additional expense during this
period.  The Company believes that the routine annual  maintenance  performed in
the first quarter results in lower maintenance costs throughout the remainder of
the year.  Accordingly,  the Company  has  historically  experienced  its lowest
levels of revenue and gross profit during the first quarter.

The Company derives  revenues from the sales of products,  primarily  cement and
construction  products,  as well as from  the  provision  of  resource  recovery
services.  Resource  recovery  services revenue is primarily  derived from third
parties that pay the Company to utilize their waste as fuel, which  additionally
reduces the cost of traditional  fossil fuels used in the  manufacture of cement
and lightweight aggregate. Due to the nature of the Company's operations and the
fact  that  the  burning  of   waste-derived   fuels  is  inseparable  from  the
manufacturing  processes,  it is impractical to disaggregate  the costs of sales
and  services  by  revenue  classification.   The  Company's  resource  recovery
operations are influenced by general and regional economic conditions;  federal,
state, and local environmental policies;  kiln operations;  and competition from
other waste disposal alternatives.

Cement is a commodity product sold primarily on the basis of price. The price of
cement  tends to rise in periods of high  demand and can fall if supply  exceeds
demand.  The economic  recovery that began in 1993 resulted in demand levels for
cement in the United States that exceed domestic  supply.  Import  facilities in
the United  States are largely  controlled  by companies  that also own domestic
manufacturing capacity; thus imports of cement to satisfy demand have not been a
disruptive  factor  in the  marketplace  in recent  years.  Cement  prices  have
generally  increased  in one or both of the  Company's  primary  market areas in
every year since 1993 and the Company has announced a $3 per ton price  increase
in its Middle-Atlantic  market effective April 1, 1999. However, there can be no
assurance  that this price  increase  will be realized,  or that  current  price
levels will be  maintained,  should cement demand decline in relation to supply,
either domestic or import.

25
<PAGE>


The Company's  cement  manufacturing,  hourly  employees are  represented by the
United  Paperworkers  International  Union  ("UPIU").  During 1998,  the Company
reached a new three-year  labor agreement with the hourly employees at Keystone,
granting  annual wage  increases  ranging  from 3% to 4% per annum,  among other
changes,  the total impact of which is not expected to have a material effect on
the Company's results of operations.

Results of Operations
1998 Versus 1997

Total operating revenues increased $37.2 million, or 31.8%, to $154.1 million in
1998,  compared  with $116.9  million in 1997.  Product  sales  increased  $27.8
million,  or 27.5%,  to $128.8 million in 1998,  compared with $101.0 million in
1997.  The increase  resulted  primarily  from the addition of $23.3  million in
lightweight  aggregate and block revenues from Solite,  higher  average  selling
prices  of  cement  and  increased  aggregate  sales.  Cement  shipping  volumes
increased 2.1% in 1998 compared with 1997 volumes. The Company's average selling
price per ton of cement  increased 3.0% in 1998, as a result of price  increases
implemented in April 1997 and 1998. The Company  realized a price increase of $3
per  ton in  April  1998  in its  Middle-Atlantic  market  and $2 per ton in its
South-Atlantic  market.  Resource recovery revenues  increased $9.4 million,  or
59.3%,  to $25.3  million  in 1998,  compared  with $15.9  million in 1997.  The
increase  resulted from the addition of Solite's  resource recovery revenues for
the eight-  month  period  subsequent  to its  acquisition,  offset by decreases
resulting  from the Company's  suspension of the waste fuels program at Keystone
for the first seven months of 1998 and downtime associated with the installation
of the new solid waste fuel shredder at Giant in the second quarter of 1998.

Gross  profit  increased  12.1% to $39.4  million in 1998,  compared  with $35.1
million in 1997,  primarily as a result of the addition of Solite's gross profit
for the eight months subsequent to its acquisition.  The Company's gross margins
decreased  to 25.6% in 1998  from  30.1% in  1997.  In 1998,  cost of sales  and
services  excluding the Solite operations  increased $9.7 million,  or 11.8%, to
$91.4  million,  compared  with $81.8  million in 1997.  The  increase in cement
manufacturing  costs  was  primarily  the  result of  higher  fuel  costs due to
decreased  liquid waste fuel  utilization at Keystone and decreased  solid waste
fuel  utilization  at Giant,  higher  maintenance  costs and increased  imported
clinker  purchases.  Clinker  and cement  manufactured  in 1998  decreased  1.0%
compared with 1997  production.  Both of the Company's cement plants operated at
effective capacity throughout 1998.

Selling,  general and  administrative  expenses  increased $6.5 million to $14.0
million,  and increased to 9.1% of operating revenues.  Excluding Solite,  these
expenses increased $277,000, or 3.7%.

Operating income decreased $1.0 million to $25.4 million in 1998,  compared with
$26.4  million  in 1997,  primarily  as the  result of the  increases  in cement
manufacturing  costs,  partially  offset by $4.0 million in operating  income of
Solite and the write-off in 1997 of $1.2 million in  acquisition  related costs.

26
<PAGE>

The 1998 results of operations were impacted by the aforementioned suspension of
the  utilization  of waste fuels at Keystone as a result of a fire at Keystone's
waste fuel storage tank farm in December 1997,  which resulted in  approximately
$3.5 million of lost revenues and additional fuel charges.

Interest expense increased $1.0 million as a result of higher average borrowings
outstanding. The Company assumed and subsequently refinanced approximately $19.9
million of Solite's debt in connection with the Solite acquisition. Other income
increased $3.1 million in 1998 as a result of a $1.4 million charge in 1997, and
the subsequent business interruption insurance recovery of $1.6 million in 1998,
each of which  related to the Keystone  tank farm  incident  (see  Environmental
Matters).  The recovery  partially  offset resource  recovery  revenues lost and
additional fuel expenses incurred between December 1997 and July 1998.

Federal and state income tax expenses resulted in an effective tax rate of 34.1%
in 1997 and 34.0% in 1998. The Company's  effective tax rate of 34.0% in 1998 is
not expected to change materially under current tax law.

Net income increased $734,000,  or 4.6%, to $16.8 million in 1998, compared with
$16.1 million in 1997.  Net income as a percentage of net sales  decreased  from
13.8% in 1997 to 10.9% in 1998.

Results of Operations
1997 Versus 1996

Total operating revenues  increased $6.7 million,  or 6.1%, to $116.9 million in
1997,  compared  with  $110.2  million in 1996.  Product  sales  increased  $4.8
million,  or 5.0%,  to $101.0  million in 1997,  compared  with $96.2 million in
1996. The increase  resulted  primarily from an increase in the average  selling
price of cement and increased aggregate sales. Cement shipping volumes increased
0.6% in 1997 compared with 1996 volumes. The Company's average selling price per
ton of cement increased 3.4% in 1997, as a result of price increases implemented
in April 1996 and 1997.  The Company  realized a price increase of $4 per ton in
April 1997 in its Middle-Atlantic  market.  Resource recovery revenues increased
$1.9 million, or 13.5%, to $15.9 million in 1997, compared with $14.0 million in
1996, as a result of higher  volumes and pricing of both liquid and solid fuels.
Liquid fuels utilized  increased 6.7%, while liquid fuels pricing improved 5.9%.
The  Company's  solid fuels volume  increased  17.6%,  while solid fuels pricing
improved 5.7%.

Improved  cement  pricing  and  resource  recovery  revenues  resulted in a $2.7
million,  or 8.5%,  increase in gross profit from $32.4 million in 1996 to $35.1
million in 1997. The Company's gross margin  percentage  increased from 29.4% in
1996 to 30.1% in 1997.  The total  cost of sales  and  services  increased  $4.0
million to $81.8  million,  compared  with $77.8  million in 1996.  The  largest
component of the increase in cost was increased depreciation expense from recent
capital  improvements.  Cement costs per ton increased 1.1% in 1997. Clinker and
cement manufactured increased 1.2% and 3.3%,  respectively,  compared with 1996,
as a result of capital and operating improvements made in 1996 and 1997. Both of
the Company's plants have operated at effective capacity throughout 1997.

27
<PAGE>


Selling, general and administrative expenses decreased $318,000 to $7.5 million,
and  decreased to 6.4% of operating  revenues.  The expense  decrease  primarily
related to lower administrative costs.

Acquisition-related  expenses of $1.2 million were charged to expense in 1997 as
a result of the  uncertainty  of the  Company's  ability  to  obtain  regulatory
clearance to consummate the Solite acquisition at that time.

Prior to acquisition-related  expenses,  operating income improved $3.1 million,
or 12.5%,  to $27.6  million  in 1997,  compared  with  $24.5  million  in 1996,
primarily  as the result of the  increase in  operating  revenues.  Prior to the
acquisition-related  expenses,  operating  income margins improved from 22.3% in
1996 to 23.6% in 1997.  The 1997  results of  operations  were  impacted  by the
Company's  suspension of the  utilization of waste fuels at Keystone for most of
the month of December  as a result of a fire at  Keystone's  waste fuel  storage
tank farm. Keystone's inability to utilize waste fuels resulted in lost revenues
and  additional  costs of  approximately  $450,000 in the quarter,  or $0.03 per
share after tax.

Interest  expense  decreased  $175,000 as a result of lower  average  borrowings
outstanding.  Other  expense in 1997  included  pretax  charges of $1.4  million
relating  to  Keystone's  tank farm  fire and its  resulting  suspension  of the
utilization of waste fuel. (See Environmental Matters).

Federal and state income tax expenses resulted in an effective tax rate of 34.9%
in 1996 and 34.1% in 1997.

Net income increased $700,000,  or 4.3%, to $16.1 million in 1997, compared with
$15.4 million in 1996. Net income as a percentage of sales  decreased from 14.0%
in 1996 to 13.8% in 1997.

Liquidity and Capital Resources

The Company's liquidity requirements arise primarily from the funding of capital
expenditures,  debt service  obligations and working capital needs.  The Company
has  historically  met  these  needs  through  internal  generation  of cash and
borrowings  on  revolving  credit  facilities.  The  Company's  borrowings  have
historically  increased  during  the  first  half  of the  year  because  of the
seasonality  of its business and the annual plant  maintenance  performed in the
first quarter.

Cash and cash  equivalents  totaled $6.6 million at December 31, 1998,  compared
with $12.7  million at December  31, 1997.  At December  31, 1998 and 1997,  the
Company  had  net  working   capital  of  $36.4   million  and  $29.8   million,
respectively,  with a current  ratio of 2.4 in both years.  Accounts  receivable
increased  $8.9 million to $23.8  million at December 31,  1998,  compared  with
$14.9  million  at  December  31,  1997,  primarily  as a result  of the  Solite
acquisition ($7.4 million).  Inventories increased $5.5 million to $24.7 million
at  December  31,  1998,  primarily  as a  result  of  the  addition  of  Solite
inventories ($5.2 million).  Total current liabilities increased $5.7 million to
$26.5  million  at  December  31,  1998,  primarily  as a result  of the  Solite
acquisition ($11.7 million) partially offset by decreased trade accounts payable
and accrued expenses at the Company's other operations.

28

<PAGE>


Cash provided by operations  decreased $10.3 million to $15.2 million,  compared
with  $25.6  million in 1997.  The  decrease  in cash  provided  by  operations,
compared with 1997, was primarily the result of reduced trade  accounts  payable
and accrued expenses and increased accounts receivable and other current assets.
Net cash used by investing  activities  decreased  from $15.4 million in 1997 to
$14.9  million in 1998 as a result of the cash acquired with Solite and proceeds
from the sale of equipment at Solite.  Capital spending of $14 to $15 million is
planned for the year 1999. Net cash used by financing  activities decreased from
$8.0  million  in 1997 to $6.4  million  in 1998 as a result  of  increased  net
borrowings,  partially  offset by increased  purchases of the  Company's  common
stock.  During 1998,  the Company  repurchased  396,000 shares at a cost of $9.5
million.  The Company plans to repurchase an additional $9 to $10 million of its
common stock in 1999.

On April 30, 1998, the Company acquired Solite.  The acquisition,  accounted for
as a  purchase,  was  financed  through the  exchange  of 325,000  shares of the
Company's common stock,  75,000 shares of which are held in escrow (see Note 3).
The  Company  increased  the limit on its $32  million  Credit  Facility  to $46
million in order to refinance $19.9 million of Solite's  existing  indebtedness.
The  Company  believes  that  its  credit  facility,  together  with  internally
generated funds, will be sufficient to meet its needs for the next 18 months.

Environmental Matters

The Company's  operations  and  properties are subject to extensive and changing
federal, state and local laws (including common law), regulations and ordinances
relating to noise and dust suppression, air and water quality, as well as to the
handling,  treatment,  storage and disposal of wastes ("Environmental Laws"). In
connection  with  the  Company's  quarry  sites  and  utilization  of  hazardous
waste-derived  fuel,  Environmental  Laws  require  certain  permits  and  other
authorizations  mandating  procedures  under  which the Company  shall  operate.
Environmental Laws also provide significant penalties for violators,  as well as
liabilities  and costs of  cleaning up  releases  of  hazardous  wastes into the
environment.  Violations of the permit conditions or of the regulations, even if
immaterial or unintentional, may result in fines, shutdowns, remedial actions or
revocation  of the  permits,  the loss of any one of which could have a material
adverse effect on the Company's financial condition or results of operations. In
1998,  resource recovery  services  revenues totaled $25.3 million,  or 16.4% of
consolidated revenues.

While the Company  endeavors to maintain full compliance with the  environmental
laws and  regulations  at all times,  violations  have  occurred in the past and
there is no  assurance  violations  will not  occur  in the  future,  due to the
inherent  complexity and differing  interpretations of the laws and regulations.
The Company  maintains  environmental  liability  insurance  with limits of $5.0
million per occurrence and $10.0 million annual aggregate.  These policies cover
certain off-site  environmental  damage.  The policies do not cover  liabilities
arising under CERCLA, fines or penalties, and thus the Company has no claims for
recovery of these items.

29
<PAGE>

In December 1997, the resource recovery operation at Keystone experienced a fire
at its waste  fuel  storage  tank  farm.  There  were no  injuries  and no known
environmental  damage.  Keystone  negotiated an agreement with the  Pennsylvania
Department of Environmental  Protection ("DEP") to allow it to resume waste fuel
burning, effective in July 1998. Under the terms of the agreement, Keystone will
pay a fine of $488,000 in installments over a ten-year period. In June 1998, the
Company  settled  its  business  interruption  insurance  claim  related  to the
Keystone  incident  for $1.6  million,  which is  included  in other  income  at
December 31, 1998.

Year 2000

The Company has  completed the year 2000  evaluation  of all of its  significant
computer  systems and  applications.  Outside  specialists have been retained to
assist in the process to the extent considered necessary. Information technology
(IT) and non-IT systems have been evaluated and the Company has  prioritized the
non-compliant systems and expects to substantially complete modifications to all
significant  systems by the end of the third quarter of 1999.  Also, the Company
is developing a contingency  plan that is scheduled to be completed by the third
quarter of 1999.

To date,  expenses  associated with year 2000 compliance have been minimal.  The
Company's  primary  financial  management  systems  are  essentially  year  2000
compliant.   Since  the  Company's  manufacturing   operations  are  not  highly
automated,  the Company  believes that the total cost to correct  remaining year
2000  non-compliance  issues  will not have a  material  adverse  effect  on the
results of operations or cash flows.  Replacements of non-compliant systems with
new systems,  including projects  previously  planned to increase  productivity,
such as  automated  cement kiln control  systems,  but that also solve year 2000
problems,  will be  capitalized  and amortized over the life of the new systems.
The cost of  reprogramming  and correcting  existing systems will be expensed as
incurred.  The  Company  expects  that total  expenditures  for new  systems and
reprogramming existing systems will be approximately $1 million.

The Company  believes that a material  adverse effect of the year 2000 issues is
highly  unlikely.  Nevertheless,  it is not possible to anticipate  all possible
future  outcomes  or  accurately   determine  the  effects  upon  the  Company's
operations,  business  or  financial  condition,  because the year 2000 issue is
far-reaching and  consequences are dependent on many factors,  some of which are
not  completely  within the  Company's  control.  The Company is dependent  upon
numerous  third  parties,  including  customers,  power  generators,   financial
institutions  and other  significant  suppliers.  The Company has surveyed these
significant  third  parties and is not aware of any that are not  becoming  year
2000 compliant. The Company will continue to survey these third parties and will
take corrective action if needed.

The total  cost  involved  and the date on which the  Company  believes  it will
complete the year 2000  modifications  are based on management's best estimates,
which were derived using numerous  assumptions  of future events,  including the
continued  availability of certain resources and other factors.  However,  there
can be no guarantee  that these  estimates  will be achieved and actual  results
could differ materially from those anticipated.


30
<PAGE>


Disclosure Regarding Forward-Looking Statements

This report contains certain  forward-looking  statements,  containing the words
"believes,"  "anticipates,"  "expects" and words of similar  import,  based upon
current  expectations  that involve a number of known and unknown business risks
and  uncertainties.  The factors that could cause  results to differ  materially
include the following: national and regional economic conditions, changes in the
levels of  construction  spending,  changes in supply or pricing of waste fuels,
year 2000 computer system  problems and other risks as further  described in the
Company's  Annual  Report on Form  10-K  filed  with the SEC for the year  ended
December 31, 1998.

31
<PAGE>


                           GIANT CEMENT HOLDING, INC.
                              CORPORATE INFORMATION

Quarterly Results of Operations
(Unaudited; amounts in thousands, except per share data)


                                                    Quarter Ended
                                       
1998                              March 31    June 30  September 30  December 31
----                              --------    -------  ------------  -----------
Operating revenues               $23,475     $40,733    $47,445     $42,456
Gross profit                       3,613       9,895     14,410      11,480
Operating income                   1,489       6,318     10,345       7,230
Net income                           936       4,872      6,660       4,351
Earnings per common share:
   Basic                         $  0.10     $  0.52    $  0.72     $  0.47
   Diluted                       $  0.10     $  0.51    $  0.70     $  0.46

1997
Operating revenues               $24,358     $32,323    $31,672     $28,535
Gross profit                       4,063      10,734     10,957       9,378
Operating income                   2,040       8,839      9,112       6,418
Net income                         1,238       5,694      5,888       3,265 *
Earnings per common share:
   Basic                         $  0.13     $  0.60    $  0.63     $  0.35
   Diluted                       $  0.13     $  0.60    $  0.62     $  0.34

  * Includes special charges of $1.7 million or $0.18 per share.

Market and Dividend Information

 The Company's common stock is traded on The Nasdaq National Market(R) under the
 symbol: GCHI. On March 5, 1999, the approximate number of registered holders of
 the  Company's  common stock was 184 and the  approximate  number of beneficial
 shareholders  was 2,500.  The high and low price of the Company's  common stock
 during the calendar  quarters of 1997 and 1998 are set forth below. The closing
 price on December 31, 1998 was $24.75.  The Company  expects that earnings will
 be retained in the business,  and no cash  dividends will be paid to its common
 shareholders for the foreseeable future.

Calendar Quarter       1998                                 1997
                       ----                                 ----
                 High          Low                  High              Low
First           $30.00       $18.50                $17.13           $15.25

Second          $29.50       $21.25                $18.75           $15.50

Third           $31.75       $17.87                $24.63           $18.13

Fourth          $25.00       $17.75                $25.75           $22.00

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Corporate Information               Form 10-K and Company Information
Corporate Offices                   A copy of Giant Cement Holding, Inc.'s
320-D Midland Parkway               Annual Report on Form 10-K for the year
Summerville, South Carolina 29485   ended December 31, 1998, filed with the
(843) 851-9898                      Securities and Exchange Commission, may be
                                    obtained by writing:  Terry L. Kinder, Vice
                                    President and Chief Financial Officer, at
                                    the corporate address, or by requesting from
                                    our web site:  GCHI.com

Independent Accountants             Annual Meeting
PricewaterhouseCoopers LLP          The Annual Meeting of Shareholders for Giant
Charlotte, North Carolina           Cement Holding, Inc. will be held May 11,
                                    1999, in New York, New York.

Transfer Agent
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016


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                           GIANT CEMENT HOLDING, INC.
                             DIRECTORS AND OFFICERS

                                    DIRECTORS

                                  Gary Pechota
                             Chairman of the Board,
              President and Chief Executive Officer of the Company

                                 Terry L. Kinder
                    Vice President, Chief Financial Officer,
                     Secretary and Treasurer of the Company

                                 Dean M. Boylan
                          Vice Chairman and Director of
                       Boston Sand & Gravel Company, Inc.

                                 Edward Brodsky
                           Partner in the law firm of
                               Proskauer Rose LLP

                                 Robert L. Jones
                Chairman of Davidson - Jones - Beers Corporation

                                  John Roberts
            Founder and Past President and Chief Executive Officer of
                               Solite Corporation



                                    OFFICERS

                                  Gary Pechota
                      Chairman of the Board, President and
                             Chief Executive Officer

                                 Terry L. Kinder
                    Vice President, Chief Financial Officer,
                             Secretary and Treasurer

                               Richard A. Familia
                      Vice President, Environmental Affairs


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