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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ______________________

                                    FORM 10-K
                            FOR ANNUAL AND TRANSITION
                    REPORTS PURSUANT TO SECTIONS 13 OR 15(d)
                          OF THE SECURITIES ACT OF 1934

(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the fiscal year ended December 31, 2001

                                       OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from _______ to _________

                        Commission file number 333-32518

                      BETTER MINERALS & AGGREGATES COMPANY
             (Exact name of registrant as specified in its charter)

              Delaware                                   55-0749125
   (State or other jurisdiction of                   (I.R.S. employer
   incorporation or organization)                 identification number)

                          Route 522 North, P.O. Box 187
                      Berkeley Springs, West Virginia 25411
          (Address of principal executive offices, including zip code)

     Registrant's telephone number, including area code: (304) 258-2500

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

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

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

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

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:

     Class                                     Outstanding as of March 1, 2002
     -----                                     -------------------------------
     Common Stock                              100 shares

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                                TABLE OF CONTENTS

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Forward-Looking Information ........................................................................     i

Industry Data ......................................................................................    ii

Measurements .......................................................................................    ii

PART I .............................................................................................     1

         Item 1.      Business. ....................................................................     1

         Item 2.      Properties. ..................................................................     8

         Item 3.      Legal Proceedings ............................................................     9

         Item 4.      Submission of Matters to a Vote of Security Holders ..........................    10

PART II. ...........................................................................................    10

         Item 5.      Market for Registrant's Common Equity and Related Stockholder Matters ........    10

         Item 6.      Selected Financial Data ......................................................    10

         Item 7.      Management's Discussion and Analysis of Financial Condition and
                        Results of Operations ......................................................    12

         Item 7A.     Quantitative and Qualitative Disclosures About Market Risk ...................    23

         Item 8.      Financial Statements and Supplementary Data ..................................    25

         Item 9.      Changes In and Disagreements With Accountants on Accounting and
                        Financial Disclosure .......................................................    49

PART III ...........................................................................................    50

         Item 10.     Directors and Executive Officers of the Registrant ...........................    50

         Item 11.     Executive Compensation .......................................................    52

         Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related
                      Stockholder Matters ..........................................................    56

         Item 13.     Certain Relationships and Related Transactions ...............................    60

PART IV.............................................................................................    61

         Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K .............    61

SIGNATURES .........................................................................................    63

INDEX TO EXHIBITS ..................................................................................   E-1
</TABLE>

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                           Forward-Looking Information

         This Annual Report on Form 10-K contains statements that constitute
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934. We have based these forward-looking statements on our
current expectations and projections about future events. Although we believe
that our plans, intentions and expectations reflected in or suggested by those
forward-looking statements are reasonable, we can give no assurance that our
plans, intentions or expectations will be achieved. We caution investors that
all forward-looking statements involve risks and uncertainties, including those
arising out of economic, climatic, political, regulatory, competitive and other
factors. The forward-looking statements in this document are intended to be
subject to the safe harbor protection provided by Section 21E. Important factors
that could cause actual results to differ materially from those expressed or
implied by the forward-looking statements we make in this Annual Report on Form
10-K are set forth in this Annual Report on Form 10-K. We believe that the
following factors, among others, could affect our future performance and cause
actual results to differ materially from those expressed or implied by
forward-looking statements made in this Annual Report on Form 10-K:

         -   general and regional economic conditions, including the economy in
             the states in which we have production facilities and in which we
             sell our products;

         -   demand for residential and commercial construction;

         -   demand for automobiles and other vehicles;

         -   interest rate changes and changes in financial markets generally;

         -   levels of government spending on road and other infrastructure
             construction;

         -   the competitive nature of the industrial minerals and aggregates
             industries;

         -   operating risks typical of the industrial minerals and aggregates
             industries;

         -   difficulties in, and unanticipated expense of, assimilating
             newly-acquired businesses;

         -   fluctuations in prices for, and availability of, transportation,
             power, petroleum-based products and other energy products;

         -   unfavorable weather conditions;

         -   regulatory compliance, including compliance with environmental and
             silica exposure regulations, by us and our customers;

         -   litigation affecting our customers;

         -   product liability litigation by our customers' employees affecting
             us;

         -   changes in the demand for our products due to the availability of
             substitutes for products of our customers; and

         -   labor unrest.

Except for our obligations under the federal securities laws, we undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. In light of these
risks, uncertainties and assumptions, our future performance may differ
materially from that expressed or implied by the forward-looking statements
discussed in this Annual Report on Form 10-K.

                                       i

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                                  Industry Data

         Information contained in this Annual Report on Form 10-K concerning the
industrial minerals and aggregates industries, our general expectations
concerning these industries and our market position and market share within
these industries and the end use markets we serve are based on estimates
prepared by us using data from various sources (primarily the U. S. Geological
Survey, including its web site at www.usgs.gov, the Committee on Environment and
Public Works of the United States Senate and data from our internal research)
and on assumptions made by us, based on that data and our knowledge of these
industries, which we believe to be reasonable. We believe data regarding the
industrial minerals and aggregates industries and our market position and market
share within those industries and the end use markets we serve are inherently
imprecise, but are generally indicative of their size and our market position
and market share within those industries and end use markets. While we are not
aware of any misstatements regarding any industry data presented in this Annual
Report on Form 10-K, our estimates, particularly as they relate to our general
expectations concerning the industrial minerals and aggregates industries,
involve risks and uncertainties and are subject to change based on various
factors, including those discussed under the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations-- Significant
Factors Affecting Our Business" and elsewhere in this Annual Report on Form
10-K. Information contained in this Annual Report on Form 10-K relating to the
Transportation Equity Act for the 21st Century comes primarily from the United
States Department of Transportation's web site located at www.fhwa.dot.gov. The
information contained in, or linked to, the web sites referenced in this
paragraph does not constitute part of this Annual Report on Form 10-K.

                                  Measurements

         When used in this Annual Report on Form 10-K:

         -   data in tons or tonnage is measured in "short" tons (2,000 pounds);

         -   mesh refers to size measured in sieve openings per square inch and
             thus as mesh size increases, particle size decreases; and

         -   microns refer to size (one micron is equal to 0.00004 of an inch).

                                       ii

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                                     PART I

Item 1.  Business

Overview of Better Minerals & Aggregates Company

         We mine, process and market industrial minerals, principally industrial
silica, in the eastern and midwestern United States. We also mine, process and
market aggregates and produce and market hot mixed asphalt in certain parts of
Pennsylvania and New Jersey.

         We are the second leading producer of industrial silica in the United
States, accounting for approximately 24% of industry volume in 2001, and believe
that we have leading positions in most of our key end use markets for our silica
products, typically occupying the number one or two position by sales. These end
use markets include container glass, fiberglass, specialty glass, flat glass,
fillers and extenders, chemicals and ceramics. We also supply our silica
products to the foundry, building materials and other end use markets.

         Our customers use our aggregates, which consist of high quality crushed
stone, construction sand and gravel, for road construction and maintenance,
other infrastructure projects and residential and commercial construction and to
produce hot mixed asphalt and concrete products. We also use our aggregates to
produce hot mixed asphalt.

         We operate a network of 27 production facilities in 14 states. Many of
our production facilities are located near major modes of transportation and our
significant customers, which reduces transportation costs and enhances customer
service. Our principal industrial minerals and aggregates properties each have
deposits that we believe will support production in excess of 15 years. Our
industrial minerals business (substantially all the sales of which consists of
silica products) and our aggregates business accounted for 61% and 39% of our
sales, respectively, for the year ended December 31, 2001.

Products

         We operate in two business segments: industrial minerals products and
aggregates products.

         Industrial Minerals. Our industrial minerals products are processed to
meet a broad range of chemical purity, particle shape and sizing specifications.
Our key industrial minerals products are known as unground silica, ground
silica, fine ground silica, kaolin and aplite. Our unground silica products
consist of silica of various size grades ranging from 120 to 20 mesh. For the
year ended December 31, 2001, we sold 5.7 million tons of unground silica. Our
ground silica products consist of unground silica that is further processed into
sizes of 40 to 125 microns. For the year ended December 31, 2001, we sold
500,000 tons of ground silica. Our fine ground silica products consist of ground
silica that we have further processed with highly engineered equipment into size
grades of 5 to 40 microns. For the year ended December 31, 2001, we sold 50,000
tons of fine ground silica. In addition to our silica products we also produce a
limited amount of kaolin and aplite. Kaolin is a mineral co-product in our
production of silica in Kosse, Texas that we sell primarily as a filler and
extender to the paints and coatings industry. For the year ended December 31,
2001, we sold 48,000 tons of kaolin. Aplite is an alumina source produced at our
Montpelier, Virginia facility that we sell primarily to the glass industry. For
the year ended December 31, 2001, we sold 229,000 tons of aplite.

         Aggregates. Our aggregates products include high quality crushed stone,
construction sand and gravel, which we provide in various sizes, and hot mixed
asphalt. Hot mixed asphalt is a blended mixture of approximately 95% crushed
stone, sand or gravel bound together by asphalt oil. A major component of the
road system in the United States, hot mixed asphalt covers approximately 95% of
the paved roads in the United States, and the hot mixed asphalt industry
generates over $10 billion in sales annually in the United States. Market growth
and demand is primarily driven by road construction and population growth. We
sold 10.2 million tons of our aggregates products that included 2.0 million tons
of our hot mixed asphalt for the year ended December 31, 2001.

         We produce a high quality, anti-skid asphalt for use in Superpave.
Superpave is a relatively new approach to asphalt mix design, which provides
designers with standards for customizing roadway mixes for specific weather and
traffic conditions. This new set of standards generally requires high quality
aggregates that conform to a variety of specific characteristics, including
hardness, absorption, size and shape. Many state governments have elected to
require their roadways to conform to the Superpave standards. For example, the
Pennsylvania Department of Transportation requires all roadway contracts to
include the use of the Superpave standards. We have the ability both to supply
our customers with the quality of aggregates required for Superpave as well as
to manufacture Superpave-compliant asphalt from our own hot mixed asphalt
plants.

                                       1

<PAGE>

End Use Markets and Customers

         Our industrial minerals and aggregates businesses generate sales from a
diversified base of customers and end use markets. During the year ended
December 31, 2001, we exceeded $10 million in sales in each of 8 distinct end
use markets, and no single customer accounted for more than 5% of our sales.

         Industrial Minerals. Our industrial mineral products are sold into a
variety of end use markets, as described below.

         Container Glass. We supply unground silica and aplite to the container
glass end use market for use in the production of food, beverage and liquor
bottles.

         Fiberglass. We supply unground and ground silica and aplite to the
textile and insulation fiberglass end use markets. Textile fiberglass is used in
the production of roofing products and composites for automotive parts, sports
equipment and boats. Insulation fiberglass is used to maximize energy efficiency
in buildings by insulating heating and cooling ducts, attics, basements and
exterior walls.

         Specialty Glass. We supply unground and ground silica and aplite to the
specialty glass end use market for use in the production of television tubes,
lights and tableware. Because of the higher quality standards in this market,
certain of our industrial minerals for specialty glass are shipped regionally,
nationally and also are exported.

         Flat Glass. We supply unground silica to the flat glass end use market
for use in the production of automotive glass and windows. Windows are primarily
used in commercial and residential construction and remodeling.

         We estimate that in 2001 our shipments of industrial silica to the
container glass, fiberglass, specialty glass and flat glass end use markets
accounted for approximately 29% of the total volume of industrial silica shipped
to the glass end use markets in the United States.

         Foundry. We supply unground and ground silica to the foundry end use
market for use in the production of automotive, heavy equipment and machine tool
castings. We estimate that in 2001 we accounted for approximately 14% of the
silica volume shipped to the foundry end use market in the United States.

         Fillers and Extenders. We supply unground, ground and fine ground
silica and kaolin to the paints and coatings end use market as fillers and
extenders in the production of architectural, industrial and traffic paints, and
to the rubber and plastic end use market for use in the production of epoxy
molded countertops and silicone rubber. We estimate that in 2001 we accounted
for approximately 30% of the silica volume shipped to the fillers and extenders
end use market in the United States. We are able to ship certain of these
products, which are primarily marketed on a local basis, to customers nationally
as well as regionally. In addition, we are also able to compete internationally
with some of these products.

         Building Materials. We supply unground, ground and fine ground silica
and kaolin to the building materials end use market for use in the production of
bricks, stucco, concrete and asphalt shingles. We estimate that in 2001 we
accounted for approximately 25% of the silica volume shipped to the building
materials end use market in the United States.

         Chemicals. We supply unground and ground silica to the chemicals end
use market where it is used in the manufacture of sodium silicate, which is used
in products such as detergents, paper textile, finishing and dental products. We
estimate that in 2001 we accounted for approximately 70% of the silica volume
shipped to the chemicals end use market in the United States.

         Ceramics. We supply unground, ground and fine ground silica and kaolin
to the ceramics end use market for use in the production of ceramic whiteware,
floor tiles and glaze formulations. We estimate that in 2001 we accounted for
approximately 29% of the silica volume shipped to the ceramics end use market in
the United States.

         Other. We also supply our silica, kaolin and aplite to a variety of
additional markets. For example, our silica is used as fracturing sand in the
oil and gas end use market and in athletic fields, race tracks, sand boxes,
playgrounds and golf courses.

         Aggregates. We supply our aggregates products primarily to the paving
and construction end use market in southern New Jersey and southeastern and
western Pennsylvania for use in pavements. We also supply our aggregates for use
in outside recreational facilities, sport stadiums and residential and
commercial construction. We use the remainder of our aggregates to produce hot
mixed asphalt.

                                       2

<PAGE>

         Our aggregates business is highly seasonal, due primarily to the effect
of weather conditions on construction activity in the markets that we serve.
Poor weather during the peak season of our aggregates business from April
through November could result in lower sales of aggregates by reducing or
delaying road construction and maintenance, other infrastructure projects and
residential and commercial construction. In the past, significant changes in
weather conditions during this period have caused variations in demand for
aggregates. In addition, because we are not as geographically diverse as some of
our aggregates competitors, we may be more vulnerable than these competitors to
poor weather conditions in the geographic areas in which we operate.

         In 1998, Congress established the Transportation Equity Act for the
21st Century ("TEA-21"). TEA-21 establishes a $218 billion transportation
program that provides for increased federal funding for highways and related
infrastructure improvements through 2003. TEA-21 authorizes average annual
federal spending on highways and related infrastructure improvements of
approximately $26 billion. In Pennsylvania and New Jersey, our primary
aggregates markets, average annual federal spending on highways and related
infrastructure improvements under TEA-21 is projected to be approximately 47%
and 30% higher, respectively, than under the predecessor program.

         Many of our aggregates customers depend substantially on government
funding of highway construction and maintenance and other infrastructure
projects. Although TEA-21 provides for increased federal funding for highways
and related infrastructure improvements through 2003, there can be no assurance
that any successor program adopted by Congress, if one is adopted at all, will
provide for equivalent or increased government funding. Furthermore, although
TEA-21 provides for federal funding through 2003, state and municipal
governmental entities need to provide for matching funds in order to obtain
federal funding under TEA-21, and state and municipal governmental entities have
separate approval processes relating to the matching of any federal funding for
highways that have not been completed. Accordingly, a decrease in federal
funding of highways and related infrastructure improvements after the expiration
of TEA-21, or a failure of states or municipalities to match the federal funding
to be provided by TEA-21, could adversely affect our revenue and profits in our
aggregates business. In addition, unlike some of our competitors, we currently
sell our aggregates products almost entirely in only two states, Pennsylvania
and New Jersey. As a result, we are more vulnerable than our more geographically
diverse competitors to decreases in state government highway spending in those
states.

Sales and Marketing

         We market our industrial minerals products primarily on a local basis.
Our local sales and marketing efforts are each managed by a regional sales
person, and are directed to meet our local customers' specific needs. Our
technical and customer service personnel support our local sales and marketing
personnel. Certain of our smaller local customers are primarily serviced by
customer service representatives located at our facilities. We also sell to
distributors for resale to customers who desire to purchase a combination of our
industrial minerals and other products that the distributor supplies.

         In the case of our customers that have facilities in multiple states,
we also direct our sales and marketing efforts at the corporate headquarters
level. While competition for these customers generally remains at the local
level, the terms of certain of our agreements are negotiated with the customer
at the corporate level. Our national account managers also coordinate multi-
disciplinary teams that work with these customers and their technical and
engineering departments to jointly develop specifications for industrial
minerals to meet their local product and application needs. In addition, we
provide technical and customer service to these customers' individual facility
locations at the local level.

         We market our aggregates products, including our hot mixed asphalt,
directly through our local sales force, which calls on our customers at their
facilities.

Competition

         We operate in the highly competitive industrial silica and aggregates
industries. Transportation costs are a significant portion of the total cost of
industrial minerals and aggregates to customers, typically representing up to
50% of that cost. As a result, the industrial minerals and aggregates markets
are typically local, and competition from beyond the local area is limited.
Although we experience competition in all of our end use markets, we believe
that we are a leading producer in the key end use markets and geographic areas
that we serve.

                                       3

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         The industrial silica industry is a competitive market that is
characterized by a small number of large, national producers and a larger number
of small, regional producers. We are the second leading producer of industrial
silica in the United States, accounting for approximately 24% of industry volume
in 2001. We compete with, among others, Unimin Corporation, Fairmount Minerals,
Inc., Oglebay Norton Industrial Sands, Inc. and Badger Mining Corporation.
Competition in the industrial minerals industry is based on price, consistency
and quality of product, site location, distribution capability, customer
service, reliability of supply, breadth of product offering and technical
support. In addition, there is significant underutilized capacity in the
industrial minerals industry that could adversely affect the pricing of our
industrial minerals products.

         In recent years, the aggregates industry has seen increasing
consolidation, although competition remains primarily local. Competition in the
aggregates industry is based primarily on price, quality of product, site
location, distribution capability and customer service. Due to the high cost of
transportation relative to the value of the product, competition within the
aggregates industry favors producers with aggregates production facilities in
close proximity to transportation modes and customers. Accordingly, in
Pennsylvania and New Jersey, we compete primarily with local or regional
operations. In addition, in western Pennsylvania, slag, a residue from steel
processing, also competes with our aggregates products.

         Many of our competitors are large companies that have greater financial
resources than we do, may develop technology superior to ours and have
production facilities that are located closer to key customers. We cannot
guarantee that we will be able to compete successfully against our competitors
in the future or that competition will not have a material adverse effect on us.

Production and Distribution

         Our production process for our industrial minerals generally consists
of mining mineral ore followed by a number of processing steps. All of our
industrial minerals mining operations involve surface mining. As is customary in
our industry, some of our mining operations, particularly drilling and blasting,
are outsourced to third parties. After the mineral ore is mined we crush it into
various sizes, depending on the specific customer application. We then remove
impurities from the materials in a washing process and remove oversized
particles by screening. Moisture is removed through a drying process and the
product is loaded into trucks or rail cars for shipment or is bagged before
shipping.

         We ship our industrial mineral products direct to our customers by
either truck or rail. Bagged product is generally distributed by truck. We
sometimes utilize rail-truck transfer stations to deliver our products if we can
thereby achieve lower delivery costs to a given customer or region. Almost all
our truck shipments of industrial minerals are carried out by third parties. Our
rail shipments are generally made by railcar equipment owned by the railroad,
although for some customers and regions we lease our own railcars. Given the
value to weight ratio of most of our industrial mineral products, the
cost-effective distribution range is approximately 200 miles. For some of our
high margin fine ground silica and other specialty products such as kaolin, we
can effectively distribute our products nationally and, in some cases,
internationally.

         Our production process for our aggregates consists of mining mineral
ore and then crushing it into various sizes based on customer specifications.
All of our aggregates mining operations involve surface mining, except for two
that involve underground mining. Generally, surface mining is subject to less
operational risk than underground mining. We either ship our aggregates products
directly to our customers by truck, typically within 75 miles of the plant, or
store it at our facility to meet future customer demand. In certain instances we
deliver large orders by rail. Our hot mixed asphalt is produced by mixing our
aggregates with asphalt oil, blending to customer specifications and then
delivering by truck typically within 30 miles of the plant.

         Our Commercial Aggregates Transportation and Sales, LLC ("CATS")
subsidiary runs a cooperative fleet of dump trucks owned by independent
contractors. CATS hires these trucks for hauling aggregates and other bulk
materials. In return, the independent trucking contractors benefit from a steady
source of work and bulk discounts on fuel, tires and other services. CATS
enables us to secure reliable access to a fleet of approximately 200 dump trucks
on a cost-effective basis.

                                       4

<PAGE>

Technical Support

         We operate an industrial minerals laboratory to monitor the quality of
our products, plants and services. The laboratory has four principal functions.
The technical service function provides support to both current and prospective
customers and performs controlled tests for a variety of applications. The lab
also assists foundries in their quality control programs through periodic
testing of their sand and equipment, a service that has enabled us to increase
our business by acquiring several large foundries as customers. The application
function evaluates the chemical, physical and performance characteristics of our
products and those of our competitors. These evaluations assist us in developing
new products and applications and enable us to provide our customers with
technical support and recommendations. The analytical function both provides
support for plants lacking the ability to provide certain technical information
to customers, and analyzes drill core samples to provide data for short- and
long-term mine planning. The mineral processing function is designed to simulate
all plant processes, primarily preparing and analyzing drill core samples for
mine planning purposes and providing expertise in plant problem troubleshooting.
We are ISO 9002 registered at nine plants.

Government Regulation

         Environmental Matters. We are subject to a variety of governmental
regulatory requirements relating to the environment, including those relating to
our handling of hazardous materials and air and wastewater emissions. Some
environmental laws impose substantial penalties for noncompliance, and others,
such as the federal Comprehensive Environmental Response, Compensation, and
Liability Act, impose strict, retroactive and joint and several liability upon
persons responsible for releases of hazardous substances.

         We believe that we have all material environmental permits, that our
operations are in substantial compliance with applicable laws and that any
noncompliance is not likely to have a material adverse effect on us. Through
periodic self-audits, we continually evaluate whether we must take additional
steps to ensure compliance with existing environmental laws. However, if we fail
to comply with present and future environmental laws and regulations, we could
be subject to liabilities or our operations could be interrupted. In addition,
future environmental laws and regulations could restrict our ability to expand
our facilities or extract our mineral deposits or could require us to acquire
costly equipment or to incur other significant expenses in connection with our
business. Although we believe we have made sufficient capital expenditures to
achieve substantial compliance with existing environmental laws and regulations,
future events, including changes in any environmental requirements and the costs
associated with complying with such requirements, could have a material adverse
effect on us.

         We have taken a number of steps to minimize potential environmental
liabilities and address environmental activities in a proactive manner,
including performing regular environmental audits, performing Phase 1
environmental assessments on all of our properties in 1995 and, prior to
acquisition, on all properties acquired after that time, removing all known
underground storage tanks, replacing PCB-containing transformers with non-PCB
transformers and developing and implementing an "environmental information
management system" to allow us to better track permits and compliance matters.

         Some of our facilities have a long history of industrial operations. As
such, we may have liability for cleanup of contamination from historical
discharges of hazardous materials. For example, we may be required to remediate
groundwater contamination at our Rockwood, Michigan facility. Although the
contamination has not moved off of our site and has not affected drinking water
supplies, further action may be required by state authorities. Our Ottawa,
Illinois facility has trace levels of arsenic contamination in the groundwater
beneath the quarries. Studies show that there is no health risk to workers and
that the product is not contaminated. We believe that we have claims against
responsible third parties or have insurance coverage for these matters. We also
believe that, even assuming third-party or insurance recoveries were not
successful, all such remediation matters, individually or in the aggregate,
would not have a material adverse effect on us. We have identified other areas
of historic waste disposal on our properties. Historically, the waste, pallets,
bags, scrap metal and other wastes from the plant sites were dumped on certain
of our lands. The presence of the disposal areas has not materially impacted,
and is not expected to materially impact, our operations or otherwise have a
material adverse effect on us.

         Regulation of Silica. The Occupational Safety and Health
Administration, or OSHA, regulates work place exposure to crystalline silica at
our customer locations through a "permissible exposure level," commonly referred
to as a PEL and through ancillary provisions. In the Department of Labor
regulatory agenda published in December 2001, OSHA announced that it would move
forward with a crystalline silica rule-making only if the affected parties reach
a consensus concerning any changes to the existing OSHA regulation of
crystalline silica.

                                       5

<PAGE>

         The Mining Safety and Health Administration, or MSHA, regulates
occupational health and safety matters for mining. Accordingly, MSHA regulates
our quarries, underground mines and industrial mineral processing facilities.
The MSHA "threshold limit value" for crystalline silica as quartz is the same as
the current OSHA PEL. MSHA is expected to follow OSHA's actions regarding the
permissible limits of exposure to crystalline silica for mining.

         The Environmental Protection Agency, or EPA, is currently evaluating
crystalline silica under its Integrated Risk Information System, or IRIS,
program. Essentially, the EPA is conducting a risk assessment regarding the
cancer and non-cancer health effects of crystalline silica and may possibly
develop reference concentrations for non-cancer health effects and unit risk
factors for cancer health effects. These reference concentrations and unit risk
factors, if developed, will be entered into the EPA IRIS database. In a recently
published EPA regulatory agenda, the EPA announced that the EPA's evaluation of
crystalline silica under the IRIS program would be complete in 2004 or 2005. In
addition, several states have considered, and a few have promulgated,
regulations regarding crystalline silica air emissions. For example, in Oklahoma
and Texas, crystalline silica is considered a toxic air contaminant. As such,
these states have established maximum allowable ambient concentrations, or
MAACs, for crystalline silica (quartz). Generally, these MAACs establish limits
for facility crystalline silica emissions, measured at the facility property
line. The IRIS initiative and state MAAC standards could result in lower permit
limits requiring costly equipment upgrades or operational restrictions.

         In 2001, Massachusetts classified crystalline silica smaller than 10
micron in particle size and used for abrasive blasting or in foundry molding
operations as a toxic substance for purposes of the state's toxic use reduction
act program. The toxic use reduction act program imposes fees on the use of
toxic substances and requires certain users of toxic substances to develop plans
to reduce the use of the toxic substance. California requires that a warning
accompany any chemical that the state has published as being known to cause
cancer. "Silica, crystalline (airborne particles of respirable size)" has been
included as a carcinogen under these criteria since 1988. These state programs
may have the effect of reducing our customers' demand for silica products.

         We believe that we materially comply with governmental requirements for
crystalline silica exposure and emissions and other regulations relating to
silica and plan to continue to comply with these regulations. However, we cannot
guarantee that we will be able to comply with any new standards that are adopted
or that these new standards will not have a material adverse effect on us by
requiring us to modify our operations or equipment or shut down some of our
plants. Additionally, we cannot guarantee that our customers will be able to
comply with any new standards or that any such new standards will not have a
material adverse effect on our customers by requiring them to shut down old
plants and to relocate plants to locations with less stringent regulations that
are further away from us. Accordingly, we cannot at this time reasonably
estimate our costs of compliance or the timing of any costs associated with any
new standards, or any material adverse effects that any new standards will have
on our customers and, consequently, on us.

         Mining and Processing of Minerals. In addition to the regulatory
matters described above, the industrial minerals and aggregates industries are
subject to extensive governmental regulation on matters such as permitting and
licensing requirements, plant and wildlife protection, wetlands protection,
reclamation and restoration of mining properties after mining is completed, the
discharge of materials into the environment, surface subsidence from underground
mining and the effects that mining has on groundwater quality and availability.
Our future success depends upon the quantity of our industrial minerals and
aggregates deposits and our ability to extract these deposits profitably. It is
difficult for us to estimate quantities of recoverable deposits, in part due to
future permitting and licensing requirements. We believe we have obtained all
material permits and licenses required to conduct our present mining operations.
However, we will need additional permits and renewals of permits in the future.
We may be required to prepare and present to governmental authorities data
pertaining to the impact that any proposed exploration or production activities
may have upon the environment. New site approval procedures may require the
preparation of archaeological surveys, endangered species studies and other
studies to assess the environmental impact of new sites. Compliance with these
regulatory requirements is expensive, requires an investment of funds well
before the potential producer knows if its operation will be economically
successful and significantly lengthens the time needed to develop a new site.
Furthermore, obtaining or renewing required permits is sometimes delayed or
prevented due to community opposition and other factors beyond our control. New
legal requirements, including those related to the protection of the
environment, could be adopted that could materially adversely affect our mining
operations (including the ability to extract mineral deposits), our cost
structure or our customers' ability to use our industrial minerals or aggregates
products.

         For most of our operations, state statutes and regulations or local
ordinances require that mine property be restored in accordance with specific
standards and an approved reclamation plan. We believe that we are making
adequate provisions for all expected reclamation and other costs relating to
expected mine closures in the reasonably foreseeable future. We believe that
future costs associated with reclamation provisions and mine closures will not
have a material adverse effect on us. Nevertheless, we could be adversely
affected if these provisions were later determined to be insufficient, or if
future costs associated with reclamation are significantly greater than our
current estimates. Accordingly, there can be no assurance that current or future
mining regulation will not have a material adverse effect on our business or
that we will be able to obtain or renew permits in the future.

                                       6

<PAGE>

Employees

         As of March 1, 2002, we had approximately 1,050 employees, of which
approximately 550 were represented by 12 local unions under 12 union contracts.
These union contracts have remaining durations ranging from one to five years.
Over the last 10 years, we have been involved in numerous labor negotiations,
only two of which have resulted in a work disruption at two of our 27
facilities. During these disruptions, the operations of the facilities and our
ability to serve our customers were not materially affected. Although we
consider our current relations with our employees to be good, if we do not
maintain these good relations, or if a work disruption were to occur, we could
suffer a material adverse effect.

                                       7

<PAGE>

Item 2. Properties

         We own or lease a number of properties located in the eastern and
midwestern United States. Our headquarters is in Berkeley Springs, West
Virginia. Set forth below is the location, use, status and number of years of
remaining reserves as of December 31, 2001 for each of our principal properties:

<TABLE>
<CAPTION>
                                                                                                               Number of Years
Location                           Use                                                Status                 Remaining Reserves/1/
--------                           ---                                                ------                 ---------------------
<S>                                <C>                                                <C>                    <C>
Berkeley Springs, WV               Corporate offices                                  Owned                            N/A

Industrial Minerals
Berkeley Springs, WV               Silica mining and processing                       Owned                             24
Columbia, SC                       Silica mining and processing                       Leased                            26
Dubberly, LA                       Silica mining and processing                       Owned/Leased                      34
Dundee, OH                         Silica mining and processing                       Owned                             77
Hurtsboro, AL                      Silica mining and processing                       Owned/Leased                       9
Jackson, TN                        Silica mining and processing                       Owned                             31
Kosse, TX                          Silica and kaolin mining and processing            Owned/Leased                      31
Mapleton Depot, PA                 Silica mining and processing                       Owned/Leased                      25
Mill Creek, OK                     Silica mining and processing                       Owned/Leased                      26
Montpelier, VA                     Aplite mining and processing                       Owned/Leased                      40
Ottawa, IL                         Silica mining and processing                       Owned                             62
Pacific, MO                        Silica mining and processing                       Owned                             69
Rockwood, MI                       Silica processing                                  Owned                            N/A

Aggregates
Adamsburg, PA                      Hot mixed asphalt plant                            Owned                            N/A
Berlin, NJ                         Construction sand mining and processing            Owned                             13
Cedar Lake, NJ                     Construction sand mining and processing            Owned                             18
Jim Mountain, PA                   Stone quarry                                       Leased                            35
Mauricetown, NJ                    Silica processing                                  Owned                            N/A
Newport, NJ                        Construction sand  and silica mining and           Owned/Leased                      23
                                   processing
Ottsville, PA                      Stone quarry; hot mixed asphalt plant              Owned                             29
Penns Park, PA                     Stone quarry; hot mixed asphalt plant              Owned                             30
Port Elizabeth, NJ                 Construction sand and silica mining and            Owned                             39
                                   processing
Rich Hill, PA                      Stone quarry                                       Owned/Leased                      29
Sewickly, PA                       Hot mixed asphalt plant                            Owned                            N/A
Springfield Pike, PA               Stone quarry; hot mixed asphalt plant; offices     Owned                             45
Upper Township, NJ                 Construction sand mining and processing            Owned/Leased                       3
Washington, PA                     Hot mixed asphalt plant                            Owned                            N/A
</TABLE>

         With respect to each operation at which we mine industrial minerals and
aggregates, we obtain permits from various governmental authorities prior to the
commencement of mining. The current permitted deposits on our properties are
sufficient to support production, based on historical rates of production
ranging from approximately four years to approximately 77 years. We obtain
permits to mine deposits as needed in the normal course of business based on our
mine plans and state and local regulatory provisions regarding mine permitting
and licensing. Based on our historical permitting experience, we expect to be
able to continue to obtain necessary mining permits to support historical rates
of production. Industrial minerals and aggregates properties which have deposits
(which include both permitted and unpermitted deposits) that we believe are
sufficient to support production for over 15 years accounted for approximately
97% of our sales for the year ended December 31, 2001. Additionally, to further
assure sufficient deposits and adequate facilities to meet future demand, we
plan to obtain new deposits through expansion of existing sites, where feasible,
and acquisitions of industrial minerals and aggregates businesses.

----------
/1/  The number of years of remaining reserves for each of our principal
     properties as of December 31, 2001 is based on extraction and production
     information collected during 2001.

                                       8

<PAGE>

         Some of our mining leases can be indefinitely renewed by us on an
annual basis while others have terms ranging from two to 50 years (including
unilateral renewal rights). These leases generally provide for royalty payments
to the lessor based on a specific amount per ton or a percentage of revenue. In
addition, we have a number of non-mining leases that relate to the above
properties that permit us to perform activities that are ancillary to the mining
of industrial minerals or aggregates such as surface use leases that allow haul
trucks to transport material from the mine to the plant site.

Item 3. Legal Proceedings

         We are a defendant in various lawsuits related to our business. These
matters include lawsuits relating to the exposure of persons to silica. For a
detailed discussion of these lawsuits and potential liability to us, please see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Significant Factors Affecting Our Business - Silica Health Risks
and Litigation May Have a Material Adverse Effect on Our Business." Although we
cannot predict what the full effect of these or other lawsuits will be, we
currently believe that these claims and proceedings in the aggregate are
unlikely to have a material adverse effect on us.

                                       9

<PAGE>

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

         No matters were submitted to a vote of security holders during the
fourth quarter of fiscal year 2001.

                                     PART II

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

         Not applicable.

Item 6. Selected Financial Data

         The following table sets forth our selected historical consolidated
financial and other data as of the end of and for the periods presented. The
selected historical consolidated financial data as of December 31, 2001 and
December 31, 2000 and for the years ended December 31, 2001, 2000 and 1999 have
been derived from our audited consolidated financial statements and the notes
thereto included elsewhere in this Annual Report on Form 10-K. The selected
historical consolidated financial data as of December 31, 1999, December 31,
1998 and December 31, 1997 and for the years ended December 31, 1998 and 1997
are derived from our audited consolidated financial statements that are not
included in this Annual Report on Form 10-K. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and the
notes thereto included elsewhere in this Annual Report on Form 10-K.

                                       10

<PAGE>

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                               -----------------------
                                                           2001            2000          1999(1)         1998(2)           1997
                                                           ----            ----          -------         -------           ----
                                                                                (Dollars in Thousands)
<S>                                                     <C>            <C>              <C>             <C>             <C>
Statement of Operations Data:
Sales ..............................................    $ 307,947      $ 299,335        $ 244,802      $  169,943       $ 154,470
Cost of goods sold .................................      229,193        222,754          175,971         126,127         114,055
Depreciation, depletion and amortization ...........       32,670         35,895           28,481          19,888          17,886
Selling, general and administrative (3) ............       23,905         26,541           21,843          31,157          14,345
Operating income (loss) ............................       22,179         14,145           18,507          (7,229)          8,184
Interest expense ...................................       35,625         36,359           19,590          10,269          10,513
Accretion of preferred stock warrants (4) ..........           --             --               56           1,254           1,374
Other income net, including interest income. .......       (1,103)        (1,575)          (2,171)         (1,881)         (1,742)
(Loss) income before income taxes ..................      (12,343)       (20,639)           1,032         (16,871)         (1,961)
Provision (Benefit) for income taxes before
extraordinary items ................................       (8,299)       (11,091)          (2,714)         (2,204)         (2,239)
Net income (loss) before extraordinary loss. .......       (4,044)        (9,548)           3,746         (14,667)            278
Extraordinary loss (5) .............................           --             --           (2,747)         (2,102)             --
Net income (loss) ..................................    $  (4,044)     $  (9,548)       $     999      $  (16,769)      $     278
Balance Sheet Data:
Cash ...............................................    $   2,493      $     860        $  13,573      $    2,222       $     402
Working capital ....................................       34,288         38,086           45,715          19,508          12,277
Total assets .......................................      515,644        538,286          551,603         274,678         188,647
Total debt .........................................      288,086        289,405          287,505         137,448          88,163
Stockholder's equity ...............................       48,826         53,216           64,335          23,396          26,022
Other Financial Data:
Capital expenditures ...............................    $  13,738      $  20,319        $  14,572      $    9,399       $   5,537
Cash interest expense. .............................       34,132         33,266           10,925           9,269           8,731
Ratio of earnings to fixed charges (6) .............        -- (7)         -- (7)             1.1           -- (7)          -- (7)
</TABLE>

----------

(1)  Includes the results of the Morie Assets from April 9, 1999, the date of
     acquisition, and the results of Commercial Stone from October 1, 1999, the
     date of acquisition.
(2)  Includes (i) with respect to the year ended December 31, 1998, the results
     of Pettinos from July 25, 1998, the date of acquisition, and (ii) with
     respect to the year ended December 31, 1998, the results of Better
     Materials from December 14, 1998, the date of acquisition.
(3)  Includes non-cash compensation expense recorded in 2000 for stock grants to
     our new Chief Executive Officer and in 1998 due to the waiver by USS
     Holdings, our parent, of its right to repurchase certain capital stock held
     by our management.
(4)  Represents the non-cash accretion in value of certain warrants granted with
     respect to preferred stock of USS Holdings. We recognize this charge as
     part of push down accounting because the warrants were issued in connection
     with debt issued by our subsidiary, U.S. Silica. The obligation to satisfy
     any payments due in connection with these warrants was forgiven by USS
     Holdings during 1999.
(5)  Represents non-cash charges and write-offs recorded in connection with our
     early retirement of certain subordinated debt in 1998, and the early
     retirement of certain senior debt in 1999.
(6)  Under Item 503 of Regulation S-K, "earnings" for purposes of this
     calculation have been computed by adding to "income before extraordinary
     items" all taxes based on income or profits, total interest charges and the
     estimated interest element of rentals charged to income. "Fixed charges"
     include total interest charges and the estimated interest element of
     rentals charged to income.
(7)  Earnings were insufficient to cover fixed charges by $12.3 million, $20.6
     million, $16.9 million, and $2.0 million for the years ended December 31,
     2001, 2000, 1998 and 1997, respectively.

                                       11

<PAGE>

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

         The following information should be read in conjunction with our
audited consolidated financial statements and the notes thereto included in Item
8 of this Annual Report on Form 10-K.

Overview

         We mine, process and market industrial minerals, principally industrial
silica, in the eastern and midwestern United States. We also mine, process and
market aggregates and produce and market hot mixed asphalt in certain parts of
Pennsylvania and New Jersey. We are a holding company that conducts
substantially all our operations through our subsidiaries.

         We were incorporated in Delaware in January 1996 and purchased U.S.
Silica Company, which was organized in 1927 as the Pennsylvania Glass Sand
Corporation, from U.S. Borax in February 1996. After purchasing U.S. Silica, we
subsequently completed the following acquisitions and disposition:

         -   In July 1998, we acquired George F. Pettinos, Inc. ("Pettinos"), a
             producer of aggregates with operations in Berlin, New Jersey and a
             processor of silica with operations in Ontario, Canada.

         -   In December 1998, we acquired Better Materials Corporation ("Better
             Materials"), an aggregates producer in southeastern Pennsylvania.

         -   In April 1999, we acquired certain operating assets in southern New
             Jersey from Unimin Corporation (the "Morie Assets"), which are used
             in the production and sale of silica and aggregates.

         -   In October 1999, we acquired Commercial Stone Co., Inc., a crushed
             stone and hot mixed asphalt producer in southwestern Pennsylvania,
             CATS and related quarry properties (collectively, "Commercial
             Stone").

         -   In February 2000, we sold one of our two Canadian subsidiaries,
             George F. Pettinos (Canada) Limited ("PECAL").

         In November 2000 we incorporated a new Delaware subsidiary, BMAC
Services Co., Inc., to provide consulting and management services to our other
subsidiaries. In April 2001, Commercial Stone merged with Better Materials, with
Better Materials surviving. As a result of this merger, CATS became a
wholly-owned subsidiary of Better Materials.

         On January 1, 2001, as part of a change in management reporting
responsibilities, all of the New Jersey operating assets of our industrial
minerals business unit were transferred to our aggregates business unit. Net
sales from the transferred assets are made both directly to customers and to our
industrial minerals subsidiary. Prior year segment reporting has been restated
to include the New Jersey operations as a part of our aggregates business unit.

Critical Accounting Policies

         In our opinion, we do not have any individual accounting policy which
is critical to the preparation of our financial statements. Also, in many
instances, we must use an accounting policy or method because it is the only
policy or method permitted under accounting principles generally accepted in the
United States. However, certain accounting policies are more important to the
reporting of the Company's financial position and results of operations. These
policies are discussed in the succeeding paragraphs. The notes to the audited
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K include a summary of the significant accounting policies used in the
preparation of our financial statements.

         Sales. We recognize sales at the time the product is shipped to our
customers and title passes (generally when the product leaves our facility).
Sales includes the costs of transportation borne by our customers when we pay
the costs on their behalf and are reimbursed.

         Cost of Goods Sold. Cost of goods sold includes the ongoing mining and
processing costs of our operations (primarily labor costs, energy and power
costs, repair and maintenance costs, transportation costs on customer shipments,
costs of hiring third party subcontractors to drill and blast in our mining
operations, as well as lease and royalty payments, at some locations) and
non-cash charges associated with estimated net future costs of restoring and
reclaiming operating mine sites. This reclamation provision is made at each
operating location based on units of production and engineering estimates of
total reserves, which are expected to last from 3 to 77 years, as of the balance
sheet date. The effect of any changes in estimated costs, production, and
minable reserves is recognized on a prospective basis.

                                       12

<PAGE>

         Selling, General and Administrative. Selling, general and
administrative expenses are the costs of operating our business, including
corporate overhead and associated fees and expenses related to acquisitions.
Management fees to our acquisition advisors, due diligence costs for any
acquisitions that we are unable to complete and amounts recorded for product
liability claims are also included in this category. See "Self-Insurance and
Product Liability Claim Reserves" below.

         Depreciable Properties. Acquired property and mineral deposits are
recorded at cost. Costs to develop new mining properties are capitalized and
amortized based on units of production. The purchase price of business
acquisitions is allocated based on the fair values of assets acquired and
liabilities assumed at that time. Depreciation is computed using the straight
line method over the estimated useful lives of the assets, which ranges from 3
to 15 years. Depletion of mineral deposits is accounted for as the minerals or
aggregates are extracted, based on units of production and engineering estimates
of total deposits. Accordingly, depletion expense will increase or decrease with
changes in the volumes of minerals or aggregates extracted or, prospectively,
for changes in engineering estimates of total deposits. Amortization of various
non-current assets such as non-competition agreements are made on a straight
line basis over the life of the related agreement. Goodwill related to purchased
acquisitions was amortized over 15 years. As described under "Recent Accounting
Pronouncements," the adoption of SFAS 142 will eliminate goodwill amortization
and requires an evaluation of goodwill impairment upon adoption, as well as
subsequent annual valuations.

         Upon retirement or disposal of assets, other than those of U.S. Silica
acquired on February 9, 1996, the cost and accumulated depreciation or
amortization are eliminated from the accounts and any gain or loss is reflected
in the statement of operations. Group asset accounting is utilized for the U.S.
Silica assets acquired on February 9, 1996. Gains and losses on normal
retirements or dispositions of these assets are excluded from net income and
proceeds for dispositions are recorded as a reduction of the acquired cost.
Expenditures for normal repairs and maintenance are expensed as incurred.
Construction-in-progress is primarily comprised of machinery and equipment which
has not yet been placed in service.

         Self-Insurance and Product Liability Claim Reserves. We are
self-insured for healthcare costs and, in some states, worker's compensation.
Our subsidiary, U.S. Silica Company, is currently self-insured for third party
product liability claims alleging occupational disease. We provide for estimated
future losses based on reported cases and past claim history. Accounting for
these liabilities requires us to use our best judgment. While we believe that
our accruals for these matters are adequate, if the actual loss is significantly
different than the estimated loss for these liabilities, our results of
operations could be materially affected. See "Significant Factors Affecting Our
Business - Silica Health Risks and Litigation May Have a Material Adverse Effect
on Our Business" for a further discussion of the manner in which we record
amounts for product liability claims.

         Employee Benefit Plans. We provide a range of benefits to our employees
and retired employees, including pensions and postretirement healthcare and life
insurance benefits. We record annual amounts relating to these plans based on
calculations specified by generally accepted accounting principles, which
include various actuarial assumptions, including discount rates, assumed rates
of returns, compensation increases, turnover rates and healthcare cost trend
rates. We review the actuarial assumptions on an annual basis and make
modifications to the assumptions based on current rates and trends when it is
deemed appropriate to do so. As required by U.S. generally accepted accounting
principles, the effect of the modifications is generally recorded or amortized
over future periods. We believe that the assumptions utilized in recording our
obligations under the plans, which are presented in note 11 to the audited
consolidated financial statements, are reasonable based on advice from our
actuaries and information as to assumptions used by other employers.

         Taxes. We account for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes"
which requires that deferred tax assets and liabilities be recognized using
enacted tax rates for the effect of temporary differences between the book and
tax bases of recorded assets and liabilities. SFAS No. 109 also requires that
deferred tax assets be reduced by a valuation allowance if it is more likely
than not that some portion or all of the deferred tax asset will not be
realized.

         We evaluate quarterly the realizability of our deferred tax assets by
assessing the need for a valuation allowance and by adjusting the amount of such
allowance, if necessary. The factors used to assess the likelihood of
realization are our forecast of future taxable income and available tax planning
strategies that could be implemented to realize the net deferred tax assets.
Failure to achieve forecasted taxable income might affect the ultimate
realization of the net deferred tax assets. Factors that may affect our ability
to achieve sufficient forecasted taxable income include, but are not limited to,
the following: a decline in sales or margins, increased competition or loss of
market share. In addition, we operate within multiple taxing jurisdictions and
are subject to audit in these jurisdictions. These audits can involve complex
issues, which may require an extended time to resolve. In management's opinion,
adequate provisions for income taxes have been made for all years.

         Use of Estimates and Assumptions. The preparation of financial
statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of

                                       13

<PAGE>

revenues and expenses during the reporting periods. Significant estimates
include doubtful accounts, amortization and depreciation, income taxes,
environmental and product liabilities, mine reclamation and employee benefit
costs. Actual results could differ from those estimates.

                                       14

<PAGE>

Results of Operations

         The following table sets forth our consolidated statement of operations
data for the three years ended December 31, 2001, 2000 and 1999, and the
percentage of sales of each line item for the periods presented. This statement
of operations data is derived from our consolidated financial statements and the
notes thereto included elsewhere in this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                             Year Ended December 31
                                                                             ----------------------
                                                         2001                         2000                         1999
                                                         ----                         ----                         ----
                                                                             (Dollars in Thousands)
<S>                                             <C>             <C>         <C>             <C>          <C>              <C>
Sales:
   Industrial minerals .......................  $ 187,670         60.9%     $ 192,590         64.3%      $ 191,575          78.3%
   Aggregates ................................    138,091         44.8        124,957         41.7          69,249          28.3
   Intercompany elimination ..................    (17,814)        (5.7)       (18,212)        (6.0)        (16,022)         (6.6)
                                                ---------       ------      ---------       ------       ---------        ------

Total sales ..................................    307,947        100.0        299,335        100.0         244,802         100.0
Cost of goods sold............................    229,193         74.4        222,754         74.4         175,971          71.9
Depreciation, depletion and amortization......     32,670         10.6         35,895         12.0          28,481          11.6
Selling, general and administrative...........     23,905          7.8         26,541          8.8          21,843           8.9
                                                ---------       ------      ---------       ------       ---------        ------

Operating income (loss) ......................     22,179          7.2         14,145          4.7          18,507           7.6
Interest expense..............................     35,625         11.6         36,359         12.1          19,590           8.0
Accretion of preferred stock warrants.........         --           --             --           --              56            --
Other income, net of interest income..........     (1,103)        (0.4)        (1,575)        (0.5)         (2,171)         (0.9)
                                                ---------       ------      ---------       ------       ---------        ------

(Loss) income before income taxes ............    (12,343)        (4.0)       (20,639)        (6.9)          1,032           0.4
Benefit for income taxes before
extraordinary items...........................     (8,299)        (2.7)       (11,091)        (3.7)         (2,714)         (1.1)
                                                ---------       ------      ---------       ------       ---------        ------

Net income (loss) before
     extraordinary loss ......................     (4,044)        (1.3)        (9,548)        (3.2)          3,746           1.5
Extraordinary loss. ..........................         --           --             --           --          (2,747)         (1.1)
                                                ---------       ------      ---------       ------       ---------        ------
Net income (loss) ............................  $  (4,044)        (1.3)%    $  (9,548)        (3.2)%     $     999           0.4%
                                                =========                   =========                    =========
</TABLE>

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

         Sales. Sales increased $8.6 million, or 2.9%, to $307.9 million in the
year ended December 31, 2001 from $299.3 million in the year ended December 31,
2000.

         Sales of industrial minerals decreased $4.9 million, or 2.5% to $187.7
million in the year ended December 31, 2001 from $192.6 million in the year
ended December 31, 2000. Included in sales in 2000 was $1.9 million from PECAL,
our subsidiary that was sold in February 2000. Excluding PECAL results, sales of
industrial minerals decreased $3.0 million, or 1.6%, to $187.7 million in the
year ended December 31, 2001 from $190.7 million in the year ended December 31,
2000. The primary reason behind the decrease in industrial minerals sales was
decreased sales of silica sand to all glass market segments, and the chemicals
and foundry market segments, partially offset by increased silica sand sales to
the oil and gas and building product market segments, plus additional sales of
aplite to the glass container market segment.

         Sales of aggregates increased $13.1 million, or 10.5% to $138.0 million
in the year ended December 31, 2001 from $124.9 million in the year ended
December 31, 2000. Included in aggregate sales are intercompany shipments to our
industrial minerals business that are then resold to customers. These
intercompany shipments are eliminated in consolidation and totaled $17.8 million
in the year ended December 31, 2001 and $18.2 million in the year ended December
31, 2000. Excluding the intercompany shipments, sales of aggregates directly to
aggregate customers increased $13.5 million, or 12.6%, to $120.2 million in the
year ended December 31, 2001 from $106.7 million in the year ended December 31,
2000. The increase in sales is primarily due to a 14.5% increase in asphalt
volume and a 21.4% increase in stone volume sold to customers, and a $3.4
million, or 14.1% increase in transportation costs billed to customers,
increasing from $24.1 million in 2000 to $27.5 million in 2001.

         Cost of Goods Sold. Cost of goods sold increased $6.4 million, or 2.9%,
to $229.2 million in the year ended December 31, 2001 from $222.8 million in the
year ended December 31, 2000.

         Cost of goods sold for industrial minerals decreased $1.7 million, or
1.2%, to $141.7 million in the year ended December 31, 2001 from $143.4 million
in the year ended December 31, 2000. Excluding PECAL's results from 2000, cost
of goods sold for industrial minerals decreased $0.2 million to $141.7 million
for the year ended December 31, 2001 from $141.9 million in the year ended
December 31, 2000. Included in cost of goods sold, are the cost of the
intercompany shipments from our aggregates

                                       15

<PAGE>

business as noted earlier. The cost of these intercompany shipments are
eliminated in consolidation and decreased $0.4 million to $17.8 million in the
year ended December 31, 2001 from $18.2 million in the year ended December 31,
2000. The remaining change in cost of goods sold is primarily due to the 3.8%
decrease in the volume of material sold in the year, offset by a $1.9 million
increase in the price of drier fuel and a $0.4 million increase in the price of
electricity.

         Cost of goods sold for aggregates increased $7.7 million, or 7.9%, to
$105.3 million in the year ended December 31, 2001 from $97.6 million in the
year ended December 31, 2000. The increase in cost of goods sold for aggregates
is primarily due to a 14.4% increase in the volume of material sold in the year,
partially offset by a $2.9 million decrease in the price of asphalt cement that
is the binder used in the production of hot mixed asphalt.

         Depreciation, Depletion and Amortization. Depreciation, depletion and
amortization decreased $3.2 million, or 8.9%, to $32.7 million in the year ended
December 31, 2001 from $35.9 million in the year ended December 31, 2000. The
decrease was primarily due to a $4.9 million decrease in the amortization of
non-compete agreements on the expiration, in February 2001, of the non-compete
agreement with the former owner of our industrial minerals subsidiary. Depletion
costs increased $1.5 million in 2001 to $7.9 million from $6.4 million in 2000
due to the increase in aggregates volume mined and sold.

         Selling, General and Administrative. Selling, general and
administrative expenses decreased $2.6 million, or 9.8%, to $23.9 million in the
year ended December 31, 2001 from $26.5 million in the year ended December 31,
2000. Included in selling, general and administrative expense in 2000 were $2.3
million in compensation costs incurred to recruit our new chief executive
officer that were not duplicated in 2001, and $0.4 million in costs for PECAL.
Excluding both the compensation costs and PECAL's results from 2000, selling,
general and administrative expenses increased $0.1 million to $23.9 million in
the year ended December 31, 2001 from $23.8 million in the year ended December
31, 2000. This increase is primarily due to reduced personnel and other
operating expenses, and a $0.8 million reduction in management fees and
consulting expenses on unsuccessful acquisitions, offset by a $1.4 million
increase in the amounts provided for product liability claims primarily recorded
in the fourth quarter relating to occupational health claims. See "Significant
Factors Affecting Our Business - Silica Health Risks and Litigation May Have a
Material Adverse Effect on Our Business."

         Operating Income. Operating income increased $8.1 million or 57.5% to
$22.2 million in the year ended December 31, 2001, from $14.1 million in the
year ended December 31, 2000.

         Operating income for industrial minerals increased $1.5 million, or
9.3%, to $17.7 million in the year ended December 31, 2001 from $16.2 million in
the year ended December 31, 2000 due to the factors noted earlier, partially
offset by a $0.8 million increase in allocated corporate overhead expense.

         Operating income for aggregates increased $3.6 million, or 180%, to
$5.6 million in the year ended December 31, 2001 from $2.0 million in the year
ended December 31, 2000 as a result of the factors noted earlier, partially
offset by a $0.6 million increase in allocated corporate overhead expenses.

         Corporate expenses not allocated to the business segments decreased
$2.9 million to $1.1 million in the year ended December 31, 2001 from $4.0
million in the year ended December 31, 2000 due to the reduction in management
and consulting fees, and non-recurring compensation and incentive stock
compensation expenses noted earlier.

         Interest Expense. Interest expense decreased $0.8 million, or 2.2%, to
$35.6 million in the year ended December 31, 2001 from $36.4 million in the year
ended December 31, 2000 primarily as a result of lower interest rates on the
variable portion of our senior secured debt.

         Net Income (Loss). Net loss decreased $5.5 million to $4.0 million in
the year ended December 31, 2001 from $9.5 million in the year ended December
31, 2000. The decrease is primarily due to the factors noted earlier, partially
offset by $2.8 million decrease in the benefit for income taxes.

Year Ended December 31, 2000 Compared with Year Ended December 31, 1999

         Sales. Sales increased $54.5 million, or 22.3%, to $299.3 million in
the year ended December 31, 2000 from $244.8 million in the year ended December
31, 1999.

         Sales of industrial minerals increased $1.0 million to $192.6 million
in the year ended December 31, 2000 from $191.6 million in the year ended
December 31, 1999. Sales decreased $7.1 million due to the February 2000 sale of
PECAL. Excluding PECAL's results for both periods, sales of industrial minerals
increased $8.1 million, or 4.4%, to $190.8 million in the year ended December
31, 2000 from $182.7 million in the year ended December 31, 1999. The primary
reasons behind the increase in industrial minerals sales were a $4.6 million
increase in transportation costs billed to customers (increasing from $32.1
million in

                                       16

<PAGE>

1999 to $36.7 million in 2000), $2.4 million from the full year results from the
acquisition of the Morie Assets, and an increase in sales to the oil and gas
extraction market segment, partially offset by a decline in sales of calcined
kaolin to the fillers and extenders market segment.

         Sales of aggregates increased $55.7 million to $124.9 million in the
year ended December 31, 2000 from $69.2 million in the year ended December 31,
1999. Included in aggregate sales are intercompany shipments to our industrial
minerals business that are then resold to customers. These intercompany
shipments are eliminated in consolidation and totaled $18.2 million in the year
ended December 31, 2000 and $16.0 million in the year ended December 31, 1999.
Excluding the intercompany shipments, sales of aggregates directly to aggregate
customers increased $53.5 million to $106.7 million in the year ended December
31, 2000 from $53.2 million in the year ended December 31, 1999. The increase
was primarily due to the full year results from the acquisitions of Commercial
Stone and the Morie Assets, which resulted in the inclusion of additional sales
of $52.1 million in the year ended December 31, 2000.

         Cost of Goods Sold. Cost of goods sold increased $46.8 million, or
26.6%, to $222.8 million in the year ended December 31, 2000 from $ 176.0
million in the year ended December 31, 1999.

         Cost of goods sold for industrial minerals increased $1.2 million to
$143.4 million in the year ended December 31, 2000 from $142.2 million in the
year ended December 31, 1999. Cost of goods sold decreased $5.9 million due to
the February 2000 sale of PECAL. Excluding PECAL's results for both periods,
cost of goods sold for industrial minerals increased $7.1 million, or 5.3%, to
$141.9 million in the year ended December 31, 2000 from $134.8 million in the
year ended December 31, 1999. Included in cost of goods sold are the cost of the
intercompany shipments from our aggregates business as noted earlier. The cost
of these intercompany shipments are eliminated in consolidation and increased
$1.2 million to $18.2 million in the year ended December 31, 2000 from $16.0
million in the year ended December 31, 1999. The remaining increase was
primarily due to an increase of $4.6 million in transportation costs billed to
customers, and a $4.0 million increase in the cost of drier fuel partially
offset by reductions in other operating expenses.

         Cost of goods sold for aggregates increased $47.8 million to $97.6
million in the year ended December 31, 2000 from $49.8 million in the year ended
December 31, 1999. The increase was primarily due to the inclusion of the full
year results from the acquisitions of Commercial Stone and the Morie Assets,
which resulted in an additional $42.7 million in cost of goods sold in the year
ended December 31, 2000, along with $0.8 million in increased costs for
petroleum based products in our eastern Pennsylvania and New Jersey aggregates
operations, and $0.6 million in additional costs from a new aggregate sand plant
which began operations in mid-2000.

         Depreciation, Depletion and Amortization. Depreciation, depletion and
amortization increased $7.4 million, or 26.0%, to $35.9 million in the year
ended December 31, 2000 from $28.5 million in the year ended December 31, 1999.
The increase was primarily due to a $ 5.1 million increase from the acquisition
of Commercial Stone, including a $0.5 million increase in annual depletion rates
made at Commercial Stone in September 2000 after a reduction in the estimated
available reserves at our related aggregates sites following a reserve analysis.

         Selling, General and Administrative. Selling, general and
administrative expenses increased $4.7 million, or 21.6%, to $26.5 million in
the year ended December 31, 2000 from $21.8 million in the year ended December
31, 1999. The increase was primarily due to the acquisition of Commercial Stone,
which resulted in the inclusion of $2.6 million in additional expense, partially
offset by a reduction of $0.5 million from the sale of PECAL in February 2000.
Excluding the acquisition and divestiture, selling, general and administrative
expenses increased $2.7 million, or 13.4%, to $22.8 million in the year ended
December 31, 2000 from $20.1 million in the year ended December 31, 1999 due to
a $2.3 million compensation charge for the recruitment of our new chief
executive officer.

         Operating Income. Operating income decreased $4.4 million to $14.1
million in the year ended December 31, 2000 from $18.5 million in the year ended
December 31, 1999.

         Operating income for industrial minerals increased $2.4 million to
$16.2 million in the year ended December 31, 2000 from $13.8 million in the year
ended December 31, 1999. The increase is primarily due to the factors noted
earlier, and a reduction of $2.9 million in direct and allocated selling,
general and administrative expense.

         Operating income for aggregates decreased $3.8 million to $2.0 million
in the year ended December 31, 2000 from $5.8 million in the year ended December
31, 1999 due to the factors noted earlier and an increase of $2.6 million in
allocated corporate overhead expense.

         Corporate expenses not allocated to the business segments increased
$2.9 million to $4.0 million in the year ended December 31, 2000 from $1.1
million in the year ended December 31, 1999, primarily as a result of the
non-recurring

                                       17

<PAGE>

compensation expenses noted earlier, and an increase in consulting costs.

         Interest Expense. Interest expense increased $16.8 million, or 85.7%,
to $36.4 million in the year ended December 31, 2000 from $19.6 million in the
year ended December 31, 1999. The increase was primarily due to increased
borrowings related to prior year acquisitions and increased interest rates.

         Net Income (Loss). Net income decreased $10.5 million to a $9.5 million
net loss in the year ended December 31, 2000 from $1.0 million in net income in
the year ended December 31, 1999. The decrease in net income is primarily due to
the factors noted earlier, especially the increases in interest expense,
depreciation and non-recurring compensation expenses recognized in 2000,
partially offset by an $8.4 million increase in the benefit for income taxes.
Extraordinary losses incurred in 1999 were $2.7 million, reflecting the after
-tax charge recognized to write off debt issuance fees that were previously
capitalized in connection with our 1998 financing.

                                       18

<PAGE>

Liquidity and Capital Resources

         Our principal liquidity requirements have historically been to service
our debt, meet our working capital, capital expenditure and mine development
expenditure needs and finance acquisitions. We are a holding company and as such
we conduct substantially all our operations through our subsidiaries. As a
holding company, we are dependent upon dividends or other intercompany transfers
of funds from our subsidiaries to meet our debt service and other obligations,
and have historically met our liquidity and capital investment needs with
internally generated funds supplemented from time to time by borrowings under
our revolving credit facility. Conversely, we have funded our acquisitions
through borrowings and equity investments. Our total debt as of December 31,
2001 was $288.1 million and our total stockholder's equity as of that date was
$48.8 million, giving us total debt representing approximately 86% of total
capitalization. Our debt level makes us more vulnerable to economic downturns
and adverse developments in our business.

         Net cash provided by operating activities was $16.5 million for the
year ended December 31, 2001 compared to $7.7 million of net cash provided by
operating activities in the year ended December 31, 2000. Cash provided by
operating activities increased $8.8 million in 2001 due primarily to increased
earnings and a $2.0 million refund of income taxes deposited in 2000.

         Net cash used for investing activities decreased $11.0 million to $13.1
million in the year ended December 31, 2001 from $24.1 million for the year
ended December 31, 2000. This decrease primarily resulted from a $6.6 million
decrease in capital expenditures, and the $6.1 million spent to acquire a fourth
hot mixed asphalt plant in Pittsburgh in 2000.

         Cash flow used for financing activities was $1.8 million for the year
ended December 31, 2001 as compared to $3.6 million of cash flow provided by
financing activities in the year ended December 31, 2000. There was a $9.2
million reduction in long-term debt in the year ended December 31, 2001 and a
$3.6 million decrease in long-term debt in the same period in 2000. Advances
under the revolving credit facility were $13.3 million and $5.5 million in the
years ended December 31, 2001 and December 31, 2000, respectively.

         Interest payments on our 13% senior subordinated notes due 2009 ($150
million outstanding as of December 31, 2001), which are unconditionally and
irrevocably guaranteed, jointly and severally, by each of our domestic
subsidiaries, debt service under our senior secured credit agreement described
below, working capital, capital expenditures and mine development expenditures,
incurred in the normal course of business as current deposits are depleted,
represent our current significant liquidity requirements.

         Under our senior secured credit agreement, as of December 31, 2001, we
had $32.3 million outstanding under the tranche A term loan facility (which
matures in September 2005) and $91.5 million outstanding under the tranche B
term loan facility (which matures in September 2007). In addition, this credit
agreement provides us with a $50.0 million revolving credit facility. The
revolving credit facility was partially drawn for $13.3 million as of December
31, 2001, and $7.5 million was allocated for letters of credit, leaving $29.2
million available for our use. As of March 15, 2002, borrowings under the
revolving credit facility increased to $21.3 million, and $9.2 million was
allocated for letters of credit, leaving $19.5 million available for our use.
The revolving credit facility is available for general corporate purposes,
including working capital and capital expenditures, but excluding acquisitions,
and includes sublimits of $12.0 million and $3.0 million, respectively, for
letters of credit and swingline loans. Debt under the senior secured credit
agreement is collateralized by substantially all of our assets, including our
real and personal property, inventory, accounts receivable and other
intangibles. For a further description of our senior secured credit agreement,
including certain restrictions that it imposes upon us and certain quarterly and
annual financial covenants that it requires us to maintain, please see note 6 to
our audited consolidated financial statements included elsewhere in this Annual
Report on Form 10-K.

         As of December 31, 2001, the total of our future contractual cash
commitments, including the repayment of our debt obligations under our senior
secured credit agreement and our senior subordinated notes, is summarized as
follows:

<TABLE>
<CAPTION>
Contractual Cash Obligations                                                Payments Due by Period
(In millions)

                                                                      Less than                                        After
                                                           Total         1 year      1-3 years      4-5 years        5 years
<S>                                                       <C>         <C>            <C>            <C>              <C>
Senior Long-Term Debt (1) ..............................  $137.1          $10.6          $38.2          $88.3        $     -
Subordinated Long-Term Debt ............................   150.0              -              -              -          150.0
Capital Lease Obligations (2) ..........................     3.9            1.0            2.7            0.2              -
Operating Lease Obligations (2) (3) ....................     4.0            2.1            1.7            0.2              -
Other Long-Term Obligations (3) ........................     2.7            0.9            1.4            0.3            0.1
Total Contractual Cash Obligations .....................  $297.7          $14.6          $44.0          $89.0         $150.1
</TABLE>

                                       19

<PAGE>

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

         (1) For a further description of the annual payment terms for the debt
             incurred under our senior secured credit agreement, please see note
             6 to our audited consolidated financial statements included
             elsewhere in this Annual Report on Form 10-K.

         (2) We are obligated under certain capital and operating leases for
             railroad cars, mining properties, mining and processing equipment,
             office space, transportation and other equipment. Certain of our
             operating lease arrangements include options to purchase the
             equipment for fair market value at the end of the original lease
             term. Ownership of the equipment under a capital lease transfers to
             us at the end of the original lease term. Annual operating and
             capital lease commitments are presented in more detail in note 5 to
             our audited consolidated financial statements included elsewhere in
             this Annual Report on Form 10-K.

         (3) In March 2001, we entered into a sublease and option agreement for
             all rights, title and interest under leases held, and property
             owned, of a Pennsylvania aggregates operation known as the Jim
             Mountain Quarry. The original term of this agreement expires in
             March 2004. Included in our operating lease obligations is $0.4
             million for our annual rental expense, and included in other
             long-term obligations is $0.8 million in annual payments covering
             an option to purchase the quarry and minimum annual royalty
             payments. If we decide not to exercise this option, any related
             amounts recorded will be expensed at that time. For a further
             description of this agreement, please see note 3 to our audited
             consolidated financial statements included elsewhere in this Annual
             Report on Form 10-K.

         On February 25, 2002, the lenders under our senior secured credit
agreement approved an amendment effective January 31, 2001 that waived any
default under the required leverage ratio and interest coverage covenants as of
December 31, 2001 and revised these covenants under the credit agreement for the
period of March 31, 2002 through December 31, 2002. In connection with this
amendment and an earlier amendment, we have agreed to a 50 basis point increase
in interest rates over the original credit agreement for any period in which our
leverage ratio is greater than 5.0. A one-time amendment fee of approximately
$424,000 was paid to the lenders as part of the amendment.

         We believe, based on our calendar year 2002 forecast, that we will be
in compliance with the amended leverage ratio and interest coverage ratio
covenants contained in the senior secured credit agreement throughout calendar
year 2002. In the event that we do not substantially achieve our 2002 forecast,
it will be necessary to seek further amendments to the senior secured credit
agreement covenants. While we obtained amendments and waivers under the senior
secured credit agreement in the past, there can be no assurance that future
amendments or waivers will be granted or that such amendments or waivers, if
granted, would be on terms satisfactory to us.

         Capital expenditures decreased $6.6 million, or 32.5%, to $13.7 million
in the year ended December 31, 2001 from $20.3 million in the year ended
December 31, 2000. Excluding possible acquisitions, our expected capital
expenditure and mine development requirements for 2002 are $15.0 million.

         Our ability to satisfy our debt obligations and to pay principal and
interest on our debt, fund working capital, mine development and acquisition
requirements and make anticipated capital expenditures will depend on the future
performance of our subsidiaries, which is subject to general economic, financial
and other factors, some of which are beyond our control. We cannot be certain
that the cash earned by our subsidiaries will be sufficient to allow us to pay
principal and interest on our debts and meet our other obligations. We believe,
however, that based on current levels of operations and anticipated growth, cash
flow from operations, together with borrowings under the revolving credit
facility, will be adequate for at least the next twelve months to make required
payments of principal and interest on our debt and fund working capital, mine
development and capital expenditure requirements. There can be no assurance,
however, that our business will generate sufficient cash flow from operations or
that future borrowings will be available under the revolving credit facility in
an amount sufficient to enable us to service our debt or to fund our other
liquidity needs. If we do not have enough cash, we may be required to refinance
all or part of our existing debt, including the notes, sell assets, borrow more
money or raise equity. We cannot guarantee that we will be able to refinance our
debt, sell assets, borrow more money or raise equity on terms acceptable to us,
or at all.

Significant Factors Affecting Our Business

         Silica Health Risks and Litigation May Have a Material Adverse Effect
on Our Business. The inhalation of respirable crystalline silica is associated
with several adverse health effects. First, it has been known since at least the
1930s that prolonged inhalation of respirable crystalline silica can cause
silicosis, an occupational disease characterized by fibrosis, or scarring, of
the lungs. Second, since the mid-1980s, the carcinogenicity of crystalline
silica has been at issue and the subject of much debate and research. In 1987,
the International Agency for Research on Cancer, or IARC, an agency of the World
Health Organization, classified crystalline silica as a probable human
carcinogen. In 1996, a working group of IARC voted to reclassify crystalline
silica as a known human carcinogen. On May 15, 2000, the National Toxicology
Program, part of the Department of Health and Human Services, issued its ninth
report on carcinogens, which reclassified crystalline silica (respirable size)
from its previous

                                       20

<PAGE>

classification as "a reasonably anticipated carcinogen" to "a known human
carcinogen." Third, the disease silicosis is associated with an increased risk
of tuberculosis. Finally, there is recent evidence of an association between
crystalline silica exposure or silicosis and lung cancer and a possible
association between crystalline silica exposure or silicosis and other diseases
such as immune system disorders, like scleroderma, and end-stage renal disease.

         One of our subsidiaries, U.S. Silica, has been named as a defendant in
an estimated 1,320 product liability claims alleging silica exposure filed in
the period January 1, 2001 to December 31, 2001. U.S. Silica was named as a
defendant in 154 similar claims filed in 1998, 497 filed in 1999 and 610 filed
in 2000. U.S. Silica has been named as a defendant in similar suits since 1975;
in each of the years 1983, 1987, 1995 and 1996, more than 100 claims were filed
against U.S. Silica. The plaintiffs, who allege that they are employees or
former employees of our customers, claim that our silica products were defective
or that we acted negligently in selling our silica products without a warning,
or with an inadequate warning. The plaintiffs further claim that these alleged
defects or negligent actions caused them to suffer injuries and sustain damages
as a result of exposure to our products. In almost all cases, the injuries
alleged by the plaintiffs are silicosis or "mixed dust disease," a claim that
allows the plaintiffs to pursue litigation against the sellers of both
crystalline silica and other minerals. There are no pending claims of this
nature against any of our other subsidiaries.

         As of December 31, 2001, there were an estimated 2,292 silica-related
products liability claims pending in which U.S. Silica is a defendant. Almost
all of the claims pending against U.S. Silica arise out of the alleged use of
U.S. Silica products in foundries or as an abrasive blast media and have been
filed in the states of Texas and Mississippi.

         ITT Industries, Inc., successor to a former owner of U.S. Silica, has
agreed to indemnify U.S. Silica for third party silicosis claims (including
litigation expenses) filed against it prior to September 12, 2005 alleging
exposure to U.S. Silica products for the period prior to September 12, 1985, to
the extent of the alleged exposure prior to that date. This indemnity is subject
to an annual deductible of $275,000, which is cumulative and subject to
carry-forward adjustments. The Company fully accrued this deductible on a
present value basis when it acquired U.S. Silica. As of December 31, 2001 and
2000, this accrual amounted to $1.8 million and $1.7 million, respectively.
Pennsylvania Glass Sand Corporation, predecessor to U.S. Silica, was a named
insured on insurance policies issued to ITT Industries for the period April 1,
1974 to September 12, 1985 and to U.S. Borax (another former owner) for the
period September 12, 1985 to December 31, 1985. To date, we have not sought
coverage under these policies. Although we cannot provide any assurance,
coverage under these policies may be available to us. Ottawa Silica Company (a
predecessor that merged into U.S. Silica in 1987) had insurance coverage on an
occurrence basis prior to July 1, 1985.

         On April 20, 2001, in an action pending in Beaumont, Texas (Donald
Tompkins et al v. American Optical Corporation et al), a jury rendered a verdict
against Ottawa Silica Company and Pennsylvania Glass Sand Corporation,
predecessors to U.S. Silica, in the amount of $7.5 million in actual damages. On
June 1, 2001, the trial judge entered judgment on the verdict against U.S.
Silica in the amount of $5,928,000 in actual damages (the verdict of $7.5
million, less credits for other settlements), approximately $464,000 in
prejudgment interest and $40,000 in court costs. In addition, punitive damages
were settled for $600,000.

         In light of the facts entered into evidence relating to the timing of
the exposure, we believe that the entire judgment and settlements of the
Tompkins action are covered by a combination of Ottawa Silica Company's
insurance coverage and the current indemnity agreement of ITT Industries, in
each case, discussed above. After the judgment was entered by the trial judge
and upon the posting of a bond, we filed an immediate appeal to the appropriate
appellate court in Texas. Based on advice of counsel, we believe that there were
meritorious grounds to file the appeal and that a reversal and remand of the
case is probable.

         It is likely that we will continue to have silica-related product
liability claims filed against us, including claims that allege silica exposure
for periods after January 1, 1986. We cannot guarantee that our current
indemnity agreement with ITT Industries (which currently expires in 2005 and in
any event only covers alleged exposure to U.S. Silica products for the period
prior to September 12, 1985), or potential insurance coverage (which, in any
event, only covers periods prior to January 1, 1986) will be adequate to cover
any amount for which we may be found liable in such suits. Any such claims or
inadequacies of the ITT Industries indemnity or insurance coverage could have a
material adverse effect in future periods on our consolidated financial
position, results of operations or cash flows, if such developments occur.

         We record amounts for product liability claims based on estimates of
our portion of the cost to be incurred for all pending product liability claims
and estimates based on the present value of an incurred but not reported
liability for unknown claims for exposures that occurred before 1976, when we
began warning our customers and their employees of the health effects of
crystalline silica. Estimated amounts recorded are net of any expected
recoveries from insurance policies or the ITT Industries indemnity. The amounts
recorded for product liability claims are estimates, which are reviewed
periodically by management and legal counsel and adjusted to reflect additional
information when available. The process of estimating and recording amounts for
product liability claims is imprecise and based on a variety of assumptions some
of which, while reasonable at the time, may

                                       21

<PAGE>

prove to be inaccurate. As of December 31, 2001 and December 31, 2000, we had
recorded as an other noncurrent liability $4.6 million and $3.2 million,
respectively, for product liability claims.

         The exposure of persons to silica and the accompanying health risks
have been, and will continue to be, a significant issue confronting the
industrial minerals industry and our industrial minerals segment. Concerns over
silicosis and other potential adverse health effects, as well as concerns
regarding potential liability arising from the use of silica, may have the
effect of discouraging our customers' use of our silica products. The actual or
perceived health risks of mining, processing and handling silica could
materially and adversely affect silica producers, including us, through reduced
use of silica products, the threat of product liability or employee lawsuits,
increased levels of scrutiny by federal and state regulatory authorities of us
and our customers or reduced financing sources available to the silica industry.

         Our Business Is Subject to Operating Risks, Including Fluctuations in
Oil and Energy Prices. All of our revenue is and will be derived from our
industrial minerals and aggregates businesses. The mining, processing and
related infrastructure facilities of these businesses are subject to risks
normally encountered in the industrial minerals and aggregates industries. These
risks include environmental hazards, industrial accidents, technical
difficulties or failures, late delivery of supplies, the price and availability
of power, the price and availability of transportation, unusual or unexpected
geological formations or pressures, cave-ins, pit wall failures, rock falls,
unanticipated ground, grade or water conditions, flooding and periodic or
extended interruptions due to the unavailability of materials and equipment,
inclement or hazardous weather conditions, fires, explosions or other accidents
or acts of force majeure. Any of these risks could result in damage to, or
destruction of, our mining properties or production facilities, personal injury,
environmental damage, delays in mining or processing, losses or possible legal
liability. Any prolonged downtime or shutdowns at our mining properties or
production facilities could have a material adverse effect on us.

         In addition, the price or availability of oil, a raw material used in
making hot mixed asphalt, could adversely affect operating costs, which could in
turn adversely affect our operating results if we cannot pass these increased
costs through to our customers or if customers use less asphalt due to higher
prices. Furthermore, increased energy prices, particularly relating to natural
gas, propane, diesel fuel and other petroleum-based products, could adversely
affect operating costs and, therefore, operating results.

         Demand for Our Products Is Affected by External Factors. Demand in the
markets served by the industrial minerals and aggregates industries is affected
by many external factors, including the general and regional economic conditions
in the states in which we produce and sell our products, demand for automobiles
and other vehicles, the substitution of plastic or other materials for glass,
levels of government spending on road and other infrastructure construction and
demand for residential and commercial construction. General or localized
economic downturns or other external factors adversely affecting demand in the
areas where we sell our products could result in a decrease in sales and
operating income and, therefore, could have a material adverse effect on us. For
example, because our aggregates business is more geographically concentrated
than the businesses of some of our competitors, we may be more vulnerable to
local economic conditions in Pennsylvania and New Jersey.

         We Rely Heavily on Third Party Transportation. We rely heavily on
railroads and trucking companies to ship our industrial minerals and aggregates
products to our customers. Because freight costs represent a significant portion
of the total cost to the customer, fluctuations in freight rates can change the
relative competitive position of our production facilities. Rail and trucking
operations are subject to various hazards, including extreme weather conditions,
work stoppages and operating hazards. If we are unable to ship our products as a
result of the railroads or trucking companies failing to operate or if there are
material changes in the cost or availability of railroad or trucking services,
we may not be able to arrange alternative and timely means to ship our products,
which could lead to interruptions or slowdowns in our businesses and, therefore,
have a material adverse effect on us.

         Future Acquisitions May Adversely Affect Our Operations. We may
actively pursue acquisition opportunities, some of which could be material. We
may finance future acquisitions through internally generated funds, bank
borrowings, public offerings or private placements of equity or debt securities,
or a combination of these sources. We might not be able to make acquisitions on
terms that are favorable to us, or at all. If we do complete any future
acquisitions, we will face many risks, including the possible inability to
integrate an acquired business into our operations, diversion of our
management's attention, failure to retain key acquired personnel and
unanticipated problems or liabilities, some or all of which could have a
material adverse effect on us. Acquisitions could place a significant strain on
management, operating, financial and other resources and increased demands on
our systems and controls.

Inflation

         We do not believe that inflation has had a material impact on our
financial position or results of operations during the periods covered by the
financial statements included in this Annual Report on Form 10-K.

                                       22

<PAGE>

Seasonality

         Our aggregates business is seasonal, due primarily to the effect of
weather conditions in winter months on construction activity in our Pennsylvania
and New Jersey markets. Due to this, peak sales of aggregates occur primarily in
the months of April through November. Accordingly, our results of operations in
any individual quarter may not be indicative of our results of operations for
the full year.

Environmental and Related Matters

         We discuss certain environmental matters relating to our various
production and other facilities, certain regulatory requirements relating to
human exposure to crystalline silica and our mining activity and how such
matters may affect our business in the future under "Business--Government
Regulation."

Recent Accounting Pronouncements

         In June 1998, Statement of Financial Accounting Standards ("SFAS") No.
133, "Accounting for Derivative Instruments and Hedging Activities," was issued.
SFAS No. 133 requires that all derivatives be recognized either as assets or
liabilities in the statement of financial position and be measured at fair
value. SFAS No. 133, as amended by SFAS 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB," is
effective for fiscal years beginning after June 15, 2000. The effect of adopting
this standard at January 1, 2001 was immaterial to our consolidated financial
position and results of operations.

         In June 2001, Statement of Financial Accounting Standards ("SFAS") No.
141, "Business Combinations," was issued. SFAS No. 141 establishes accounting
and reporting standards for business combinations. The provisions of SFAS 141,
which eliminate pooling of interest accounting, apply to all business
combinations initiated after June 30, 2001, and had no effect on our financial
statements.

         Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
and Other Intangible Assets," was issued in June 2001 and is effective for
fiscal years beginning after December 16, 2001. SFAS 142 eliminates goodwill
amortization and requires an evaluation of goodwill impairment upon adoption, as
well as subsequent annual valuations, or more frequently if circumstances
indicate a possible impairment. Impairment if any, resulting from the initial
application of SFAS 142 will be classified as a cumulative effect of a change in
accounting principles. Subsequent impairments, if any, would be classified as an
operating expense. Under SFAS 142, other intangible assets that meet certain
criteria will qualify for recognition on the balance sheet and will continue to
be amortized in the income statement.

         Adoption of SFAS 142 will eliminate annual goodwill amortization
expense of approximately $1.2 million. Although this standard will increase our
results of operations in the future due to the elimination of goodwill
amortization, any impairment would result in a change as discussed above. We are
in the process of assessing the impact of adopting SFAS 142.

         Statement of Financial Accounting Standards ("SFAS") No. 143,
"Accounting for Asset Retirement Obligations," was issued in June 2001. SFAS 143
establishes accounting and reporting standards for obligations associated with
the retirement of tangible long-lived assets. SFAS 143 is effective for fiscal
years beginning after June 15, 2002 and we are evaluating the impact, if any, of
adopting SFAS 143.

         Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," was issued in
August 2001. SFAS 144 establishes accounting and reporting standards for
impairment of long-lived assets to be disposed of, and is effective for fiscal
years beginning after December 15, 2001. We are evaluating the impact of
adopting SFAS 144 but do not believe the effect of adoption will be material to
reported results.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

         We do not expect to enter into financial instruments for trading
purposes. We anticipate periodically entering into interest rate swap agreements
to effectively convert all or a portion of our floating-rate debt to fixed-rate
debt in order to reduce our exposure to movements in interest rates. Such
agreements would involve the exchange of fixed and floating interest rate
payments over the life of the agreement without the exchange of the underlying
principal amounts. The impact of fluctuations in interest rates on the interest
rate swap agreements is expected to be offset by the opposite impact on the
related debt. We record the payments or receipts on the agreements as
adjustments to interest expense. Swap agreements will only be entered into with
syndicate banks. In addition, we may enter into interest rate cap agreements,
which limit our variable rate interest to a specified level. In the future, we
may enter into natural gas and other energy related hedge arrangements in order
to reduce our exposure to

                                       23

<PAGE>

changes in commodity energy prices. At this time, we have no energy hedge
agreements outstanding.

         We are exposed to various market risks, including changes in interest
rates. Market risk related to interest rates is the potential loss arising from
adverse changes in interest rates.

         At December 31, 2001, we had an outstanding interest rate swap
agreement maturing in 2004 with a notional principal amount of $30.0 million. At
December 31, 2000, we had outstanding interest rate swap agreements maturing in
2001 with an aggregate notional principal amount of $30.0 million. At December
31, 1999, we had outstanding interest rate swap agreements maturing in 2001 with
an aggregate notional principal amount of $30.0 million. These swaps effectively
convert the variable interest rates on the notional principal amounts to a fixed
interest rate. In addition, we had interest rate cap agreements at December 31,
2001, 2000 and 1999 with aggregate notional principal amounts of $46.0 million,
$57.0 million and $51.0 million, respectively. These agreements effectively
limit the variable interest rate on the notional principal amount of variable
rate debt to 6.5%.

         The fair value of interest rate swap and cap agreements represents the
estimated receipts or payments that we would make to terminate the agreements.
At December 31, 2001, we would have paid $800,000 to terminate the interest rate
swap agreement and received $149,000 to terminate the interest rate cap
agreements.

         The fair market value of our long-term fixed interest rate debt is
subject to interest rate risk. Generally, the fair market value of the fixed
interest rate debt will increase as the interest rates fall and decrease as
interest rates rise. At December 31, 2001, the estimated fair value of our fixed
interest rate long-term debt (including current portion) was approximately $22.5
million less than its carrying value of $150.0 million due to changes in market
conditions for the senior subordinated notes, which were trading at 85% of their
face value as of December 28, 2001. If the prevailing interest rates at December
31, 2001 increased by 1.0%, the fair market value of our total long-term debt
would decrease by approximately $5.2 million.

                                       24

<PAGE>

Item 8. Financial Statements and Supplementary Data

                        Report of Independent Accountants

To the Board of Directors and Stockholder of Better Minerals & Aggregates
Company:

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 61 present fairly, in all material
respects, the financial position of Better Minerals & Aggregates Company at
December 31, 2001 and 2000, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2001 in conformity
with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 14(a)(2) on page 61 presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, 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, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
March 11, 2002

                                       25

<PAGE>

Better Minerals & Aggregates Company
Consolidated Balance Sheets
(Dollars in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 December 31,
Assets                                                      2001              2000
<S>                                                     <C>              <C>
Current:

   Cash and cash equivalents                           $    2,493        $       860
   Accounts receivable:
     Trade, less allowance for doubtful accounts of
       $1,824 and $1,327                                   45,241             44,817
     Other                                                  2,338              1,173
   Inventories                                             30,780             27,890
   Prepaid expenses and other current assets                2,979              3,221
   Income tax deposit                                           -              2,070
   Deferred income taxes                                    4,276             12,809
                                                       ----------        -----------

         Total current assets                              88,107             92,840

Property, plant and equipment:
   Mining property                                        264,611            264,175
   Mine development                                        11,381              8,156
   Land                                                    26,691             28,249
   Land improvements                                        5,822              5,043
   Buildings                                               36,878             36,556
   Machinery and equipment                                169,122            156,297
   Furniture and fixtures                                   1,923              1,395
   Construction-in-progress                                 6,871              5,317
                                                       ----------        -----------
                                                          523,299            505,188

   Accumulated depletion, depreciation and
     amortization                                        (121,944)           (89,502)
                                                       ----------        -----------

         Property, plant and equipment, net               401,355            415,686


Other noncurrent:
   Goodwill and non-compete agreements, net                14,857             16,649
   Debt issuance costs                                     10,566             12,958
   Other noncurrent assets                                    759                153
                                                       ----------        -----------
         Total other noncurrent                            26,182             29,760
                                                       ----------        -----------
         Total assets                                  $  515,644        $   538,286
                                                       ==========        ===========

<CAPTION>

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

                                                                     December 31,
Liabilities                                                       2001             2000
<S>                                                           <C>               <C>
Current:
   Book overdraft                                             $   7,142         $   7,264
   Accounts payable                                              13,012            15,868
   Accrued liabilities                                           11,872            11,490
   Due to parent                                                  2,405             2,362
   Accrued interest                                               7,391             8,654
   Income taxes payable                                             439                 -
   Current portion of obligation under capital lease                813                40
   Current portion of long-term debt                             10,745             9,076
                                                              ---------         ---------

         Total current liabilities                               53,819            54,754

Noncurrent liabilities:
   Deferred income taxes                                         92,720           110,676
   Obligations under capital lease                                2,583               110
   Long-term debt                                               277,341           280,329
   Other noncurrent liabilities                                  40,355            39,201
                                                              ---------         ---------

         Total noncurrent liabilities                           412,999           430,316


Commitments and contingencies


Stockholder's Equity

Common stock, par value $.01, authorized 5,000 shares,
   issued 100 shares                                                  -                 -
   Loans to related party                                        (1,434)           (1,507)
   Additional paid-in capital                                    81,377            81,377
   Retained deficit                                             (30,604)          (26,560)
   Accumulated other comprehensive (loss)                          (513)              (94)
                                                              ---------         ---------

         Total stockholder's equity                              48,826            53,216
                                                              ---------         ---------
         Total liabilities and stockholder's equity           $ 515,644         $ 538,286
                                                              =========         =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       26








<PAGE>

Better Minerals & Aggregates Company
Consolidated Statements of Operations
(Dollars in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 Years Ended
                                                                                 December 31,
                                                                     2001           2000            1999
<S>                                                             <C>              <C>            <C>
Sales                                                           $   307,947      $  299,335     $   244,802
Cost of goods sold                                                  229,193         222,754         175,971
Depreciation, depletion and amortization                             32,670          35,895          28,481
Selling, general and administrative (Note 13)                        23,905          26,541          21,843
                                                                -------------  --------------  -------------
       Operating income (loss)                                       22,179          14,145          18,507

Interest expense                                                     35,625          36,359          19,590
Accretion of preferred stock warrants                                     -               -              56
Other income, net, including interest income                         (1,103)         (1,575)         (2,171)
                                                                -------------  --------------  -------------
       Income (loss) before income taxes                            (12,343)        (20,639)          1,032

Benefit for income taxes                                             (8,299)        (11,091)         (2,714)
                                                                -------------  --------------  -------------
       Net income (loss) before extraordinary loss                   (4,044)         (9,548)          3,746

Extraordinary loss (less applicable income
   taxes of $1,752) (Note 7)                                              -               -          (2,747)
                                                                -------------  --------------  -------------
       Net income (loss)                                        $    (4,044)     $   (9,548)    $       999
                                                                =============  ==============  =============
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                       27


<PAGE>


Better Minerals & Aggregates Company
Consolidated Statements of Stockholder's Equity
(Dollars in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                     Accumulated Other
                                                                                                 Comprehensive Income (Loss)
                                                                                            ----------------------------------------
                                                         Additional               Loans to     Foreign      Unrealized      Minimum
                                                Common    Paid-In     Retained     Related     Currency      Loss on        Pension
                                                Stock     Capital      Deficit      Party     Translation   Derivatives    Liability
<S>                                            <C>        <C>        <C>           <C>         <C>          <C>            <C>
Balance, December 31, 1998                     $     -    $ 41,491   $ (18,011)    $      -    $     (44)    $      -      $    (40)

Comprehensive income, net of income taxes:
   Net income                                                              999
   Foreign currency translation                                                                       14
   Minimum pension liability                                                                                                     40

           Total comprehensive income (loss)

Capital contributed by parent                               39,886
                                               -------    --------   ---------     --------    ---------     --------      --------

Balance, December 31, 1999                                  81,377     (17,012)                      (30)

Comprehensive income, net of income taxes:
   Net income (loss)                                                    (9,548)
   Foreign currency translation                                                                       30
   Minimum pension liability                                                                                                    (94)



           Total comprehensive income (loss)

Loans to related party                                                               (1,507)
                                               -------    --------   ---------     --------    ---------     --------      --------
Balance, December 31, 2000                                  81,377     (26,560)      (1,507)           -                        (94)

Comprehensive income, net of income taxes:
   Net income (loss)                                                    (4,044)
   Unrealized loss on derivatives                                                                                (499)
   Minimum pension liability                                                                                                     80


           Total comprehensive income (loss)

Loans to related party                                                                   73
                                               -------    --------   ---------     --------    ---------     --------      --------

Balance, December 31, 2001                     $     -    $ 81,377   $ (30,604)    $ (1,434)   $       -     $   (499)     $    (14)
                                               =======    ========   =========     ========    =========     ========      ========

<CAPTION>
                                                         ----------
                                                                            Total
                                                                         Stockholder's
                                                             Total          Equity
<S>                                                       <C>            <C>
Balance, December 31, 1998                                $     (84)     $   23,396

Comprehensive income, net of income taxes:
   Net income                                                                   999
   Foreign currency translation                                  14              14
   Minimum pension liability                                     40              40
                                                                         ----------

           Total comprehensive income (loss)                                  1,053

Capital contributed by parent                                                39,886
                                                          ---------      ----------
Balance, December 31, 1999                                      (30)         64,335

Comprehensive income, net of income taxes:
   Net income (loss)                                                         (9,548)
   Foreign currency translation                                  30              30
   Minimum pension liability                                    (94)            (94)
                                                                         ----------
           Total comprehensive income (loss)                                 (9,612)

Loans to related party                                                       (1,507)
                                                                         ----------
Balance, December 31, 2000                                      (94)         53,216

Comprehensive income, net of income taxes:
   Net income (loss)                                                         (4,044)
   Unrealized loss on derivatives                              (499)           (499)
   Minimum pension liability                                     80              80
                                                                         ----------
           Total comprehensive income (loss)                                 (4,463)

Loans to related party                                                           73
                                                                         ----------
Balance, December 31, 2001                                $    (513)     $   48,826
                                                                         ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       28



<PAGE>

Better Minerals & Aggregates Company
Consolidated Statements of Cash Flows
(Dollars in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                Years Ended December 31,
                                                                          2001            2000            1999
<S>                                                                  <C>            <C>             <C>
Cash flows from operating activities:
   Net income (loss)                                                 $    (4,044)   $     (9,548)   $        999
   Adjustments to reconcile net income (loss) to cash flows
   from operations:
     Depreciation, depletion and amortization                             34,363          37,033          29,112
     Accretion of preferred stock warrants                                     -               -              56
     Debt issuance amortization                                            2,392           2,078           1,148
     Extraordinary loss                                                        -               -           4,499
     Deferred income taxes                                                (9,423)        (11,218)         (6,962)
     Gain on disposal of property, plant and equipment                      (147)           (237)           (165)
     Loss on sale of investment                                                -              83               -
     Other                                                                   128             610             468
     Changes in current assets and liabilities, net of the effects
       from acquired companies:
         Trade receivables                                                  (424)         (4,868)           (360)
         Other receivables                                                (1,165)           (229)            563
         Receivable from parent                                               43           3,196            (838)
         Payable to related party                                              -            (898)            898
         Inventories                                                      (2,890)         (5,098)         (1,250)
         Prepaid expenses and other current assets                        (1,063)         (1,256)           (668)
         Accounts payable and accrued liabilities                         (2,474)         (1,711)         (4,565)
         Accrued interest                                                 (1,263)            825           7,153
         Income taxes                                                      2,510          (1,064)           (569)
                                                                     ------------   -------------   -------------
           Net cash provided by operating activities                      16,543           7,698          29,519
Cash flows from investing activities:
   Capital expenditures                                                  (13,738)        (20,319)        (14,572)
   Proceeds from sale of property, plant and equipment                       594             670           1,310
   Proceeds from sale of investment                                            -           3,136               -
   Loans to related party                                                     73          (1,507)              -
   Purchases of businesses, net of cash acquired                               -          (6,050)       (172,379)
                                                                     ------------   -------------   -------------
            Net cash used for investing activities                       (13,071)        (24,070)       (185,641)
Cash flows from financing activities:
   Change in book overdraft                                                 (122)          2,238          (1,402)
   Issuance of long-term debt                                                  -               -         325,006
   Repayment of long-term debt                                            (9,169)         (3,600)       (169,205)
   Change in Working Capital Facility                                      7,850           5,500          (6,100)
   Principal payments on capital lease obligations                          (398)            (73)            (44)
   Financing fees                                                              -            (435)        (15,796)
   Capital contributed by parent                                               -               -          35,000
                                                                     ------------   -------------   -------------
           Net cash (used for) provided by financing activities           (1,839)          3,630         167,459
Effect of exchange rate on cash                                                -              29              14
                                                                     ------------   -------------   -------------
           Net increase (decrease) in cash                                 1,633         (12,713)         11,351
Cash and cash equivalents, beginning of period                               860          13,573           2,222
                                                                     ------------   -------------   -------------
Cash and cash equivalents, end of period                              $    2,493     $       860     $    13,573
                                                                     ============   =============   =============

Schedule of noncash investing and financing activities:

Assets acquired by entering into capital lease obligations            $    3,644     $         -     $         -
                                                                     ============   =============   =============
Forgiveness of Series A and B Preferred Stock warrants of
 Holdings                                                             $        -     $         -     $     3,836
                                                                     ============   =============   =============
Forgiveness of payable to parent                                      $        -     $         -     $     1,050
                                                                     ============   =============   =============
Cash paid during the year for:
  Interest                                                            $   34,132     $    33,266     $    10,925
                                                                     ============   =============   =============
  Income taxes                                                        $      689     $     2,447     $     3,232
                                                                     ============   =============   =============
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       29




<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

1.      Organization

        Better Minerals & Aggregates Company (the "Company"), an indirect
        wholly owned subsidiary of USS Holdings, Inc. ("Holdings"), was
        organized in January 1996. BMAC Holdings, Inc. ("BMAC Holdings"), a
        wholly owned subsidiary of Holdings, is the direct parent of the
        Company.

        The Company owns three operating subsidiaries: U.S. Silica Company
        ("U.S. Silica"), which produces industrial minerals, Better Materials
        Corporation ("Better Materials"), which produces aggregates and BMAC
        Services Co., Inc., which provides management advisory services to the
        Company.

        On April 8, 1999, U.S. Silica acquired the assets (the "Morie Assets")
        of five New Jersey-based operations owned by Unimin Corporation (Note
        3). On October 1, 1999, the Company acquired Commercial Stone Co.,
        Inc. and Commercial Aggregates Transportation and Sales, L.P. and
        their related quarry properties (Note 3), collectively referred to as
        "Commercial Stone."

        The Company and its subsidiaries are collectively referred to as the
        "Company" in the accompanying financial statements and footnotes.

2.      Summary of Significant Accounting Policies

        a.   Principles of Consolidation

             The consolidated financial statements include the accounts of the
             Company and its direct and indirect wholly owned subsidiaries.
             All significant intercompany balances and transactions have been
             eliminated in consolidation.

        b.   Reclassifications

             Certain prior years' amounts have been reclassified to conform
             with the current year's presentation.

        c.   Use of Estimates and Assumptions

             The preparation of financial statements in conformity with
             generally accepted accounting principles requires management to
             make estimates and assumptions that affect the reported amounts
             of assets and liabilities and the disclosure of contingent assets
             and liabilities at the dates of the financial statements and the
             reported amounts of revenues and expenses during the reporting
             periods. Significant estimates include doubtful accounts,
             amortization and depreciation, income taxes, environmental and
             product liabilities, mine reclamation and employee benefit costs.
             Actual results could differ from those estimates.

        d.   Cash and Cash Equivalents

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

        e.   Inventories

             Inventories are stated at the lower of cost or market. Cost is
             determined using the first-in, first-out and average cost
             methods.

                                       30

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     f.   Revenue Recognition

          Revenue is recorded when legal title passes at the time of shipment to
          the customer. Shipping and handling costs billed to customers are
          included in sales.

     g.   Deferred Financing Costs

          Deferred financing costs consist of loan origination costs, which are
          being amortized over the term of the related debt principal.
          Amortization included in interest expense for each of the three years
          in the period ended December 31, 2001 totaled approximately $2.4
          million, $2.1 million and $1.1 million, respectively.

     h.   Depreciable Properties

          Depreciable properties, mining properties and mineral deposits
          acquired in connection with business acquisitions are recorded at fair
          market value as of the date of acquisition. Additions and improvements
          occurring through the normal course of business are capitalized at
          cost.

          Upon retirement or disposal of assets, other than those of U.S. Silica
          acquired on February 9, 1996, the cost and accumulated depreciation or
          amortization are eliminated from the accounts and any gain or loss is
          reflected in the statement of operations. Group asset accounting is
          utilized for the U.S. Silica assets acquired on February 9, 1996.
          Gains and losses on normal retirements or dispositions of these assets
          are excluded from net income and proceeds for dispositions are
          recorded as a reduction of the acquired cost. Expenditures for normal
          repairs and maintenance are expensed as incurred.
          Construction-in-progress is primarily comprised of machinery and
          equipment which has not yet been placed in service.

          Depreciation is computed using the straight-line method over the
          estimated useful lives of the assets, ranging from 3 to 15 years.

          Depletion and amortization of mineral deposits are provided as the
          minerals are extracted, based on units of production and engineering
          estimates of mineable reserves. The impact of revisions to reserve
          estimates is recognized on a prospective basis.

     i.   Mine Exploration and Development

          Costs to develop new mining properties and expand existing properties
          are capitalized and amortized based on units of production.

     j.   Mine Reclamation Costs

          The estimated net future costs of dismantling, restoring and
          reclaiming operating mines and related mine sites, in accordance with
          federal, state and local regulatory requirements, are accrued during
          operations. The provision is made based upon units of production and
          estimated minable reserves as of the balance sheet date. The effect of
          changes in estimated costs, production, and minable reserves is
          recognized on a prospective basis.

                                       31

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

          k.   Intangible Assets

               The Company's intangible assets include goodwill and non-compete
               agreements. The cost of goodwill is being amortized on a
               straight-line basis over a period of fifteen years. The Company
               periodically evaluates the recoverability of its goodwill and
               measures any impairment by comparison to estimated undiscounted
               cash flows from future operations (see footnote 2.q. below). The
               costs of the non-compete agreements are being amortized on a
               straight-line basis over the terms of the agreements, which range
               from three to five years.

          l.   Income Taxes

               The Company accounts for income taxes pursuant to the provisions
               under Statement of Financial Accounting Standards ("SFAS") No.
               109, "Accounting for Income Taxes", which requires recognition of
               deferred tax liabilities and assets for the expected future tax
               consequences of events that have been included in the financial
               statements or tax returns. Under this method, deferred tax
               liabilities and assets are determined based upon the difference
               between the financial statement and tax basis of assets and
               liabilities using enacted tax rates in effect for the year in
               which the expenses are expected to reverse. The Company is
               included in the consolidated federal tax return of Holdings. The
               tax provision (benefit) included in the accompanying financial
               statements has been computed on a separate return basis.

          m.   Concentration of Credit Risk

               The Company's five largest customers accounted for approximately
               12%, 13% and 20% of sales for the three years ended December 31,
               2001, 2000 and 1999. Management believes it maintains adequate
               reserves for potential credit losses; ongoing credit evaluations
               are performed and collateral is generally not required.

          n.   Financial Instruments

               The Company uses interest rate swap and cap agreements to manage
               interest costs and the risk associated with changing interest
               rates. Amounts to be paid or received under interest rate swap
               agreements are accrued as interest rates change and are
               recognized over the life of the swap agreements as an adjustment
               to interest expense. The Company's policy is to not hold or issue
               derivative financial instruments for trading or speculative
               purposes. When entered into, these financial instruments are
               designated as hedges of underlying exposures, associated with the
               Company's long-term debt, and are monitored to determine if they
               remain effective hedges. Gains and losses on derivatives
               designated as cash flow hedges are recorded in other
               comprehensive income and reclassified to earnings in a manner
               that matches the timing of the earnings impact of the hedged
               transactions. The ineffective portion of all hedges, if any, are
               recognized currently in income.

          o.   Environmental Costs

               Environmental costs, other than qualifying capital expenditures,
               are accrued at the time the exposure becomes known and costs can
               be reasonably estimated. Costs are accrued based upon
               management's estimates of all direct costs, after taking into
               account expected reimbursement by third parties (primarily the
               sellers of acquired businesses), and are reviewed by outside
               consultants. Environmental costs are charged to expense unless a
               settlement with an indemnifying party has been reached.

                                       32

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     p.   Comprehensive Income

          Comprehensive income is defined as the change in equity from
          transactions and other events from nonowner sources and consists of
          net income and other comprehensive income. The Company includes
          foreign currency translation adjustments, changes in the fair value of
          cash flow hedge derivative instruments and minimum pension liability
          adjustments in other comprehensive income.

     q.   Impact of Recent Accounting Standards/Pronouncements

          Effective January 1, 2001, the Company adopted Statement of Financial
          Accounting Standards No. 133 (FAS 133), Accounting for Derivative
          Instruments and Hedging Activities. FAS 133 establishes accounting and
          reporting standards for derivative instruments, and for hedging
          activities. It requires that an entity recognize all derivatives as
          either assets or liabilities in the statement of financial position
          and measure those instruments at fair value. The effect of adopting
          this Standard was not material to reported results.

          Statement of Financial Accounting Standards No. 141 (FAS 141),
          Business Combinations, was issued in June 2001. FAS 141 establishes
          accounting and reporting standards for business combinations. The
          provisions of FAS 141, which eliminate pooling of interests
          accounting, apply to all business combinations initiated after June
          30, 2001 and had no effect on the Company's financial statements.

          Statement of Financial Accounting Standards No. 142 (FAS 142),
          Goodwill and Other Intangible Assets, was issued in June 2001 and is
          effective for fiscal years beginning after December 15, 2001. FAS 142
          eliminates amortization of goodwill and indefinite-lived intangibles
          and requires an evaluation of impairment of such units upon adoption
          of the Standard, as well as subsequent annual evaluations, or more
          frequently if circumstances indicate a possible impairment.
          Impairment, if any, resulting from the initial application of the new
          Standard will be classified as a cumulative effect of a change in
          accounting principle. Subsequent impairments, if any, would be
          classified as an operating expense. Under this standard, other
          intangible assets that have finite useful lives will continue to be
          amortized in the income statement.

          Adoption of FAS 142 will eliminate annual goodwill amortization
          expense of approximately $1.2 million. Although this standard will
          increase the Company's results of operations in the future due to the
          elimination of goodwill amortization, any impairment would result in a
          charge as discussed above. The Company is in the process of assessing
          the impact of adopting FAS 142.

          Statement of Financial Accounting Standards No. 143 (FAS 143),
          Accounting for Asset Retirement Obligations, was issued in June 2001.
          FAS 143 establishes accounting and reporting standards for obligations
          associated with the retirement of tangible long-lived assets. FAS 143
          is effective for the Company beginning January 1, 2003 and the Company
          is evaluating the impact of adopting this Standard.

          Statement of Financial Accounting Standards No. 144 (FAS 144),
          Accounting for the Impairment or Disposal of Long-Lived Assets, was
          issued in August 2001. FAS 144 establishes accounting and reporting
          standards for impairment of long-lived assets to be

                                       33

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

               disposed of. FAS 144 is effective for fiscal years beginning
               after December 15, 2001. The Company is evaluating the impact of
               adopting the Standard but does not believe the effect of adoption
               will be material to reported results.

3.       Acquisitions

         On March 10, 2001, Better Materials entered into a Sublease and Option
         Agreement with Amerikohl Mining, Inc. for a three year period. Under
         this agreement, Better Materials obtained all rights, title and
         interest under leases held, and property owned, by Amerikohl Mining,
         Inc. to an aggregates operation in Springfield Township, Pennsylvania,
         known as the Jim Mountain Quarry. The agreement requires Better
         Materials to pay a monthly amount for equipment rental and royalties
         plus a purchase option payment. Furthermore, the agreement grants
         Better Materials the right to purchase all of the assets of the
         operation at any time during the three-year period for a predetermined
         price less the total option payments paid up to the time the option is
         exercised. The Company expenses all payments related to the operation
         of the facility. Option payments are recorded as other noncurrent
         assets on the balance sheet. As of December 31, 2001 the total amount
         included in other noncurrent assets for option payments totaled
         $500,000. If the Company decides not to exercise its option by the end
         of the three-year period, this amount will be expensed at that time.

         On October 1, 1999, the Company acquired Commercial Stone for total
         consideration of $139.0 million in cash. The Company financed the
         acquisition through the issuance of $150.0 million Senior Subordinated
         Notes and the refinancing of its existing senior debt by entering into
         new Senior Secured Credit Facilities (Note 6). The acquisition was
         accounted for as a purchase and the purchase price was allocated to the
         assets acquired and liabilities assumed based on their fair values at
         the date of acquisition. Approximately $175.9 million, inclusive of
         deferred income taxes of $76.0 million, has been allocated to mineral
         reserves and is being amortized based on production. The allocation of
         the purchase price was as follows:

                                                                 (In thousands)

         Working capital, other than cash                            $   7,443
         Property, plant and equipment                                  27,207
         Goodwill                                                        7,403
         Mineral reserves                                              175,856
         Other assets                                                    1,739
         Other liabilities                                                (818)
         Deferred income taxes                                         (79,830)
                                                                     ---------
               Purchase price, net of cash received                  $ 139,000
                                                                     =========

         On April 8, 1999, the Company acquired the assets of five New
         Jersey-based operations formerly owned by the Morie Company and owned
         at the time by Unimin Corporation for total consideration of $33.4
         million. Also on April 8, 1999, the Company amended its $155.0 million
         Credit Agreement to add a $35.0 million dollar Senior Term C Facility
         (Note 6). The purchase price was financed with proceeds from the
         addition of the Senior Term C Facility. The acquisition was accounted
         for as a purchase and the purchase price was allocated to the assets
         acquired and liabilities assumed based on their fair values at the date
         of acquisition. Approximately $11.1 million has been allocated to
         mineral reserves and is being amortized based on production. The
         allocation of the purchase price was as follows:

                                       34

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    (In thousands)
     <S>                                                            <C>
     Working capital, other than cash                                 $   1,569
     Property, plant and equipment                                       15,102
     Goodwill                                                             5,844
     Mineral reserves                                                    11,053
     Other liabilities                                                     (308)
     Deferred income taxes                                                  120
                                                                      ---------
           Purchase price, net of cash received                       $  33,380
                                                                      =========
</TABLE>

  4. Inventories

     At December 31, 2001 and 2000, inventory consisted of the following:

     (In thousands)                                           2001       2000

     Supplies (net of $266 and $66 obsolescence reserve)   $  11,783  $  11,820
     Raw materials and work in process                         4,707      4,563
     Finished goods                                           14,290     11,507
                                                           ---------  ---------

                                                           $  30,780  $  27,890
                                                           =========  =========

  5. Lease Commitments

     The Company is obligated under certain capital and operating leases for
     railroad cars, mining property, mining/processing equipment, office space
     and transportation and other equipment. Certain of the operating lease
     agreements include options to purchase the equipment for fair market value
     at the end of the original lease term. Future minimum annual commitments
     under such operating leases at December 31, 2001 are as follows:

<TABLE>
<CAPTION>
     Year Ending
     December 31,                                                   (In thousands)
     <S>                                                            <C>
     2002                                                             $   2,068
     2003                                                                   974
     2004                                                                   453
     2005                                                                   305
     2006                                                                   141
     Thereafter                                                              70
                                                                      ---------
                                                                      $   4,011
                                                                      =========
</TABLE>



     Rental expense for operating leases for each of the three years in the
     period ended December 31, 2001 totaled approximately $2.6 million, $2.7
     million and $2.0 million, respectively.

     In general, the above leases include renewal options and provide that the
     Company pays for all utilities, insurance, taxes and maintenance.

                                       35

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Future minumum annual commitments under the capital lease obligations as of
     December 31, 2001 are as follows:

     Year Ending
     December 31,                                         (In thousands)
     2002                                                     $  1,045
     2003                                                        1,038
     2004                                                        1,014
     2005                                                          638
     2006                                                          158
     Thereafter                                                      -
                                                              --------
                Total minimum lease payments                     3,893

       Less amount representing interest                           497
                                                              --------

                Present value of net minimum lease payments   $  3,396
                                                              ========

6.   Long-Term Debt

     At December 31, 2001 and 2000, long-term debt consisted of the following:

<TABLE>
<CAPTION>
     (In thousands)                                                       2001            2000
     <S>                                                              <C>             <C>
     Senior Secured Credit Facilities
        Tranche A Term Loan Facility (final maturity                  $    32,250     $     39,057
          September 30, 2005) (5.75% at December 31, 2001)
        Tranche B Term Loan Facility (final maturity
          September 30, 2007) (6.25% at December 31, 2001)                 91,500           93,500

     Senior Subordinated Notes (final maturity
        September 15, 2009) (13% at December 31, 2001)                    150,000          150,000

     Working Capital Facility (final maturity
        September 30, 2005) (average of 6.32% at
        December 31, 2001)                                                 13,350            5,500

     Secured Note (due December 31, 2001)                                       -               72

     Mortgage Notes
        0% Note, imputed at 10.0% (due January 16, 2008)                      955              990
        8.5% Note (due July 1, 2003)                                           31               49
        7.0% Note (due July 31, 2004)                                           -              237
                                                                      -----------     ------------
                                                                          288,086          289,405
         Less, current portion                                             10,745            9,076
                                                                      -----------     ------------

                                                                      $   277,341     $    280,329
                                                                      -----------     ------------
</TABLE>

                                       36



<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

         At December 31, 2001, contractual maturities of long-term debt are as
         follows:

         Year Ending
         December 31,                                             (In thousands)

            2002                                                  $      10,745
            2003                                                         10,650
            2004                                                         10,792
            2005                                                         17,162
            2006                                                         39,259
            Thereafter                                                  199,478
                                                                 ---------------
                                                                  $     288,086
                                                                 ===============

         Debt Agreements

         On September 30, 1999, the Company entered into a new $230.0 million
         Credit Agreement (the "Agreement"), which consisted of a $50.0 million
         revolving credit facility (the "Revolving Credit Facility"), a $45.0
         million Tranche A Term Loan Facility ("Term A Loan"), a $95.0 million
         Tranche B Term Loan Facility ("Term B Loan") and a $40.0 million term
         loan acquisition facility (the "Acquisition Term Loan Facility"). The
         Term A Loan included a tranche of loans denominated in Canadian dollars
         (the "Canadian Term Facility") equal to $2.0 million, which was
         borrowed by George F. Pettinos (Canada) Limited, an indirect wholly
         owned subsidiary of the Company. The Revolving Credit Facility, Term A
         Loan, Term B Loan, Acquisition Term Loan Facility and the Canadian Term
         Facility are collectively referred to in the notes to the financial
         statements as the "Senior Secured Credit Facilities." In addition, on
         October 1, 1999 the Company issued $150.0 million of Senior
         Subordinated Notes. Pursuant to an Exchange and Registration Rights
         Agreement, in April 2000, the Company consummated an exchange offer
         pursuant to which it exchanged the Senior Subordinated Notes for
         registered notes having substantially the same terms. The proceeds from
         the Senior Secured Credit Facilities and the Senior Subordinated Notes
         were primarily used to pay off the outstanding senior debt and to
         finance the acquisition of Commercial Stone. On February 29, 2000, the
         Company completed the sale of the stock of its Canadian operating
         subsidiary, George F. Pettinos (Canada) Limited for $3.2 million. The
         proceeds from the sale were used to retire the Canadian Term Facility
         and for general corporate uses. The Acquisition Term Loan facility was
         canceled in February 2001 as described below.

         Under the Agreement, the Company has available, until September 30,
         2005, the Revolving Credit Facility, which provides for the borrowings
         of up to $50.0 million with a sublimit of $12.0 million for letters of
         credit and a sublimit of $3.0 million for swingline loans. The
         borrowing capacity of the Revolving Credit Facility is reduced by
         outstanding letters of credit and swingline loans. At December 31,
         2001, outstanding letters of credit totaled $7.5 million. There were
         $13.4 million in borrowings under the Revolving Credit Facility at
         December 31, 2001, including $2.9 million of borrowings under the
         swingline loans.

         Borrowings under the Senior Secured Credit Facilities bear variable
         interest at the Company's option at either (1) the bank's base (base
         rate at December 31, 2001 was 4.75%) rate plus a margin percentage,
         ranging from 1.00% to 2.50% or (2) the London Interbank Offered Rate
         ("LIBOR") (LIBOR at December 31, 2001 was 1.88%) plus a margin
         percentage, ranging from 2.00% to 3.50%. Commitment fees, ranging from
         .375% to .75%, on the average daily unused

                                       37

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Revolving Credit Facility are payable quarterly. Letter of credit fees are
     also payable quarterly based upon the average daily balance of all letters
     of credit outstanding. The Senior Subordinated Notes bear interest at a
     rate of 13% per annum, payable semi-annually.

     The obligations of the Company under the Senior Secured Credit Facilities
     are unconditionally and irrevocably guaranteed, jointly and severally, by
     BMAC Holdings and each of the Company's direct or indirect domestic
     subsidiaries. BMAC Holdings has no operations or assets other than its
     investment in its subsidiaries. In addition, the Senior Secured Credit
     Facilities are secured by a first priority pledge of (i) all the capital
     stock of BMAC Holdings, the Company, each of the Company's direct or
     indirect domestic subsidiaries and 65% of the capital stock of each direct
     foreign subsidiary of the Company or any of its domestic subsidiaries and
     (ii) substantially all of the tangible and intangible assets held by BMAC
     Holdings, the Company and each of the Company's direct or indirect domestic
     subsidiaries.

     The Agreement contains various restrictive covenants that, among other
     things, limit the ability of the Company to engage in certain transactions
     with affiliates, incur additional indebtedness, repay other indebtedness or
     amend other debt instruments, create liens on assets, make investments or
     acquisitions, engage in mergers or consolidations, dispose of assets, or
     pay dividends. In addition, the Agreement requires the Company to maintain
     certain financial covenants, annually and quarterly, including a leverage
     ratio, an interest coverage ratio and a capital expenditures covenant. The
     Senior Subordinated Notes are also subject to certain restrictive covenants
     that are similar to those of the Senior Secured Credit Facilities.

     The obligation of the Company under the Senior Subordinated Notes is
     unconditionally and irrevocably guaranteed, jointly and severally, on an
     unsecured senior subordinated basis to the Company's Senior Secured Credit
     Facilities, by each of the Company's domestic subsidiaries. The Senior
     Subordinated Notes are not guaranteed by the Company's inactive Canadian
     subsidiary.

     On February 22, 2001 the lenders under the Senior Secured Credit Facilities
     approved an amendment effective December 31, 2000 that revised the required
     leverage ratio and interest coverage ratio covenants under the Agreement
     for the period of December 31, 2000 through December 31, 2001. As a result
     of this amendment, the Company was in compliance with all of its financial
     covenants, as revised, as of December 31, 2000. In connection with this
     amendment, the Company agreed to a 25 basis point increase in interest
     rates for any period in which the leverage ratio is greater than 5.0. In
     addition, the Company agreed to cancel the undrawn $40.0 million
     Acquisition Term Loan Facility, which also resulted in a $300,000 reduction
     in the annual loan commitment fees, as of February 22, 2001. A one-time
     amendment fee of approximately $424,000 was paid to the lenders as part of
     the amendment.

     Effective January 31, 2002, the lenders under the Senior Secured Credit
     Facilities approved an amendment that waived any default under the required
     leverage ratio and interest coverage covenants for the fiscal quarter ended
     December 31, 2001. The amendment also revised the requirement for these
     covenants under the Agreement for the period from March 31, 2002 through
     December 31, 2002. In connection with this amendment, the Company agreed to
     another 25 basis point increase in interest rates for any period in which
     the leverage ratio is greater than 5.0. A one-time amendment fee of
     approximately $424,000 was paid to the lenders as part of the amendment.

                                       38

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     The Company believes, based on its calendar year 2002 forecast, that it
     will be in compliance with the amended leverage ratio and interest coverage
     ratio covenants contained in the Agreement throughout calendar year 2002.
     In the event that the Company does not substantially achieve its 2002
     forecast, it will be necessary to seek further amendments to the senior
     credit agreement covenants. While the Company obtained amendments and
     waivers under this agreement in the past, there can be no assurance that
     future amendments or waivers will be granted or that such amendments or
     waivers, if granted, would be on terms satisfactory to the Company.

     At December 31, 2001 and 2000, the fair value of the Company's long-term
     debt approximated $266 and $256 million, respectively.

     Warrants
     Warrants to purchase 41,667 shares of Series A Preferred Stock ("Series A
     warrants") and 83,334 shares of Series B Preferred Stock ("Series B
     warrants") of the Company's ultimate parent, Holdings, were issued to
     holders of subordinated debt as part of a Note Purchase Agreement dated
     February 9, 1996.

     The Series A warrants and Series B warrants are exercisable at any time
     until December 19, 2005 at an exercise price of $.01 per share or less as
     defined by the warrant issuance agreement. The holder of the warrants has
     the right to require Holdings to purchase any and all of the warrants and
     shares subject to the warrants at fair value in cash after December 19,
     2001 and prior to a "liquidity event" which is defined as the sale or
     liquidation of Holdings or the consummation of a public offering. Holdings
     may call all of the outstanding warrants and shares subject to warrants
     after December 19, 2002, subject to approval of the holders of the senior
     debt. Fair value is defined as the liquidation preference value of $7.78
     per share (plus all accrued and unpaid dividends thereon) for the Series A
     warrants and the common equity value per share as determined by the Board
     of Directors for the Series B warrants. The accretion of the Series A
     warrants and the Series B warrants to fair value is accounted for by
     charges to earnings. The holders of the Series A warrants and the Series B
     warrants are entitled to dividends as if they had held underlying shares
     from February 9, 1996.

     Effective December 31, 1999, Holdings agreed to forgive the Company and its
     subsidiaries for the obligation associated with the Series A warrants and
     the Series B warrants. The forgiveness of the obligation resulted in a
     credit to additional paid-in capital of approximately $3.8 million during
     the year ended December 31, 1999.

7.   Extraordinary Item

     During the year ended December 31, 1999, the Company recorded an
     extraordinary after-tax charge of $2.7 million in connection with the early
     extinguishment of outstanding senior debt under its $155.0 million Credit
     Agreement. The extraordinary loss of $4.5 million (before an income tax
     benefit of $1.8 million) consisted of the write-off of related unamortized
     debt issuance costs.

8.   Financial Instruments

     Interest rate swap and cap agreements are utilized in the normal course of
     business to manage the Company's interest costs and the risk associated
     with changing interest rates. Interest rate swap agreements are used to
     exchange the difference between fixed and variable-rate interest amounts
     calculated by reference to an agreed-upon notional principal amount. In
     addition, the Company utilizes interest rate cap agreements to limit the
     impact of increases in interest rates on its floating

                                       39

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     rate debt. Interest rate cap agreements entitle the Company to receive from
     the counterparties the amounts, if any, by which the selected market
     interest rates exceed the strike rates stated per the agreements. The
     Company does not use derivative financial instruments for trading or
     speculative purposes. By their nature, all such instruments involve risk,
     including the possibility that a loss may occur from the failure of another
     party to perform according to the terms of a contract (credit risk) or the
     possibility that future changes in market price may make a financial
     instrument less valuable or more onerous (market risk). As is customary for
     these types of instruments, the Company does not require collateral or
     other security from other parties to these instruments. In management's
     opinion there is no significant risk of loss in the event of nonperformance
     of the counterparties to these financial instruments.

     The fair value of the interest rate agreements represents the estimated
     receipts or payments that would be required to settle the agreements at
     year-end. Quoted market prices were used to estimate the fair values of the
     interest rate swap and cap agreements. The notional amount represents
     agreed upon amounts on which calculations of dollars to be exchanged are
     based. They do not represent amounts exchanged by the parties and,
     therefore, are not a measure of the Company's exposure. The Company's
     credit exposure is limited to the fair value of the contracts with a
     positive fair value plus interest receivable, if any, at the reporting
     date.

<TABLE>
<CAPTION>
                                              December 31, 2001                   December 31, 2000
                                       ---------------------------------   -----------------------------------
                                         Contract/                           Contract/
                             Maturity    Notional    Carrying     Fair       Notional     Carrying      Fair
(In thousands)                 Date       Amount      Amount      Value       Amount       Amount        Value
                             --------  -----------   --------    -------   ------------   ---------     -------
<S>                          <C>       <C>           <C>         <C>       <C>            <C>           <C>
Derivatives
  Interest rate swap
     agreements                2001     $      -     $      -    $      -  $ 30,000 (2)   $       -      $  97
                               2004     $ 30,000 (1) $   (798)   $   (798)


  Interest rate cap
     agreements                2001     $      -     $      -    $      -  $ 30,000 (3)   $       -      $  15
                               2002     $ 21,000 (3) $      -    $      -  $ 21,000 (2)   $      57      $ (25)
                               2004     $ 25,000 (3) $    149    $    149  $      -       $       -      $   -
</TABLE>


(1)  Agreement effectively exchanges the LIBOR floating interest rate for a
     fixed interest rate of 4.70%.

(2)  Agreement effectively exchanges the LIBOR floating interest rate for a
     fixed interest rate of 5.74%.

(3)  Agreement limits the LIBOR floating interest rate to 6.50%.

The Company has designated these contracts as qualified cash flow hedges.
Accordingly, the effective portion of the gain or loss on the derivative
instrument is reported as a component of other comprehensive income and
recognized in earnings in the same period or periods during which the hedged
transaction affects earnings. The Company had no ineffective interest rate
contracts at December 31, 2001.

                                       40

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     9.   Commitments and Contingencies

          The Company's subsidiary, U.S. Silica Company, is currently
          self-insured for third party product liability claims alleging
          occupational disease. U.S. Silica has been named as a defendant in
          numerous product liability claims in which the plaintiffs allege that
          they are employees or former employees of its customers, that U. S.
          Silica's silica products were defective, or that U.S. Silica acted
          negligently in selling its silica products without a warning, or with
          an inadequate warning. The plaintiffs further claim that these alleged
          defects or negligent actions caused them to suffer injuries and
          sustain damages as a result of exposure to those products. In almost
          all cases, the injuries alleged by the plaintiffs are silicosis or
          "mixed dust disease," a claim that allows the plaintiffs to pursue
          litigation against the sellers of both crystalline silica and other
          minerals. There are no pending claims of this nature against any other
          subsidiary of the Company. As of December 31, 2001 and December 31,
          2000, there were, respectively, 2,292 and 1,311 silica-related product
          liability plaintiff claims pending in which U.S. Silica Company is a
          defendant.

          ITT Industries, Inc., successor to a former owner of U.S. Silica, has
          agreed to indemnify U.S. Silica for third party silicosis claims
          (including litigation expenses) filed against it prior to September
          12, 2005 alleging exposure to U.S. Silica products for the period
          prior to September 12, 1985, to the extent of the alleged exposure
          prior to that date. This indemnity is subject to an annual deductible
          of $275,000, which is cumulative and subject to carry-forward
          adjustments. The Company fully accrued this deductible on a present
          value basis when it acquired U.S. Silica Company. As of December 31,
          2001 and 2000, this accrual amounted to $1.8 million and $1.7 million,
          respectively. Pennsylvania Glass Sand Corporation, as a predecessor to
          U.S. Silica, was a named insured on insurance policies issued to ITT
          Industries for the period April 1, 1974 to September 12, 1985 and to
          U.S. Borax (another former owner) for the period September 12, 1985 to
          December 31, 1985. To date, U.S. Silica has not sought coverage under
          these policies. Although no assurances can be provided, coverage under
          these policies may be available to the Company. Ottawa Silica Company
          (a predecessor that merged into U.S. Silica in 1987) had insurance
          coverage on an occurrence basis prior to July 1, 1985.

          On April 20, 2001, in an action pending in Beaumont, Texas (Donald
          Tompkins et al v. American Optical Corporation et al), a jury rendered
          a verdict against Ottawa Silica Company and Pennsylvania Glass Sand
          Corporation, predecessors to U.S. Silica, in the amount of $7.5
          million in actual damages. On June 1, 2001, the trial judge entered
          judgment on the verdict against U.S. Silica in the amount of $5.9
          million in actual damages (the verdict of $7.5 million, less credits
          for other settlements), $464,000 in prejudgment interest and $40,000
          in court costs. In addition, punitive damages were settled for
          $600,000. In light of the facts entered into evidence relating to the
          timing of the exposure, the Company believes that the entire judgment
          and settlement in this action is covered by a combination of the
          historical insurance coverage of Ottawa Silica Company and the current
          indemnity agreement of ITT Industries, in each case, discussed above.
          After the judgment was entered by the trial judge and upon the posting
          of a bond, U.S. Silica filed an immediate appeal to the appropriate
          appellate court in Texas. Based on advice of counsel, it is believed
          that there were meritorious grounds to file the appeal and that a
          reversal and remand of the case is probable.

          It is likely that there will continue to be silica-related product
          liability claims filed against U.S. Silica, including claims that
          allege silica exposure for periods after January 1, 1986. The Company
          cannot guarantee that the current indemnity agreement with ITT
          Industries (which currently expires in 2005 and in any event only
          covers alleged exposure to U.S. Silica products

                                       41

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

          for the period prior to September 12, 1985), or potential insurance
          coverage (which, in any event, only covers periods prior to January 1,
          1986) will be adequate to cover any amount for which U.S. Silica may
          be found liable in such suits. Any such claims or inadequacies of the
          ITT Industries indemnity or insurance coverage could have a material
          adverse effect in future periods on the consolidated financial
          position, results of operations or cash flows of the Company, if such
          developments occur.

          U.S. Silica records amounts for product liability claims based on
          estimates of its portion of the cost to be incurred for all pending
          product liability claims and estimates based on the present value of
          an incurred but not reported liability for unknown claims for
          exposures that occurred before 1976, when it began warning its
          customers and its customers employees of the health effects of
          crystalline silica. Estimated amounts recorded are net of any expected
          recoveries from insurance policies or the ITT Industries indemnity.
          The amounts recorded for product liability claims are estimates, which
          are reviewed periodically by U.S. Silica and its legal counsel and
          adjusted to reflect additional information when available. The process
          of estimating and recording amounts for product liability claims is
          imprecise and based on a variety of assumptions some of which, while
          reasonable at the time, may prove to be inaccurate. As of December 31,
          2001 and December 31, 2000, the Company had recorded as an other
          noncurrent liability $4.6 million and $3.2 million, respectively, for
          product liability claims.

          In addition, the Company and its subsidiaries are involved in other
          legal proceedings, claims and litigation arising in the ordinary
          course of business. Management believes, through discussions with
          counsel, that its liability arising from or the resolution of these
          other legal proceedings, claims and litigation, in the aggregate will
          not have a material adverse effect on the consolidated financial
          position, results of operations or cash flows of the Company.

     10.  Income Taxes

          The provision (benefit) for income taxes consisted of the following
          for each of the three years in the period ended December 31, 2001:

          (In thousands)                          2001       2000        1999

          Current:
             Federal                          $    (139)  $      26   $       -
             State                                1,324         358         378
             Foreign                                  -         (52)        180
                                              ---------   ---------   ---------
                                                  1,185         332         558
          Deferred:
             Federal                             (7,692)     (9,981)     (4,307)
             State                                1,792      (1,416)       (642)
             Foreign                                  -         (26)        (75)
                                              ---------   ---------   ---------
                                                 (9,484)    (11,423)     (5,024)
                                              ---------   ---------   ---------

          Tax effect of extraordinary items           -           -       1,752
                                              ---------   ---------   ---------

             Benefit for income taxes         $  (8,299)  $ (11,091)  $  (2,714)
                                              =========   =========   =========

                                       42

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Under SFAS No. 109, deferred tax assets and liabilities are recognized for
     the estimated future tax effects, based on enacted tax laws, of temporary
     differences between the values of assets and liabilities recorded for
     financial reporting and for tax purposes and of net operating loss and
     other carryforwards. The tax effects of the types of temporary differences
     and carryforwards that gave rise to deferred tax assets and liabilities at
     December 31, 2001 and 2000 consisted of the following:

<TABLE>
<CAPTION>
     (In thousands)                                                2001            2000
     <S>                                                       <C>             <C>
     Gross deferred tax liabilities

     Land and mineral property basis difference                $  (111,777)    $  (114,891)
     Fixed assets and depreciation                                 (26,868)        (29,274)
     Restricted stock vesting                                         (573)           (562)
     Debt fee amortization                                            (107)            (90)
     Other                                                          (4,849)         (5,176)
                                                               -----------     -----------
            Total deferred tax liabilities                        (144,174)       (149,993)
                                                               -----------     -----------

     Gross deferred tax assets

     Royalty                                                           940           2,025
     Post retirement benefit costs                                   7,374           7,789
     Reserves for self-insurance                                     2,905           2,415
     Plant closure liability                                         3,107           3,010
     State deferred tax                                              8,444           8,994
     Covenants not to compete                                        6,698           7,155
     Alternative minimum tax credit carryforward                     4,995           5,295
     Reserves for vacation                                             929           1,040
     Pensions                                                        1,840           1,587
     Inventories                                                     1,013             840
     Net operating loss carryforward                                14,539           9,308
     Bad debts                                                         742             512
     Reclamation                                                     1,025           1,028
     Other                                                           1,179           1,128
                                                               -----------     -----------
            Total deferred tax assets                               55,730          52,126
                                                               -----------     -----------

            Net deferred tax liabilities                           (88,444)        (97,867)

       Less net current deferred tax assets                         (4,276)        (12,809)
                                                               -----------     -----------

     Net long-term deferred tax liabilities                    $   (92,720)    $  (110,676)
                                                               -----------     -----------
</TABLE>

     At December 31, 2001 and 2000, the Company had federal net operating loss
     carryforwards ("NOL") of $37.0 million and $24.0 million, respectively,
     which begin to expire in 2011.

     The Company believes that it is more likely than not that the NOL
     carryforwards will be utilized prior to their expiration. The NOL
     carryforward and existing deductible temporary differences are offset by
     existing taxable temporary differences reversing within the carryforward
     period.

     In addition, the Company has an alternative minimum tax credit carryforward
     at December 31, 2001 and 2000 of approximately $5 million and $5.3 million,
     respectively. The credit carryforward may be carried forward indefinitely
     to offset any excess of regular tax liability over

                                       43

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

         alternative minimum tax liability subject to certain limitations. This
         alternative minimum tax credit carryforward has been reflected as a
         reduction of net noncurrent deferred income tax liabilities for
         financial reporting purposes.

         The effective income tax rate on pretax earnings before extraordinary
         items differed from the U.S. federal statutory rate for each of the
         three years in the period ended December 31, 2001 for the following
         reasons:

<TABLE>
<CAPTION>
                                                                                 2001            2000           1999
         <S>                                                                   <C>             <C>           <C>
         Provision (benefit) computed at U.S. federal statutory rate            (35.0%)         (35.0%)         35.0%
         Increase (decrease) resulting from:
              Percentage depletion                                              (29.6)          (19.4)        (253.7)
              Accretion of preferred stock warrants                                 -               -            1.9
              Prior year tax return reconciliation                                 .5            (3.1)         (61.2)
              State income taxes, net of federal benefit                         (2.1)           (3.0)           5.4
              Sale of Canadian operation                                            -             5.5              -
              Other, net                                                         (1.0)            1.3            9.6
                                                                               --------        --------      ---------

                  Provision for incocme taxes                                   (67.2%)         (53.7%)       (263.0%)
                                                                               ========        ========      =========
</TABLE>

     11. Pension and Postretirement Benefits

         The Company maintains a number of single-employer noncontributory
         defined benefit pension plans covering substantially all employees. The
         plans provide benefits based on each covered employee's years of
         qualifying service. The Company's funding policy is to contribute
         amounts within the range of the minimum required and maximum deductible
         contributions for each plan consistent with a goal of appropriate
         minimization of the unfunded projected benefit obligation. The majority
         of the Company's pension plans use a benefit level per year of service
         (hourly) with one plan using final average pay method (salaried). All
         Company plans use the projected unit credit cost method to determine
         the actuarial valuation.

         In addition, the Company provides defined benefit postretirement
         healthcare and life insurance benefits to substantially all employees.
         Covered employees become eligible for these benefits at retirement
         after meeting minimum age and service requirements. The projected
         future cost of providing postretirement benefits, such as healthcare
         and life insurance, is recognized as an expense as employees render
         services.

         The Company contributes to a Voluntary Employees' Beneficiary
         Association trust that will be used to partially fund health care
         benefits for future retirees. Benefits are funded to the extent
         contributions are tax deductible, which under current legislation is
         limited. In general, retiree health benefits are paid as covered
         expenses are incurred.

                                       44

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     Net pension and postretirement cost consisted of the following for each of
     the three years in the period ended December 31, 2001:

<TABLE>
<CAPTION>
                                                 Pension Benefits            Postretirement Benefits
                                       --------------------------------   -------------------------------
     (In thousands)                      2001        2000         1999      2001       2000         1999
                                       --------    ---------    -------   -------    -------      -------
     <S>                               <C>         <C>          <C>       <C>        <C>          <C>
     Service cost - benefits earned
        during the period              $    983    $     974    $ 1,040   $   116    $   140      $   144
     Interest cost                        4,252        4,306      3,886       859        844          946
     Expected return on plan assets      (4,811)      (4,739)    (3,739)      (17)       (18)         (19)
     Net amortization and deferral           96           71        235      (627)      (764)        (449)
                                       --------    ---------    -------   -------    -------      -------
        Net pension and
          postretirement cost          $    520    $     612    $ 1,422   $   331    $   202      $   622
                                       ========    =========    =======   =======    =======      =======
</TABLE>

     The changes in benefit obligations and plan assets, as well as the funded
     status of the Company's pension and postretirement plans at December 31,
     2001 and 2000 were as follows:
<TABLE>
<CAPTION>
                                                     Pension Benefits        Postretirement Benefits
                                                 -----------------------     ------------------------
     (In thousands)                                2001          2000          2001           2000
                                                 ---------     ---------     ---------     ----------
     <S>                                         <C>           <C>           <C>           <C>
     Benefit obligation at January 1             $  59,593     $ 55,640      $  11,593     $  13,173
        Service cost                                   983          974            116           140
        Interest cost                                4,252        4,306            859           844
        Actuarial (gain)/loss                         (428)       2,411          1,940        (1,683)
        Benefits paid                               (3,954)      (3,978)        (1,633)       (1,117)
        Other                                          476          240            285           236
                                                 ---------     ---------     ---------     ----------
     Benefit obligation at December 31              60,922       59,593         13,160        11,593
                                                 ---------     ---------     ---------     ----------

     Fair value of plan assets at January 1         63,296       66,711            187           198
        Actual return on plan assets                  (518)         373            (20)          (11)
        Employer contributions                           -          190          1,347           881
        Benefits paid                               (3,954)      (3,978)        (1,633)       (1,117)
        Other                                            -            -            285           236
                                                 ---------     ---------     ---------     ----------
     Fair value of plan assets at December 31       58,824       63,296            166           187
                                                 ---------     ---------     ---------     ----------

     Plan assets in excess (less than)
        benefit obligations at December 31          (2,099)       3,703        (12,994)      (11,406)
          Unrecognized net loss (gain)              (2,807)      (7,709)        (5,068)       (7,674)
          Unrecognized prior service cost            1,312          932              -             -
                                                 ---------     ---------     ---------     ----------

                Net accrued benefit cost
                   recognized as other
                   noncurrent liabilities        $  (3,594)    $ (3,074)     $ (18,062)    $ (19,080)
                                                 ---------     ---------     ---------     ----------
</TABLE>

     The adjustment to recognize the minimum pension liability on the Company's
     consolidated balance sheet of $213,000 at December 31, 2001 provides
     financial statement recognition to the unfunded status of certain
     supplemental pension plans. The pension liability adjustment has been
     recorded as a long-term liability offset by an intangible pension asset of
     $193,000 and a reduction to stockholder's equity and deferred taxes of
     $14,000 and $6,000, respectively, at December 31, 2001.

                                       45

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

         The following weighted-average assumptions were used to determine the
         Company's obligations under the plans:

<TABLE>
<CAPTION>
                                                                 Pension Benefits          Postretirement Benefits
                                                               ---------------------       -----------------------
                                                                2001           2000          2001           2000
                                                               ------         ------        ------         ------
         <S>                                                   <C>            <C>          <C>             <C>
         Discount rate                                          7.25%          7.50%         7.25%          7.50%
         Long-term rate of compensation increase                3.50%          3.50%            -              -
         Long-term rate of return on plan assets                9.00%          9.00%         9.00%          9.00%
         Health care cost trend rate                               -              -          9.00%          5.00%
</TABLE>

         The assumed health care cost trend rate used in measuring the
         accumulated postretirement benefit obligation was 9.00% in 2001,
         declining by 1% per year to an ultimate rate of 5.00%. For the 2000
         obligation, the rate used was 5.00% in 2000 and for all periods
         thereafter.

         A one-percentage-point increase in the assumed health care cost trend
         rates for each year would increase the accumulated postretirement
         benefit obligation at December 31, 2001 and net postretirement health
         care cost (service cost and interest cost) for the year then ended by
         approximately $1.4 million and $130,000, respectively. A
         one-percentage-point decrease in the assumed health care cost trend
         rates for each year would decrease the accumulated postretirement
         benefit obligation at December 31, 2001 and net postretirement health
         care cost (service cost and interest cost) for the year then ended by
         approximately $1.2 million and $109,000, respectively.

         Certain hourly employees are covered under a multi-employer defined
         benefit pension plan. The pension cost recognized for these plans for
         each of the three years in the period ended December 31, 2001 totaled
         approximately $735,000, $606,000, and $271,000, respectively.

         The Company also sponsors a defined contribution plan covering certain
         employees. The Company contributes to the plan in two ways. For certain
         employees not covered by the defined benefit plan, the Company makes a
         contribution equal to 4% of their salary. The Company also contributes
         an employee match which can range from 25 to 100 cents, based on
         financial performance, for each dollar contributed by an employee, up
         to 8% of their earnings. Contributions for each of the three years in
         the period ended December 31, 2001 totaled approximately $744,000,
         $680,000 and $746,000, respectively. The Company also sponsors a
         defined contribution thrift plan for hourly employees to which
         employees may contribute up to 15% of their earnings. There is no
         contributing match for the thrift plan.

     12. Related Party Transactions

         Pursuant to an agreement between the Company and principals of D.
         George Harris & Associates, LLC ("DGH&A"), who are also stockholders of
         the Company's ultimate parent, DGH&A provides certain management
         advisory services to the Company. The Company paid approximately
         $795,000, $923,000 and $877,000 to DGH&A for each of the three years in
         the period ended December 31, 2001, respectively, associated with these
         management services. The agreement also provides that the Company will
         pay DGH&A an acquisition fee in the event of a business acquisition by
         the Company. The Company paid approximately $325,000 for services in
         connection with the acquisition of the Morie Assets during 1999. The
         management advisory services and acquisition fees have been charged to
         selling, general and administrative expense during each of the
         respective periods noted above.

                                       46

<PAGE>

Better Minerals & Aggregate Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

          Prior to the acquisition of Commercial Stone, certain operations of
          DGH&A were conducted as a subsidiary of the Company. Subsequent to the
          acquisition, the DGH&A operations have been handled separately from
          the Company. The Company does not have an ownership interest in DGH&A.
          Consequently, the DGH&A acquisition fee of approximately $1.4 million
          associated with the acquisition of Commercial Stone was capitalized
          and allocated to mineral reserves as part of the purchase price.

          The agreement also provides that, at DGH&A's request, U.S. Silica
          provide DGH&A with an interest-free loan not to exceed $3.0 million in
          total or $500,000 in any given year. At December 31, 2001, a loan
          receivable from DGH&A of $1.4 million is currently outstanding. The
          loan is guaranteed by certain principals of DGH&A. Additionally, at
          December 31, 2001, there is a receivable of $68,000 from DGH&A,
          principally related to reimbursement of general and administrative
          costs.

          On occasion, the Company and its ultimate parent make non-interest
          bearing cash advances to each other. At December 31, 2001 and 2000,
          the Company had a payable to its parent of approximately $2.4 million.

     13.  Incentive Stock Compensation

          On April 10, 2000, the Company entered into an employment agreement
          with an executive to manage its aggregates business segment. In the
          second quarter of 2000, a one-time charge of approximately $2.3
          million was recorded representing the cost to replace certain benefits
          forfeited by the executive officer in order to join the Company, of
          which $998,000 is the cost of non-cash stock grants in the Company's
          ultimate parent company, Holdings, and is recorded in selling, general
          and administrative expense.

     14.  Segment Information

          The Company operates in the industrial minerals and aggregates
          business segments, principally in the United States, and conducts
          limited operations in Canada. Industrial minerals includes the mining,
          processing and marketing of industrial minerals, principally
          industrial silica, to a wide variety of end use markets, including
          foundry, glass, chemicals, fillers and extenders (primarily used in
          paints and coatings), building materials, ceramics, and oil and gas.
          Aggregates includes the mining, processing and marketing of high
          quality crushed stone, construction sand and gravel. The Company's
          customers use its aggregates for road construction and maintenance,
          other infrastructure projects and residential and commercial
          construction and to produce hot mixed asphalt and concrete products.
          The Company also uses its aggregates to produce hot mixed asphalt at
          production facilities the Company owns or operates. The industrial
          minerals and aggregates business segments constitute the reportable
          segments of the Company.

          The Company's management reviews operating segment income to evaluate
          segment performance and allocate resources. Certain corporate expenses
          (income) including unusual items, business development costs and fees
          paid to DGH&A, interest expense, the accretion of preferred stock
          warrants, other income (net of interest income) and the provision
          (benefit) for income taxes are not included in segment operating
          income since they are excluded from the measure of segment
          profitability reviewed by the Company's management. The Company's
          assets are managed based on segment and accordingly, asset information
          is reported for the aggregates and industrial minerals segments.
          Corporate assets consist primarily of cash and cash equivalents, debt
          issuance costs and equipment. The accounting policies of the segments
          are the same as those described in the Summary of Significant
          Accounting Policies.

                                       47

<PAGE>

Better Minerals & Aggregates Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     On January 1, 2001, as part of a change in management reporting
     responsibilities, all of the New Jersey operating assets of the Company's
     industrial minerals business unit were transferred to the Company's
     aggregates business unit. Net sales from the transferred assets are made
     both directly to customers and to the Company's industrial minerals
     subsidiary. Intersegment sales are recorded at amounts which approximate
     sales to third party distributors. Prior year segment reporting has been
     restated to include the New Jersey operations as a part of the Company's
     aggregates business unit.

     Reportable segment information for each of the three years in the period
     ended December 31, 2001 was as follows:

<TABLE>
<CAPTION>
     (In thousands)                                                     2001         2000         1999
     <S>                                                             <C>         <C>          <C>
     Sales:
       Aggregates                                                    $ 138,091   $   124,957  $   69,249
       Industrial Minerals                                             187,670       192,590     191,575
       Eliminations                                                    (17,814)      (18,212)    (16,022)
                                                                     ---------   -----------  ----------
           Total sales                                               $ 307,947   $   299,335  $  244,802
                                                                     =========   ===========  ==========

     Operating segment income (loss):
       Aggregates                                                    $   5,617   $     1,971  $    5,810
       Industrial Minerals                                              17,667        16,221      13,802
                                                                     ---------   -----------  ----------
           Total operating segment income (loss)                        23,284        18,192      19,612

       General corporate expense                                        (1,105)       (4,047)     (1,105)
                                                                     ---------   -----------  ----------
           Total operating income (loss)                             $  22,179   $    14,145  $   18,507
                                                                     =========   ===========  ==========

     Depreciation, depletion and amortization expense:
       Aggregates                                                    $  18,171   $    16,233  $    9,184
       Industrial Minerals                                              14,381        19,600      19,296
       Corporate                                                           118            62           1
                                                                     ---------   -----------  ----------
           Total depreciation, depletion and
            amortization expense                                     $  32,670   $    35,895  $   28,481
                                                                     =========   ===========  ==========

     Capital expenditures:
       Aggregates                                                    $   8,706        10,790  $    3,635
       Industrial Minerals                                               5,032         9,345      10,767
       Corporate                                                             -           184         170
                                                                     ---------   -----------  ----------
           Total capital expenditures                                $  13,738   $    20,319  $   14,572
                                                                     =========   ===========  ==========
</TABLE>

     Reportable segment information at December 31, 2001, 2000 and 1999 was as
     follows:

<TABLE>
<CAPTION>
     (In thousands)                                                     2001         2000         1999
     <S>                                                             <C>         <C>          <C>
     Assets:
       Aggregates                                                    $  352,424  $  351,969   $  337,289
       Industrial Minerals                                              173,396     203,676      187,571
       Corporate                                                         21,823      20,533       29,169
       Elimination of intersegment receivables                          (31,999)    (37,892)      (2,426)
                                                                     ----------  ----------   ----------
           Totals assets                                             $  515,644  $  538,286   $  551,603
                                                                     ==========  ==========   ==========
</TABLE>


                                       48

<PAGE>

Better Minerals & Aggregate Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

     15.  Guarantor Financial Data

          Except for the Company's Canadian subsidiary, which is an inactive
          company with an immaterial amount of assets and liabilities, each of
          the Company's subsidiaries has fully and unconditionally guaranteed
          the Senior Subordinated Notes on a joint and several basis. The
          separate financial statements of the subsidiary guarantors are not
          included in this report because (a) the Company is a holding company
          with no independent assets or operations other than its investments in
          its subsidiaries, (b) the subsidiary guarantors each are wholly owned
          by the Company, comprise all of the direct and indirect subsidiaries
          of the Company (other than a minor subsidiary) and have jointly and
          severally guaranteed the Company's obligations under the Senior
          Subordinated Notes on a full and unconditional basis, (c) the
          aggregate assets, liabilities, earnings and equity of the subsidiary
          guarantors are substantially equivalent to the assets, liabilities,
          earnings and equity of the Company on a consolidated basis and (d)
          management has determined that separate financial statements and other
          disclosures concerning the subsidiary guarantors are not material to
          investors.

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

     Not applicable.

                                       49

<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

         The following table identifies members of the Board of Directors and
the executive officers of USS Holdings, Inc., our indirect parent, and us.

<TABLE>
<CAPTION>
                                                                       Year
                                                                       ----
                                                                       Assumed
                                                                       -------
                                           Present Position at         Present        Other Positions and Other Business Experience
                                           -------------------         -------        ---------------------------------------------
Name                                Age    March 1, 2001               Position(s)    Within the Last Five Years
----                                ---    -------------               -----------    --------------------------
<S>                                 <C>    <C>                         <C>            <C>
D. George Harris .................  68     Chairman and                1996           Chairman and director, D. George Harris &
                                           Director

                                                                                      Associates, LLC (1987-present); officer or
                                                                                      director of various companies, including
                                                                                      Harris Chemical Group, Inc. (1993-1998),
                                                                                      Harris Specialty Chemicals, Inc. (1994-1999)
                                                                                      and Penrice Pty Ltd. (1996-1998); Chairman,
                                                                                      Shareholders Committee, Vestolit Holdings GmbH
                                                                                      & Co., KG (1999-present); director, McWhorter
                                                                                      Technologies, Inc. (1994-2000)

Anthony J. Petrocelli ............  64     Vice Chairman and           1996           Vice Chairman, D. George Harris & Associates,
                                           Director

                                                                                      LLC (1987-present); officer or director of
                                                                                      various companies, including Harris Chemical
                                                                                      Group, Inc. (1993-1998), Harris Specialty
                                                                                      Chemicals, Inc. (1994-1999) and Penrice Pty
                                                                                      Ltd. (1996-1998); Vice Chairman, Shareholders
                                                                                      Committee, Vestolit Holdings GmbH & Co., KG
                                                                                      (1999-present)

Richard E. Goodell ...............  57     Vice Chairman;              2001; 1996     Chief Executive Officer (1999-2000); President
                                           Director                                   (1996-2000); President, Pennsylvania Glass
                                                                                      Sand Corporation (renamed U.S. Silica
                                                                                      Company) (our subsidiary) (1985-1998)

Roy D. Reeves ....................  56     President and Chief         2001           President, Stone Materials  Company, LLC (our
                                           Executive Officer;                         subsidiary) (2000); President and Chief
                                           Director                                   Operating Officer, Hanson Aggregates East
                                                                                      (1997-2000); President and Chief Operating
                                                                                      Officer, Sloan Construction Company
                                                                                      (1993-1997)

Gary E. Bockrath .................  49     Vice President and          1996           Senior Vice President of Finance, U.S. Silica
                                           Chief Financial                            (1993-present); director, U.S. Silica
                                           Officer                                    (1994-present)

Craig S. Cinalli .................  43     President and Chief         1989
                                           Operating Officer,
                                           Better Materials
                                           Corporation (our
                                           subsidiary)
</TABLE>

                                       50

<PAGE>

<TABLE>
<S>                                 <C>    <C>                         <C>            <C>
Walter C. Pellish ................  61     Vice President--              2000          Vice President--Administration, U.S.
                                           Administration                              Silica (1981-present)

Richard J. Donahue ...............  58     Vice President,               1996          Managing Director, D. George Harris &
                                           Assistant Treasurer,                        Associates, LLC (1987-present); officer of
                                           Assistant Secretary                         various companies, including Harris Chemical
                                           and Director                                Group, Inc. (1993-1998) and Harris Specialty
                                                                                       Chemicals, Inc. (1994-1999)

Richard J. Nick. .................  58     Vice President,               1996          Managing Director, D. George Harris &
                                           Treasurer and                               Associates, LLC (1989-present); officer of
                                           Assistant Secretary                         various companies, including Harris Chemical
                                                                                       Group, Inc. (1993-1998) and Harris Specialty
                                                                                       Chemicals, Inc. (1994-1999)

Richard J. Shearer ...............  51     President, U.S.               1999          Executive Vice President, U.S. Silica
                                           Silica Company                              (1997-1999); Vice President, General Manager,
                                           (our subsidiary)                            North American Chemical Company (1996-1997)

John A. Ulizio ...................  46     Vice President,               1996          Associate General Counsel, U.S. Silica
                                           General Counsel                             (1991-1995); manager of environmental, health
                                           and Assistant                               and safety matters (1994-present)
                                           Secretary

Arnold L. Chavkin. ...............  50     Director                      1996          Executive Partner, J.P. Morgan Partners, LLC
                                                                                       (formerly Chase Capital Partners)
                                                                                       (1992-present); director, American Tower
                                                                                       Corporation, Carrizo Oil & Gas, Inc., Crown
                                                                                       Media Holdings, Inc., Encore Acquisition
                                                                                       Partners, Triton PCS, Inc.

Ruth Dreessen. ...................  46     Director                      1996          Retired. Formerly Managing Director, J.P.
                                                                                       Morgan Securities Inc., formerly Chase
                                                                                       Securities Inc. (1997-2001); Director,
                                                                                       Georgia Gulf Corporation.

Timothy J. Walsh .................  38     Director                      1998          Partner, J.P. Morgan Partners, LLC (formerly
                                                                                       Chase Capital Partners) (1999-present);
                                                                                       associate, J.P. Morgan Partners, LLC
                                                                                       (1993-1999); director, MetoKote Corporation,
                                                                                       Inc., Pliant Corporation, Klockner Pentaplest
                                                                                       S.A., NexPak Corporation
</TABLE>

                                       51

<PAGE>

Item 11.   Executive Compensation

Executive Compensation

     The following table sets forth information regarding annual compensation
for services rendered to us during the fiscal years ended December 31, 2001,
2000 and 1999 by our (i) chief executive officer and (ii) four most highly
compensated executive officers (collectively, the "Named Executive Officers").

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                                     Long-term
                                                                                                   Compensation
                                                                 Annual Compensation                  Awards
                                                                 -------------------                  ------
                                                                                  Other Annual                        All Other
                                                                                  Compensation   Restricted Stock   Compensation
Name and Principal Position                 Year      Salary ($)    Bonus ($)         ($)        Award(s)/(4)/ ($)   /(5)/(6)/ ($)
---------------------------                 ----      ----------    ---------         ---        -----------------   -------------
<S>                                         <C>       <C>        <C>              <C>            <C>                <C>
Roy D. Reeves                               2001        425,000      125,000             --                 --         32,384/(9)/
   Chief Executive Officer/(1)/             2000        300,000      200,000      2,103,368/(3)/       102,250        112,168/(7)/
                                            1999             --           --             --                 --             --

Richard E. Goodell                          2001        212,500           --             --                 --          4,840
   Vice Chairman/(2)/                       2000        404,367           --             --             57,260          4,690
                                            1999        238,125      196,685             --             61,350          8,569

Richard J. Shearer                          2001        249,062       20,000             --                 --         16,368
   President                                2000        240,400           --             --                 --         15,114
   (U.S. Silica Company)                    1999        219,675      123,018             --             69,530         19,244

Gary E. Bockrath                            2001        184,585       20,000             --                 --         12,496
   Vice President and Chief                 2000        176,400           --             --                 --         11,034
   Financial Officer                        1999        168,000      109,672             --             24,540         14,100

Craig S. Cinalli                            2001        195,000       20,000
   President                                2000        175,000           --             --                 --         13,228/(8)/
   (Better Materials Corporation)           1999        175,000      138,600             --             24,540         10,536
</TABLE>

__________________
(1)  Mr. Reeves served as our President and Chief Operating Officer until
     December 31, 2000. Effective January 1, 2001, Mr. Reeves became our Chief
     Executive Officer.

(2)  Mr. Goodell served as our Chief Executive Officer until December 31, 2000.
     Effective January 1, 2001, Mr. Goodell became our Vice Chairman.

(3)  Includes reimbursement by us to Mr. Reeves for his purchase of 25,000
     shares of Class A common stock at $39.90 per share, the purchase by Mr.
     Reeves for $0.01 per share of 25,000 shares of Class C common stock valued
     at $4.10 per share, and the gross-up for the tax liability attributable to
     these purchases and to his signing bonus of $100,000, described in footnote
     7 below.

(4)  As of December 31, 2000, the Named Executive Officers held the following
     amounts of restricted stock: Mr. Goodell, 29,000 shares; Mr. Reeves, 25,000
     shares; Mr. Shearer, 17,000 shares; Mr. Bockrath, 6,000 shares; and Mr.
     Cinalli, 6,000 shares. The value of the restricted stock as of December 31,
     2001 is equal to the value as of the date of grant reflected in the above
     table.

(5)  Includes life insurance premiums paid by us in 2001 on behalf of the Named
     Executive Officers as follows: Mr. Goodell, $1,440; Mr. Reeves, $9,690; Mr.
     Shearer, $1,440; Mr. Bockrath, $1,440; and Mr. Cinalli, $1,440.

(6)  Includes matching contributions by us to the U.S. Silica Company Retirement
     Savings and Investment Plan for Salaried Employees in 2001 on behalf of the
     Named Executive Officers as follows: Mr. Goodell, $3,400; Mr. Reeves,
     $3,400; Mr. Shearer, $4,976; Mr. Bockrath, $3,686; and Mr. Cinalli, $2,625.
     Also includes other contributions by us to this plan in 2001 on behalf of
     certain Named Executive Officers as follows: Mr. Shearer, $9,952 and Mr.
     Bockrath, $7,372.

(7)  Includes a one-time signing bonus of $100,000 received by Mr. Reeves upon
     entering into his employment agreement with us.

(8)  Includes income imputed to Mr. Cinalli from the personal use of a company-
     owned vehicle and residence in the amount of $10,126.

(9)  Includes $19,294 in commuting expenses reimbursed to Mr. Reeves.

                                       52


<PAGE>

           U.S. Silica Company Retirement Plan for Salaried Employees

<TABLE>
<CAPTION>
                                            Years of Service
                                            ----------------
Remuneration          15            20             25             30             35
------------          --            --             --             --             --
<S>               <C>           <C>         <C>               <C>            <C>
 $  125,000       $ 31,898      $ 42,530       $ 53,163       $ 63,795       $ 74,428
    150,000         38,835        51,780         64,725         77,670         90,615
    175,000         45,773        61,030         76,288         91,545        106,803
    200,000         52,710        70,280         87,850        105,420        122,990
    225,000         59,648        79,530         99,413        119,295        139,178
    250,000         66,585        88,780        110,975        133,170        155,365
    300,000         80,460       107,280        134,100        160,920        187,740
    400,000        108,210       144,280        180,350        216,420        252,490
</TABLE>

     At December 31, 2001, credited years of service under the U.S. Silica
Company Retirement Plan for Salaried Employees (the "Retirement Plan") for the
only Named Executive Officer who participates, Mr. Goodell, were 20 years. The
compensation covered by the Retirement Plan includes the amount listed in the
salary column of the Summary Compensation Table only. The estimated annual
retirement benefit indicated in the Retirement Plan table includes enhanced
pension provisions under the U.S. Silica Company Pension Restoration Plan, which
is an unfunded plan providing benefits to participants in the Retirement Plan
that are not payable under the Retirement Plan because of the limitations
stipulated by the Internal Revenue Code. Estimated benefits set forth in the
Retirement Plan table were calculated on the basis of a single life annuity.
Annual benefits payable under the Retirement Plan are not offset by any amount.

                    Better Materials Corporation Pension Plan

<TABLE>
<CAPTION>
                                            Years of Service
                                            ----------------
Remuneration         15            20             25             30             35
------------         --            --             --             --             --
<S>               <C>           <C>         <C>               <C>            <C>

 $  125,000       $ 20,747      $ 27,662       $ 34,578       $ 41,494       $ 48,409
    150,000         25,622        34,162         42,703         51,244         59,784
    175,000         29,522        39,362         49,203         59,044         68,884
  and above
</TABLE>

     At December 31, 2001, credited years of service under the Better Materials
Corporation Pension Plan (the "BMC Plan") for the only Named Executive Officer
who participates, Mr. Cinalli, were 21 years. The compensation covered under the
BMC Plan includes total cash remuneration paid to the Named Executive Officer up
to the statutory limits stipulated by the Internal Revenue Service. Estimated
benefits set forth in the BMC Plan table were calculated on the basis of a
single life annuity and are not offset by any amount.

                                       53

<PAGE>

                     Supplemental Executive Retirement Plan

<TABLE>
<CAPTION>
                                                                         Years of Service
                                                                         ----------------
Remuneration                              15                20                 25                30                35
------------                              --                --                 --                --                --
<S>                                   <C>               <C>               <C>                <C>               <C>
  $ 125,000                           $       0         $       0        $    8,437        $   17,507        $   26,577
    150,000                                   0             7,368            18,437            29,507            40,577
    175,000                               2,298            15,368            28,437            41,507            54,577
    200,000                               8,298            23,368            38,437            53,507            68,577
    225,000                              14,298            31,368            48,437            65,507            82,577
    250,000                              20,298            39,368            58,437            77,507            96,577
    300,000                              32,298            55,368            78,437           101,507           124,577
    400,000                              56,298            87,368           118,437           149,507           180,577
    450,000                              68,298           103,368           138,437           173,507           208,577
    500,000                              80,298           119,368           158,437           197,507           236,577
</TABLE>

         At December 31, 2001, credited years of service under a Supplemental
Executive Retirement Plan ("SERP") for Mr. Reeves were 17 years. The
compensation covered under the SERP includes total cash remuneration paid to the
Named Executive Officer. Estimated benefits set forth in the SERP table were
calculated on the basis of a single life annuity and are offset by the benefit
Mr. Reeves will receive under a retirement plan with his previous employer in
the amount of $36,911.

Employment Contracts and Termination of Employment and Change-in-Control
Arrangements

         Employment Agreement with Mr. Cinalli. In December 2000, Better
Materials Corporation, one of our subsidiaries, renewed Mr. Cinalli's two-year
term employment agreement. The agreement provides for annual compensation of at
least $195,000, a performance-based bonus, eligibility to receive restricted
stock and the use of a company-owned vehicle and residence.

         Under this agreement, Better Materials Corporation may terminate Mr.
Cinalli for any reason other than "cause," as defined in the agreement, with
thirty days' prior written notice. This agreement provides for severance in the
amount of two years' annual salary upon termination without "cause." This
agreement contains confidentiality and non-compete covenants.

         Severance Agreement with Mr. Shearer. In August 2000, U.S. Silica
Company, one of our subsidiaries, entered into a severance agreement with Mr.
Shearer to provide for severance and benefits in the event his employment is
terminated for any reason other than "cause," as defined in the agreement. Under
this severance agreement, Mr. Shearer is entitled to continue to receive his
salary for a maximum period of two years following termination of employment. In
addition, U.S. Silica will pay medical premiums for Mr. Shearer and his family
under the U.S. Silica Health Plan for a maximum period of six months beyond the
required COBRA continuation coverage period and, upon the sale of Mr. Shearer's
house, U.S. Silica will pay a percentage of the unrecovered cost of improvements
to his residence up to approximately $47,000. This agreement contains
confidentiality and non-compete covenants.

         Employment and Change-in-Control Agreements with Mr. Reeves. In April
2000, we entered into an employment agreement with Mr. Reeves with an initial
three- year term, automatically renewable annually, which provides for annual
compensation of $400,000 (subject to salary reviews), a performance-based bonus,
a signing bonus of $100,000, net of applicable taxes, and supplemental
retirement benefits.

         Mr. Reeves is also entitled to a number of stock incentives under this
agreement. First, he purchased from USS Holdings, our indirect parent, 25,000
restricted shares of USS Holdings Class C common stock for one cent ($.01) per
share. If we terminate Mr. Reeves' employment under certain circumstances, or in
the event of certain corporate transactions, such as a sale, merger or initial
public offering involving USS Holdings, we may be obligated to repurchase these
shares, depending on the value of USS Holdings Class A common stock at the time
of such event. We reimbursed Mr. Reeves for the tax liability for these shares
at the time of purchase. Second, Mr. Reeves purchased 25,000 shares of USS
Holdings Class A common stock, for which we reimbursed him at a price of $39.90
per share, plus tax liability resulting from this reimbursement.

         We may terminate Mr. Reeves for any reason other than for "cause," as
defined in the agreement, or he may resign for "good reason," as defined in the
agreement, with thirty days' prior written notice. If we terminate Mr. Reeves
without "cause," he is entitled to severance in an amount equal to his annual
salary plus full bonus for the remainder of the term of the agreement. If Mr.
Reeves' employment is terminated following a change in control involving us, as
defined in the agreement, he is entitled to severance in an amount equal to his
annual salary plus full bonus for the remainder of the term of the agreement,
which is reduced to 18 months following the change in control. This agreement
contains confidentiality and non-compete covenants.

                                       54

<PAGE>

         Mr. Reeves has also entered into an agreement with USS Holdings that
provides for payment upon the occurrence of certain corporate transactions
involving USS Holdings, such as a sale, merger or initial public offering. If
one of these events occurs, Mr. Reeves will be entitled to a bonus based on the
extent to which the price for USS Holdings Class A common stock, as valued in
such event, exceeds a target price set for the year in which the event occurs.
If the target price is exceeded by 100% or more, Mr. Reeves will receive a bonus
of $8 million net of any excise tax liability to Mr. Reeves if the payment is
determined to be an excess parachute payment under IRS regulations. If the
target price is exceeded by less than 100%, Mr. Reeves will receive a prorated
portion of the $8 million maximum. No bonus is payable if the target price for
the year of the triggering event is not exceeded. If we experience a change in
control as a result of the triggering event and Mr. Reeves' employment is
terminated following the change in control, USS Holdings may cause us to pay the
bonus amount to Mr. Reeves.

         Employment and Consulting Agreement with Mr. Goodell. Mr. Goodell is
currently party to an employment and consulting agreement with USS Holdings,
BMAC Holdings, Inc., U.S. Silica Company, BMAC Services Co., Inc. and us
extending the term of his employment through July 7, 2004 at an annual base
salary of $100,000, plus participation in employee benefit plans and rights to
use of certain property of ours for hunting purposes.

         Under this agreement, in the event of a change in control, as defined
in the agreement, Mr. Goodell is entitled to terminate his employment and
receive severance in the amount of his salary through July 7, 2004.
Alternatively, if Mr. Goodell remains employed following a change in control, he
is entitled to receive at the time of the change in control a bonus equal to one
year's salary and to receive a stay bonus equal to one year's salary payable and
conditioned upon his continued employment until a period of six months after the
change in control. If his employment is terminated following a change in
control, he is deemed to have been employed through July 7, 2004 for purposes of
determining eligibility for, and calculation of benefits under, the U.S. Silica
benefit plans.

         For a period of five years following his termination of employment, Mr.
Goodell will serve as a consultant to USS Holdings, BMAC Holdings, Inc., U.S.
Silica Company, BMAC Services Co., Inc. and us for which he will be compensated
at an annual salary of $50,000 for up to 20 days of consulting plus $2,500 per
day for his services for a maximum additional period of 30 days.

         This agreement may be terminated for cause, as defined in the
agreement, upon Mr. Goodell's death, or in the event of disability. This
agreement contains non-compete and non-solicitation provisions.

Director Compensation

         Members of our Board of Directors who are our employees, or employees
of our shareholders, are not compensated for their services as directors, but
may be reimbursed for actual expenses incurred in attending meetings of the
Board of Directors or committees thereof. Outside directors may be compensated
for their services. Ruth Dreessen, an outside director, receives $35,000
annually as Director, and Chair of the Audit Committee.

                                       55

<PAGE>

Item 12. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters

Security Ownership

         All of our outstanding capital stock is directly owned by BMAC
Holdings, which in turn is wholly owned by USS Holdings. The following table
sets forth, to the best of our knowledge, certain information regarding the
ownership of the capital stock of USS Holdings as of March 1, 2002 with respect
to the following: (i) each person known by us to own beneficially more than 5%
of the outstanding shares of any class of capital stock of USS Holdings; (ii)
each of our directors; (iii) each of our executive officers; and (iv) all of our
directors and executive officers as a group.

         Except as otherwise indicated, each person listed in the following
table has sole voting and investment power with respect to the shares listed
opposite that person's name.

<TABLE>
<CAPTION>
Beneficial Owners/(1)/                                       Shares of Common Stock               Percentage of Common Stock/(2)/*
----------------------                                       ----------------------               --------------------------------
                                                    Class A/(3)/  Class  B/(4)/   Class C/(5)/    Class A     Class B     Class C
                                                    ------------  -------------   ------------    -------     -------     -------
<S>                                                 <C>           <C>             <C>             <C>         <C>         <C>
J.P. Morgan Chase & Co. /(9)(10)/ .............                0        340,069          8,800       **        79.9%         2.0%
Massachusetts Mutual Life Insurance
Company /(11)/ ................................                0        104,211          2,697       **        27.1%         **
D. George Harris /(12)/ .......................          124,653          8,186         42,291     22.7%        2.2%         9.8%
Anthony J. Petrocelli /(13)(15)/ ..............           73,222          5,184         41,850     13.3%        1.4%         9.7%
Richard E. Goodell ............................            6,640              0         29,000      1.2%         **          6.7%
Richard J. Donahue ............................           65,972          1,950         41,376     12.0%         **          9.6%
Richard J. Shearer ............................            5,203              0         17,000      1.0%         **          4.0%
Craig S. Cinalli ..............................            2,000              0          6,000       **          **          1.4%
Walter C. Pellish .............................            5,755              0          6,000      1.1%         **          1.4%
Richard J. Nick /(15)/ ........................           34,296          1,744         41,346      6.2%         **          9.6%
Donald G. Kilpatrick /(13)/ ...................           50,962              0         41,090      9.3%         **          9.5%
Roy D. Reeves .................................           27,500              0         30,000      5.0%         **          6.9%
John A. Ulizio ................................            5,755              0          6,000      1.1%         **          1.4%
Gary E. Bockrath ..............................            6,109              0          6,000      1.1%         **          1.4%
Arnold L. Chavkin /(10)(14)/ ..................                0              0              0       **          **          **
Ruth Dreessen .................................                0              0              0       **          **          **
Timothy J. Walsh /(10)(14)/ ...................                0              0              0       **          **          **
All directors and executive officers as a group
(14 persons) /(10)(12)(14)/ ...................          357,104         17,063        266,863     64.9%        4.5%        61.3%
</TABLE>

<TABLE>
<CAPTION>
Beneficial Owners/(1)/                                      Shares of Preferred Stock            Percentage of Preferred Stock/(2)/*
----------------------                                      -------------------------            -----------------------------------
                                                    Series A/(6)/  Series B/(7)/  Series D/(8)/   Series A    Series B    Series D
                                                    -------------  -------------  -------------   --------    --------    --------
<S>                                                 <C>            <C>            <C>             <C>         <C>         <C>
J.P. Morgan Chase & Co. /(9)(10)/ .............           678,035      1,356,070          9,232     75.0%       66.9%       52.2%
Massachusetts Mutual Life Insurance
Company /(11)/ ................................           207,778        415,556          2,829     22.7%       20.2%       16.0%
D. George Harris /(12)/ .......................            15,268         58,016          1,260      1.7%        2.9%        7.1%
Anthony J. Petrocelli /(13)/ ..................             9,035         27,070            798      1.0%        1.4%        4.5%
Richard E. Goodell ............................                 0         20,000              0      **          1.0%        **
Richard J. Donahue ............................             1,104         16,291            300      **          **          1.7%
Richard J. Shearer ............................               596          1,775              0      **          **          **
Craig S. Cinalli ..............................                 0              0              0      **          **          **
Walter C. Pellish .............................                 0         10,000              0      **          **          **
Richard J. Nick ...............................             3,312         17,771            268      **          **          1.5%
Donald G. Kilpatrick /(13)/ ...................             1,534          9,422              0      **          **          **
Roy D. Reeves .................................                 0              0              0      **          **          **
John A. Ulizio ................................                 0         10,000              0      **          **          **
Gary E. Bockrath ..............................                 0         10,000              0      **          **          **
Arnold L. Chavkin /(10)(14)/ ..................                 0              0              0      **          **          **
Ruth Dreessen .................................                 0              0              0      **          **          **
Timothy J. Walsh /(10)(14)/ ...................                 0              0              0      **          **          **
All directors and executive officers as a group
(14 persons) /(10)(12)(14)/ ...................            29,315        170,923          2,626      3.3%        8.6%       14.9%
</TABLE>

----------
                                       56

<PAGE>

*    All share percentages assume that each respective beneficial owner, and
     only that owner, has exercised its warrants to purchase shares of preferred
     stock or common stock, as the case may be, of USS Holdings, if any.
**   Less than 1%.
(1)  The address of J.P. Morgan Chase & Co. ("J.P. Morgan Chase") and its
     affiliates referred to in note (9) below is 270 Park Avenue, New York, New
     York, New York 10017 and 1221 Avenue of the Americas, 39th Floor, New York,
     New York 10020, respectively. The address of Massachusetts Mutual Life
     Insurance Company and its affiliates is 1295 State Street, Springfield,
     Massachusetts 01111. The address of Mr. Kilpatrick is c/o Pillsbury
     Winthrop LLP, One Battery Park Plaza, New York, New York 10004. The address
     of each other person is c/o D. George Harris & Associates, Inc., 9 Sylvan
     Way, Suite 285, Parsippany, New Jersey 07059.
(2)  Notwithstanding the enumerated percentage shares of beneficial ownership of
     common and preferred stock, a stockholders agreement dated as of February
     9, 1996, as amended (the "stockholders agreement"), among all of the
     stockholders of USS Holdings (the "Stockholders") governs the Stockholders'
     exercise of their voting rights with respect to election of directors and
     certain other material events. The parties to the stockholders agreement
     have agreed to vote their shares of USS Holdings to elect the Board of
     Directors as set forth therein. See "--The Stockholders Agreement."
(3)  Holders of Class A common stock are entitled to one vote with respect to
     all matters to be voted on by USS Holdings' Stockholders for each share of
     Class A common stock held, subject to the stockholders agreement.
(4)  Holders of Class B common stock, except as otherwise required by law, have
     no voting rights. The Class B common stock will automatically be converted
     into shares of Class A common stock on a one-for-one basis at the time of a
     trigger event or an event of conversion. A "trigger event" is defined in
     the stockholders agreement as (i) a default under certain debt documents or
     a failure to achieve a designated level of EBITDA (as defined in the
     stockholders agreement), (ii) after February 9, 2000, the passage of 180
     days after JPMP (23A SBIC) (as defined in note (9)) has exercised its right
     to demand a sale of USS Holdings and the failure of the principals of D.
     George Harris & Associates, LLC ("DGHA") to sell USS Holdings or purchase
     the shares of the Institutional Stockholders (as defined below) or (iii)
     both D. George Harris and Anthony J. Petrocelli no longer serving on the
     USS Holdings' Board of Directors due to death, disability or resignation.
     An "event of conversion" is defined in the stockholders agreement as (i)
     the consummation of an initial public offering resulting in net proceeds to
     USS Holdings and/or any selling stockholders of not less than $30 million
     or (ii) the conversion of more than 50% of the Series B preferred stock
     originally issued. Holders (other than Mass Mutual (as defined in note
     (11))) of at least 50% of the then outstanding common stock purchase
     warrants and shares issued or issuable under the stockholders agreement,
     and Mass Mutual, if it holds at least 50% of the then outstanding common
     stock purchase warrants and shares issued or issuable under the
     stockholders agreement upon the exercise of the warrants then outstanding
     and held by Mass Mutual, have the right to require USS Holdings to purchase
     their warrants to purchase Class B common stock and shares issued
     thereunder held by JPMP (23A SBIC), Mass Mutual and certain DGHA principals
     at any time after October 1, 2004 and prior to a sale, public offering of
     common stock or liquidation of USS Holdings. Upon the exercise of those put
     rights, if USS Holdings cannot obtain the consents from third parties
     necessary to purchase those shares after using reasonable efforts, USS
     Holdings will be released from its obligation to purchase the warrants. At
     any time after October 1, 2005, USS Holdings has the right to purchase all
     (but not less than all) of the warrants to purchase shares of Class B
     common stock held by JPMP (23A SBIC), Mass Mutual and certain DGHA
     principals.
(5)  Holders of Class C common stock are entitled to one vote with respect to
     all matters to be voted on by USS Holdings' stockholders for each share of
     Class C common stock held, subject to the stockholders agreement. Those
     shares are subject to repurchase by USS Holdings in certain circumstances
     upon the occurrence of certain liquidity events, including the sale of all
     or substantially all of the assets of USS Holdings and its subsidiaries, a
     merger of USS Holdings or any subsidiary and a sale of USS Holdings and
     upon the occurrence of certain termination events, including death,
     disability, retirement or termination of employment. The total number of
     shares of Class C common stock issuable under the warrants will be reduced
     by the number of shares of Class C common stock which did not vest and/or
     which are repurchased in accordance with the terms of the restricted stock
     purchase agreements pursuant to which the shares of Class C common stock
     are issued. Holders (other than Mass Mutual (as defined in note (11))) of
     at least 50% of the then outstanding common stock purchase warrants and
     shares issued or issuable under the stockholders agreement, and Mass
     Mutual, if it holds at least 50% of the then outstanding common stock
     purchase warrants and shares issued or issuable under the stockholders
     agreement upon the exercise of the warrants then outstanding and held by
     Mass Mutual, have the right to require USS Holdings to purchase their
     warrants to purchase shares of common stock and shares issued thereunder
     held by JPMP (23A SBIC) (as defined in note (9)), Mass Mutual and certain
     DGHA principals at any time after October 1, 2004 and prior to a sale,
     public offering of common stock or liquidation of USS Holdings. Upon the
     exercise of those put rights, if USS Holdings cannot obtain the consents
     from third parties necessary to purchase those shares after using
     reasonable efforts, USS Holdings will be released from its obligation to
     purchase the warrants. At any time after October 1, 2005, USS Holdings has
     the right to purchase all (but not less than all) of the warrants to
     purchase shares of Class C common stock held by JPMP (23A SBIC), Mass
     Mutual and certain DGHA principals.

                                       57

<PAGE>

(6)   Holders of Series A preferred stock, except as otherwise required by law,
      have no voting rights, except in the event that there is a proposal to
      amend the terms of the Series A preferred stock so as to affect it
      adversely or a proposal to authorize or issue (i) any equity or
      convertible debt securities or (ii) certain rights to purchase equity or
      convertible debt securities, in either case ranking equal or superior to
      the Series A preferred stock (with certain exceptions), which shall then
      require the consent of the holders of two-thirds of the outstanding shares
      of Series A preferred stock. Holders of more than 50% of the Series B
      preferred stock originally issued have the right to require USS Holdings
      to purchase all (but not less than all) of the shares of Series A
      preferred stock and warrants to purchase Series A preferred stock held by
      JPMP (SBIC) (as defined in note (9)) and Mass Mutual (as defined in note
      (11)) at any time after October 1, 2004 and prior to a sale, public
      offering of common stock or liquidation of USS Holdings. Upon the exercise
      of those put rights, if USS Holdings cannot obtain the consents from third
      parties necessary to purchase those shares and warrants after using
      reasonable efforts, USS Holdings will be released from its obligation to
      purchase the shares and warrants. At any time after October 1, 2005, USS
      Holdings has the right to purchase all (but not less than all) of the
      Series A preferred stock held by JPMP (SBIC) and Mass Mutual.
(7)   Holders of Series B preferred stock shall not, prior to the occurrence of
      a "trigger event" (as defined in note (4) above), have any voting rights,
      except as otherwise required by law and except in the event of a proposal
      to authorize or issue additional shares of Series B preferred stock or
      change the preferences, rights or powers of the Series B preferred stock
      so as to affect it adversely, which shall then require the consent of the
      holders of a majority of the outstanding shares of Series B preferred
      stock. After a trigger event, the holders of Series B preferred stock
      shall vote, together with the holders of Class A common stock, as one
      class, with each share of Series B preferred stock entitling its holder to
      that number of votes equal to the number of shares of common stock
      issuable upon conversion thereof (currently one share of Class B common
      stock for each share of Series B preferred stock (subject to adjustment))
      on the date of any such vote, subject to the Stockholders Agreement.
      Holders of more than 50% of the Series B preferred stock originally issued
      have the right to require USS Holdings to purchase all (but not less than
      all) of the shares of Series B preferred stock and warrants to purchase
      Series B preferred stock held by JPMP (SBIC) (as defined in note (9)) and
      Mass Mutual (as defined in note (11)) at any time after October 1, 2004
      and prior to a sale, public offering of common stock or liquidation of USS
      Holdings. Upon the exercise of those put rights, if USS Holdings cannot
      obtain the consents from third parties necessary to purchase those shares
      and warrants after using reasonable efforts, USS Holdings will be released
      from its obligation to purchase the shares and warrants. At any time after
      October 1, 2005, USS Holdings has the right to purchase all (but not less
      than all) of the Series B preferred stock held by JPMP (SBIC) and Mass
      Mutual. The Series B preferred stock will automatically be converted into
      an equal number of shares of Class B common stock (before a trigger event)
      or Class A common stock (after a trigger event) upon an event of
      conversion (as defined in note (4) above). Moreover, any holder of the
      Series B preferred stock can at any time and from time to time convert all
      or a portion of his Series B preferred stock into an equal number of
      shares of Class B common stock (before a trigger event) or Class A common
      stock (after a trigger event).
(8)   Holders of Series D preferred stock, except as otherwise required by law,
      have no voting rights, except in the event there is a proposal to amend
      the terms of the Series D preferred stock so as to affect it adversely or
      a proposal to authorize or issue (i) any equity or convertible debt
      securities or (ii) certain rights to purchase equity or convertible debt
      securities, in either case ranking equal or superior to the Series D
      preferred stock, which shall then require the consent of the holders of a
      majority of the outstanding shares of Series D preferred stock.
(9)   Includes (i) 664,146 shares of Series A preferred stock, 1,328,292 shares
      of Series B preferred stock, 9,232 shares of Series D preferred stock,
      280,076 shares of Class B common stock, 59,993 shares of Class B common
      stock issuable upon exercise of common stock warrants and 8,800 shares of
      Class C common stock issuable upon exercise of common stock purchase
      warrants, in each case held by J.P. Morgan Partners (23A SBIC), LLC
      ("JPMP (23A SBIC)"), the managing member of which is J.P. Morgan Partners
      (23A SBIC Manager), Inc. ("JPMP (23A SBIC Manager)"), the sole
      stockholder of which is JPMorgan Chase Bank, formerly known as The Chase
      Manhattan Bank ("JPMC"), the sole stockholder of which is J.P. Morgan
      Chase and (ii) 13,889 shares of Series A preferred stock issuable upon
      exercise of preferred stock warrants and 27,778 shares of Series B
      preferred stock issuable upon exercise of preferred stock warrants, in
      each case held by J.P. Morgan Partners (SBIC), LLC ("JPMP (SBIC)"), the
      sole member of which is J.P. Morgan Partners (BHCA), L.P. ("JPMP
      (BHCA)"), the general partner of which is JPMP Master Fund Manager, L.P.
      ("JPMP MFM"), the general partner of which is JPMP Capital Corp. ("JPMP
      CC"), the sole stockholder of which is J.P. Morgan Chase. Each of JPMP
      (23A SBIC), JPMP (23A SBIC Manager), JPMC, JPMP (SBIC), JPMP (BHCA), JPMP
      MFM, JPMP CC and J.P. Morgan Chase may be deemed the beneficial owner of
      the foregoing shares. Messrs. Chavkin and Walsh are executive officers of
      JPMP (23A SBIC Manager), JPMP (SBIC), JPMP CC and J.P. Morgan Partners,
      LLC ("JPMP LLC"), which serves as investment advisor to JPMP (23A SBIC),
      JPMP (SBIC) and JPMP (BHCA). JPMP (23A SBIC) and JPMP (SBIC) are licensed
      small business investment companies (an "SBIC") and as such are subject
      to certain restrictions imposed upon SBICs by the regulations established
      and enforced by the United States Small Business Administration. Among
      these restrictions are certain limitations on the extent to which an SBIC
      may exercise control over companies in which it invests.
(10)  Messrs. Chavkin and Walsh may be deemed the beneficial owners of the
      shares of common stock and preferred stock and warrants to purchase
      preferred and common stock referred to in note (9) above given their
      positions as executive officers of JPMP (23A SBIC Manager), JPMP (SBIC),
      JPMP CC and JPMP LLC.

                                       58

<PAGE>

(11)   Includes (i) 180,000 shares of Series A preferred stock and warrants to
       purchase 27,778 shares of Series A preferred stock, (ii) 360,000 shares
       of Series B preferred stock and warrants to purchase 55,556 shares of
       Series B preferred stock (iii) 2,829 shares of Series D preferred stock,
       (iv) 85,827 shares of Class B common stock, (v) warrants to purchase
       18,384 shares of Class B common stock issuable upon exercise of common
       stock purchase warrants and (vi) 2,697 shares of Class C common stock
       issuable upon exercise of common stock purchase warrants owned by
       Massachusetts Mutual Life Insurance Company, Mass Mutual Participation
       Investors, Mass Mutual Corporate Investors and Gerlach & Co.
       (collectively, "Mass Mutual").
(12)   Does not include 19,691 shares of Class A common stock, 938 shares of
       Series A preferred stock, 31,575 shares of Series B preferred stock, 219
       shares of Series D preferred stock, 1,420 shares of Class B common stock
       issuable upon exercise of common stock purchase warrants and 208 shares
       of Class C common stock issuable upon exercise of common stock purchase
       warrants held in two trusts over which Mr. Harris, as co-trustee, shares
       voting control and investment control.
(13)   Does not include 22,075 shares of Class A common stock, 18,537 shares of
       Series B preferred stock, 78 shares of Series D preferred stock, 84
       shares of Class B common stock issuable upon exercise of common stock
       purchase warrants and 12 shares of Class C common stock issuable upon
       exercise of common stock purchase warrants held in twelve trusts over
       which Messrs. Petrocelli and Kilpatrick, as co-trustees, share voting
       control and investment control.
(14)   Does not include the shares of common stock and preferred stock and
       warrants to purchase preferred and common stock referred to in note (9)
       above.
(15)   Does not include 750 shares of Class A Common held in two trusts over
       which Messrs. Nick and Petrocelli as co-trustees share voting control and
       investment control.

The Stockholders Agreement

           The holders of all of the capital stock of USS Holdings are party to
a stockholders agreement. The stockholders agreement governs the holders'
exercise of their voting rights with respect to the election of directors and
certain other material events. The parties to the agreement have agreed to vote
their shares of USS Holdings to elect (i) for as long as Mr. Harris owns 50% or
more of the securities of USS Holdings (subject to certain exceptions set forth
in the agreement) held by him on February 9, 1996 (the date of the U.S. Silica
acquisition), two directors designated by Mr. Harris, including himself, (ii)
for as long as Mr. Petrocelli owns 50% or more of the securities of USS Holdings
(subject to certain exceptions set forth in the agreement) held by him on
February 9, 1996, one director designated by Mr. Petrocelli, and (iii) three
directors designated by a majority of the institutional stockholders party to
the stockholders agreement (the "Institutional Stockholders"). JPMP (23A SBIC)
and JPMP (SBIC) currently hold 76.5% of the stock owned by the Institutional
Stockholders. For so long as each shall be a director, Mr. Harris will always be
elected as Chairman of the Board of Directors, and Mr. Petrocelli will always be
elected as Vice Chairman of the Board of Directors. Upon a trigger event, a
majority of the Institutional Stockholders have the right to designate two
additional directors, thus enabling them to choose the majority of directors
serving on the Board of Directors.

          The provisions of the stockholders agreement also govern:

          -   restrictions on certain actions by USS Holdings and its
              subsidiaries without the consent of (i) prior to the occurrence of
              a trigger event, a majority of the Institutional Stockholders and
              the DGHA Stockholders (as defined in the stockholders agreement),
              and (ii) after the occurrence of a trigger event, a majority of
              the Institutional Stockholders only; these restricted actions
              include, among other things, the consummation of a public
              offering, the issuance of certain equity securities, the merger or
              consolidation with or into another entity, the acquisition of
              another entity, certain sales of assets, the liquidation or
              reorganization of USS Holdings and the incurrence of certain debt;

          -   stockholder rights of first refusal to purchase certain capital
              stock or equity securities to be issued by USS Holdings;

          -   USS Holdings' and stockholder rights of first offer to purchase
              certain shares of USS Holdings to be sold by stockholders;

          -   USS Holdings' and stockholder rights to purchase, and stockholder
              rights to sell, certain shares of USS Holdings held by
              stockholders in certain instances (including a person's
              termination of employment);

          -   rights of certain stockholders to cause all of the other
              stockholders to sell stock in connection with the sale of USS
              Holdings; and

          -   rights of certain stockholders to participate in certain sales of
              the shares of USS Holdings by other stockholders.

                                       59

<PAGE>

Item 13.    Certain Relationships and Related Transactions

Loans to Management

         In 2000, our indirect parent, USS Holdings, made loans to certain of
its management stockholders to finance their purchase of shares of USS Holdings'
Class A common stock and Series D preferred stock. The loans are evidenced by
promissory notes that accrue interest at 9% per annum payable quarterly, and are
collateralized by the stock. During 2001, the largest aggregate amount of
indebtedness under these loans for Richard E. Goodell, our Vice Chairman, was
$100,000, and for Richard J. Shearer, the President of U.S. Silica, was $83,000.
As of March 1, 2002, Mr. Shearer's outstanding loan was $83,000, and Mr.
Goodell's loan was fully satisfied.

Relationship with J.P. Morgan Chase & Co.

         JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank
("JPMC"), an affiliate of J.P. Morgan Securities Inc., formerly known as Chase
Securities Inc. ("JPMSI"), is a lender under our senior secured credit
agreement. From time to time, JPMSI acts as a principal or agent in connection
with offers and sales of our senior subordinated notes in market-making
transactions. Both JPMSI and JPMC are affiliates of JPMP LLC, which serves as
investment advisor to JPMP (23A SBIC) and JPMP (SBIC). Certain affiliates of
J.P. Morgan Chase own a majority of the outstanding preferred stock of USS
Holdings and thus have the right under the stockholders agreement to appoint
three directors of USS Holdings. Arnold L. Chavkin, one of our directors, is
also an executive partner at JPMP LLC. Timothy J. Walsh, one of our directors,
is also a partner at JPMP LLC. Messrs. Chavkin and Walsh are also executive
officers of the managing member of JPMP (23A SBIC) and executive officers of
JPMP (SBIC).

Management Services Agreement

         Pursuant to an agreement among USS Holdings, BMAC Holdings, D. George
Harris & Associates, LLC ("DGHA") and us, DGHA (the principals of which are
stockholders of USS Holdings) provides management advisory services to us from
time to time. In consideration of these management services, effective January
1, 2002, we have agreed to pay an annual management fee of $500,000 to DGHA. The
agreement provides that in the event of a business acquisition by us, we will
pay DGHA an acquisition fee equal to 1% of the total purchase price of the
acquisition, including all third party indebtedness assumed by us in connection
with the acquisition.

         The agreement also provided that, at DGHA's request, we are obligated
to provide DGHA with one or more interest-free loans not exceeding an aggregate
of $1.0 million in any calendar year (effective January 1, 2002, however, this
limit was reduced to $500,000 in any calendar year) and not to exceed $3.0
million in total. As of December 31, 2001, a loan of $1.4 million was currently
outstanding. This loan is guaranteed by D. George Harris, Anthony J. Petrocelli,
Richard J. Donahue, Donald G. Kilpatrick and Richard J. Nick. Finally, pursuant
to the agreement, the other companies party to the agreement will reimburse DGHA
for all transaction expenses incurred in relation to completed acquisitions;
those companies will also reimburse DGHA for other expenses incurred relating to
company business up to $100,000 in any calendar year. The agreement initially
terminated on December 31, 2000, but, pursuant to its terms, was automatically
extended and will continue in full force and effect unless terminated (i) by USS
Holdings or DGHA upon nine months' prior written notice, (ii) upon certain
events of sale, merger, change of stock ownership or appointment of additional
directors or (iii) at the option of USS Holdings if neither Messrs. Harris or
Petrocelli is actively involved in the management of DGHA.

         We paid approximately $795,000 in management fees to DGHA for the year
ended December 31, 2001 under this agreement.

Tax Sharing Agreement

         Pursuant to a tax sharing agreement, USS Holdings has agreed to file
consolidated federal income tax returns (and, in certain circumstances, state
and local income tax returns) with us and our domestic subsidiaries. Under this
agreement, we have agreed to pay USS Holdings amounts designed to approximate
the amount of income tax that we and our domestic subsidiaries would have paid
had we filed consolidated federal income tax returns (and, if applicable, state
and local income tax returns) separate from USS Holdings.

                                       60

<PAGE>

                                     PART IV

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

(a) (1) Financial Statements Filed as Part of This Annual Report on Form 10-K

<TABLE>
<CAPTION>
                                   Index to Consolidated Financial Statements
<S>                                                                                                                         <C>
Report of Independent Accountants ......................................................................................     25
Consolidated Balance Sheets at December 31, 2001 and 2000 ..............................................................     26
Consolidated Statement of Operations for the years ended December 31, 2001, 2000 and 1999. .............................     27
Consolidated Statement of Stockholder's Equity for the years ended December 31, 2001, 2000, 1999 and 1998 ..............     28
Consolidated Statement of Cash Flows for the years ended December 31, 2001, 2000 and 1999. .............................     29
Notes to Consolidated Financial Statements. ............................................................................     30
</TABLE>

(2) Financial Statement Schedules

                                       61

<PAGE>

          Schedule II - Valuation and Qualifying Accounts and Reserves

                      Better Minerals & Aggregates Company

              For the Years Ended December 31, 2001, 2000, and 1999
                            (in thousands of dollars)

<TABLE>
<CAPTION>
                                                                       Additions
                                                                       ---------
                                                  Balance at    Charged to    Resulting             Accounts           Balance at
                                                 Beginning of   Costs and        from               --------             End of
Description                                         Period       Expenses    Acquisitions  Written Off    Recovered      Period
-----------                                         ------       --------    ------------  -----------    ---------      ------
<S>                                              <C>            <C>          <C>           <C>            <C>          <C>
Allowance for
Doubtful Accounts
2001                                                $1,327         $780          $ --         $(284)         $ 1         $1,824
2000                                                $1,278         $638          $ --         $(624)         $35         $1,327
1999                                                $1,060         $222          $100         $(145)         $41         $1,278
</TABLE>

                               __________________

All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

(3) Exhibits

     The list of exhibits on the accompanying Index to Exhibits is hereby
incorporated by reference. Each management contract or compensatory plan or
arrangement required to be filed as an exhibit is indicated by an asterisk.

(b) Reports on Form 8-K.

     We did not file any reports on Form 8-K during the last quarter of the
period covered by this Annual Report on Form 10-K.

                                       62


<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 29th day of March,
2002.

                                          BETTER MINERALS & AGGREGATES COMPANY

                                          By: /s/ Gary E. Bockrath
                                              ----------------------------------
                                              Name:  Gary E. Bockrath

                                              Title: Vice President and Chief
                                                     Financial Officer

                                POWER OF ATTORNEY

     Know all persons by these presents, that each person whose signature
appears below appoints Gary E. Bockrath and John A. Ulizio, jointly and
severally, as his or her true and lawful attorney-in-fact, each with full power
of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments to this
Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, jointly and severally, full
power and authority to do and perform each in connection therewith, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact, jointly and severally,
or their or his substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.

Dated:  March 29, 2002

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

<TABLE>
<CAPTION>
SIGNATURE                                        TITLE                                                             DATE
---------                                        -----                                                             ----
<S>                                              <C>                                                              <C>
/s/ Roy D. Reeves                                President and Chief Executive                                    3/29/02
-------------------------------------------
Roy D. Reeves                                    Officer (Principal Executive Officer); Director

/s/ Gary E. Bockrath                             Vice President and Chief Financial                               3/29/02
-------------------------------------------
Gary E. Bockrath                                 Officer (Principal Financial Officer
                                                 and Principal Accounting Officer)
/s/ D. George Harris
-----------------------------------------------  Director                                                         3/29/02
D. George Harris

/s/ Anthony J. Petrocelli                        Director                                                         3/29/02
-------------------------------------------
Anthony J. Petrocelli

/s/ Richard J. Donahue                           Director                                                         3/29/02
-------------------------------------------
Richard J. Donahue

/s/ Arnold L. Chavkin                            Director                                                         3/29/02
-------------------------------------------
Arnold L. Chavkin

/s/ Ruth Dreessen                                Director                                                         3/29/02
-------------------------------------------
Ruth Dreessen

/s/ Timothy J. Walsh
-------------------------------------------
Timothy J. Walsh                                 Director                                                         3/29/02

/s/ Richard E. Goodell
-------------------------------------------
Richard E. Goodell                               Director                                                         3/29/02
</TABLE>

                                       63


<PAGE>

                                INDEX TO EXHIBITS

EXHIBIT
NUMBER              EXHIBIT
------              -------

3.1                 Amended and Restated Certificate of Incorporation of Better
                    Minerals & Aggregates Company dated as of February 9, 1996
                    (incorporated by reference to Exhibit 3.1 of the Better
                    Minerals & Aggregates Company Registration Statement on Form
                    S-4, Registration No. 333-32518, filed on March 15, 2000).

3.1.1               Certificate of Amendment of Amended and Restated Certificate
                    of Incorporation of Better Minerals & Aggregates Company
                    dated September 30, 1999 (incorporated by reference to
                    Exhibit 3.1.1 of the Better Minerals & Aggregates Company
                    Registration Statement on Form S-4, Registration No.
                    333-32518, filed on March 15, 2000).

3.2                 By-laws of Better Minerals & Aggregates Company
                    (incorporated by reference to Exhibit 3.2 of the Better
                    Minerals & Aggregates Company Registration Statement on Form
                    S-4, Registration No. 333-32518, filed on March 15, 2000).

4.1                 Indenture, dated as of October 1, 1999, among Better
                    Minerals & Aggregates Company, the subsidiary guarantors
                    named therein and The Bank of New York, as trustee
                    (including the forms of Better Minerals & Aggregates
                    Company's 13% Senior Subordinated Notes due 2009 attached
                    thereto as exhibits) (incorporated by reference to Exhibit
                    4.1 of the Better Minerals & Aggregates Company Registration
                    Statement on Form S-4, Registration No. 333-32518, filed on
                    March 15, 2000).

4.2                 Supplemental Indenture, dated as of December 1, 2000, among
                    Better Minerals & Aggregates Company, BMAC Services Co.,
                    Inc. and the other subsidiary guarantors named therein and
                    The Bank of New York, as trustee (incorporated by reference
                    to Exhibit 4.2 of the Better Minerals & Aggregates Company
                    Annual Report on Form 10-K/A filed on March 29, 2001).

10.1                Stockholders Agreement, dated as of February 9, 1996, among
                    USS Holdings, Inc. and the stockholders of USS Holdings,
                    Inc. (incorporated by reference to Exhibit 10.1 of the
                    Better Minerals & Aggregates Company Registration Statement
                    on Form S-4, Registration No. 333-32518, filed on March 15,
                    2000).

10.1.1              Amendment No. 1 to Stockholders Agreement, dated as of
                    October 15, 1996, among USS Holdings, Inc. and the
                    stockholders of USS Holdings, Inc. (incorporated by
                    reference to Exhibit 10.1.1 of the Better Minerals &
                    Aggregates Company Registration Statement on Form S-4,
                    Registration No. 333-32518, filed on March 15, 2000).

10.1.2              Amendment No. 2 to Stockholders Agreement, dated as of
                    October 6, 1998, among USS Holdings, Inc. and the
                    stockholders of USS Holdings, Inc. (incorporated by
                    reference to Exhibit 10.1.2 of the Better Minerals &
                    Aggregates Company Registration Statement on Form S-4,
                    Registration No. 333-32518, filed on March 15, 2000).

10.2                Second Amended and Restated Management Services Agreement,
                    dated as of March 28, 2001, among Better Minerals &
                    Aggregates Company, USS Holdings, Inc., U.S. Silica Company,
                    and D. George Harris & Associates, LLC (incorporated by
                    reference to Exhibit 10.1 of the Better Minerals &
                    Aggregates Company Quarterly Report on Form 10-Q filed on
                    August 9, 2001).

10.2.1              Assignment and Assumption Agreement, dated as of September
                    30, 1999, among D. George Harris & Associates, Inc., D.
                    George Harris & Associates, LLC, USS Holdings, Inc., USS
                    Intermediate Holdco, Inc., U.S. Silica Company, BMAC
                    Holdings, Inc. and Better Minerals & Aggregates Company
                    (incorporated by reference to Exhibit 10.2.1 of the Better
                    Minerals & Aggregates Company Registration Statement on Form
                    S-4, Registration No. 333-32518, filed on March 15, 2000).

10.3                Amended and Restated Tax Sharing Agreement, dated as of
                    October 1, 1999, among Better Minerals & Aggregates Company,
                    its domestic subsidiaries, and USS Holdings, Inc.
                    (incorporated by reference to Exhibit 10.3 of the Better
                    Minerals & Aggregates Company Registration Statement on Form
                    S-4, Registration No. 333-32518, filed on
                    March 15, 2000).

                                      E-1


<PAGE>

10.4                Credit Agreement, dated as of September 30, 1999, among
                    Better Minerals & Aggregates Company, BMAC Holdings, Inc.,
                    George F. Pettinos (Canada) Limited, Banque Nationale de
                    Paris, and the financial institutions and other
                    institutional lenders named therein (incorporated by
                    reference to Exhibit 10.4 of the Better Minerals &
                    Aggregates Company Registration Statement on Form S-4,
                    Registration No. 333-32518, filed on March 15, 2000).

10.4.1              Amendment and Waiver No. 1 to the Credit Agreement and
                    Security Agreement, dated as of December 31, 1999, among
                    BMAC Holdings, Inc., Better Minerals & Aggregates Company,
                    George F. Pettinos (Canada) Limited, the banks, financial
                    institutions and other institutional lenders parties to the
                    Credit Agreement dated as of September 30, 1999, and Banque
                    Nationale de Paris (incorporated by reference to Exhibit
                    10.1 of the Better Minerals & Aggregates Company Quarterly
                    Report on Form 10-Q filed on August 11, 2000).

10.4.2              Amendment No. 2 to the Credit Agreement, dated as of March
                    15, 2000, among BMAC Holdings, Inc., Better Minerals &
                    Aggregates Company, the banks, financial institutions and
                    other institutional lenders parties to the Credit Agreement
                    dated as of September 30, 1999, and Banque Nationale de
                    Paris (incorporated by reference to Exhibit 10.2 of the
                    Better Minerals & Aggregates Company Quarterly Report on
                    Form 10-Q filed on August 11, 2000).

10.4.3              Amendment No. 3 to the Credit Agreement, dated as of
                    December 31, 2000, among BMAC Holdings, Inc., Better
                    Minerals & Aggregates Company, the banks, financial
                    institutions and other institutional lenders parties to the
                    Credit Agreement dated as of September 30, 1999, and Banque
                    Nationale de Paris (incorporated by reference to Exhibit
                    10.1 of the Better Minerals & Aggregates Company Current
                    Report on Form 8-K filed on March 5, 2001).

10.4.4*             Amendment No. 4 to the Credit Agreement, dated as of January
                    31, 2002, among BMAC Holdings, Inc., Better Minerals &
                    Aggregates Company, the banks, financial institutions and
                    other institutional lenders parties to the Credit Agreement
                    dated as of September 30, 1999, and Banque Nationale de
                    Paris.

10.5                Security Agreement, dated September 30, 1999, among Better
                    Minerals & Aggregates Company, the subsidiary guarantors
                    named therein and Banque Nationale de Paris (incorporated by
                    reference to Exhibit 10.5 of the Better Minerals &
                    Aggregates Company Registration Statement on Form S-4,
                    Registration No. 333-32518, filed on March 15, 2000).

10.6                Intellectual Property Security Agreement, dated September
                    30, 1999, among Better Minerals & Aggregates Company, the
                    subsidiary guarantors named therein and Banque Nationale de
                    Paris (incorporated by reference to Exhibit 10.6 of the
                    Better Minerals & Aggregates Company Registration Statement
                    on Form S-4, Registration No. 333-32518, filed on March 15,
                    2000).

10.7                Parent Guarantor Security Agreement, dated September 30,
                    1999, between BMAC Holdings, Inc. and Banque Nationale de
                    Paris (incorporated by reference to Exhibit 10.7 of the
                    Better Minerals & Aggregates Company Registration Statement
                    on Form S-4, Registration No. 333-32518, filed on March 15,
                    2000).

10.8                Parent Guaranty, dated September 30, 1999, between BMAC
                    Holdings, Inc. and Banque Nationale de Paris (incorporated
                    by reference to Exhibit 10.9 of the Better Minerals &
                    Aggregates Company Registration Statement on Form S-4,
                    Registration No. 333-32518, filed on March 15, 2000).

10.9                Subsidiary Guaranty, dated September 30, 1999, between each
                    of the subsidiary guarantors named therein and Banque
                    Nationale de Paris (incorporated by reference to Exhibit
                    10.10 of the Better Minerals & Aggregates Company
                    Registration Statement on Form S-4, Registration No.
                    333-32518, filed on March 15, 2000).

10.10               Employment Agreement, dated December 14, 1998, between
                    Better Materials Corporation and Craig S. Cinalli
                    (incorporated by reference to Exhibit 10.1 of the Better
                    Minerals & Aggregates Company Quarterly Report on Form 10-Q
                    filed on May 25, 2000).

10.11               Amendment No. 1, dated March 15, 2001, to Employment
                    Agreement dated December 14, 1998 between Better Materials
                    Corporation and Craig S. Cinalli (incorporated by reference
                    to Exhibit 10.11 of the Better Minerals & Aggregates Company
                    Annual Report on Form 10-K/A filed on March 29, 2001).

10.12               Severance Agreement, dated August 15, 2000, between U.S.
                    Silica Company and Richard Shearer (incorporated

                                      E-2

<PAGE>

                    by reference to Exhibit 10.12 of the Better
                    Minerals & Aggregates Company Annual Report on Form 10-K/A
                    filed on March 29, 2001).

10.13               Employment Agreement, dated April 19, 2000, between Better
                    Minerals & Aggregates Company and Roy Reeves (incorporated
                    by reference to Exhibit 10.13 of the Better Minerals &
                    Aggregates Company Annual Report on Form 10-K/A filed on
                    March 29, 2001).

10.14               Employment Agreement, dated April 19, 2000, between USS
                    Holdings, Inc. and Roy Reeves (incorporated by reference to
                    Exhibit 10.14 of the Better Minerals & Aggregates Company
                    Annual Report on Form 10-K/A filed on March 29, 2001).

10.15               Employment, Consulting and Non-Competition Agreement, dated
                    December 31, 2000, between USS Holdings, BMAC Holdings,
                    Inc., U.S. Silica Company and Better Minerals & Aggregates
                    Company and Richard Goodell (incorporated by reference to
                    Exhibit 4.2 of the Better Minerals & Aggregates Company
                    Annual Report on Form 10-K/A filed on March 29, 2001).

10.16*              Amendment Number One to Employment, Consulting and
                    Non-Competition Agreement, dated February 26, 2002, between
                    USS Holdings, BMAC Services Co., Inc., BMAC Holdings, Inc.,
                    U.S. Silica Company and Better Minerals & Aggregates Company
                    and Richard Goodell.

12.1*               Statement regarding ratio of earnings to fixed charges.

21.1*               Subsidiaries of Better Minerals & Aggregates Company.

* Filed herewith

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