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

                                    FORM 10-Q

(MARK ONE)

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 1-9859

                             PIONEER COMPANIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                                            06-1215192
(STATE OR OTHER JURISDICTION OF                             (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                             IDENTIFICATION NO.)


             700 LOUISIANA STREET, SUITE 4300, HOUSTON, TEXAS 77002
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (713) 570-3200
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     On November 30, 2001, there were outstanding 10,678,893 shares of Class A
Common Stock and 858,831 shares of Class B Common Stock of Pioneer Companies
Inc.
<PAGE>
                                TABLE OF CONTENTS
<Table>
<Caption>
                                       PART I--FINANCIAL INFORMATION
                                                                                                            Page
                                                                                                            ----
<S>          <C>                                                                                            <C>
Item 1.      Consolidated Financial Statements

             Consolidated Balance Sheets--September 30, 2001 and December 31, 2000                            3

             Consolidated Statements of Operations--Three Months Ended September 30, 2001 and
                    2000 and Nine Months Ended September 30, 2001 and 2000                                    5

             Consolidated Statements of Cash Flows--Nine Months Ended September 30, 2001 and 2000             6

             Notes to Consolidated Financial Statements                                                       7

Item 2.      Management's Discussion and Analysis of Financial Condition and Results of Operations           13

Item 3.      Quantitative and Qualitative Disclosures About Market Risk                                      16


                                       PART II--OTHER INFORMATION

Item 3.      Defaults Upon Senior Securities                                                                 19

Item 6.      Exhibits and Reports on Form 8-K                                                                19
</Table>


Statements regarding Pioneer's ability to complete its bankruptcy reorganization
proceedings timely, the outcome of the reorganization plan, Pioneer's ability to
sustain current operations during the reorganization, including its ability to
maintain normal relationships with customers, the ability of Pioneer to
establish normal terms and conditions with suppliers and vendors, costs of the
reorganization process, the adequacy of financing arrangements during the
reorganization period, future market prices, operating results, future operating
efficiencies, cost savings and other statements which are not historical facts
contained in this Quarterly Report on Form 10-Q are "forward looking statements"
within the meaning of the Securities Litigation Reform Act. The words "expect",
"project", "estimate", "believe", "anticipate", "plan", "intend", "could",
"should", "may", "predict" and similar expressions are also intended to identify
forward looking statements. Such statements involve risks, uncertainties and
assumptions, including, without limitation, the results of the bankruptcy
proceedings, court decisions and actions, the negotiating positions of various
constituencies, the results of negotiations, market factors, the effect of
economic conditions, the ability of Pioneer to realize planned cost savings and
other factors detailed in this and other filings with the Securities and
Exchange Commission. Should one of more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual outcomes
may vary materially.

                                       2
<PAGE>
                         Part I --Financial Information

                             PIONEER COMPANIES, INC.
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS
                      (UNAUDITED, IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                                                        SEPTEMBER 30,   DECEMBER 31,
                                                                                            2001            2000
                                                                                        -------------   ------------
<S>                                                                                       <C>             <C>
                                   ASSETS

Current assets:
      Cash and cash equivalents                                                           $   1,099       $   5,935
      Accounts receivable, net of allowance for doubtful accounts of $1,302 at
           September 30, 2001 and $1,392 at December 31, 2000                                55,887          49,571
      Inventories                                                                            22,728          25,067
      Derivative asset (Note 2)                                                             188,691            --
      Prepaid expenses and other current assets                                               2,435           2,302
                                                                                          ---------       ---------
                Total current assets                                                        270,840          82,875

Property, plant and equipment:
      Land                                                                                   10,622          10,622
      Buildings and improvements                                                             61,540          61,334
      Machinery and equipment                                                               351,437         348,695
      Construction in progress                                                               20,362          15,138
                                                                                          ---------       ---------
                                                                                            443,961         435,789
      Less: accumulated depreciation                                                       (160,466)       (135,405)
                                                                                          ---------       ---------
                Net property, plant and equipment                                           283,495         300,384

Other assets, net of accumulated amortization of $6,700 at September 30, 2001
      and $12,004 at December 31, 2000                                                        7,264          27,218
Derivative asset (Note 2)                                                                   116,742            --
Excess cost over fair value of net assets acquired, net of accumulated
      amortization of $46,523 at September 30, 2001 and $39,945 at December 31, 2000        172,981         179,560
                                                                                          ---------       ---------
                                                                                          $ 851,322       $ 590,037
                                                                                          =========       =========
</TABLE>
                 See notes to consolidated financial statements.


                                       3
<PAGE>
                             PIONEER COMPANIES, INC.
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS
                      (UNAUDITED, IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
                                                                                              SEPTEMBER 30,      DECEMBER 31,
                                                                                                  2001              2000
                                                                                              -------------      ------------
<S>                                                                                             <C>               <C>
                           LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
      Accounts payable                                                                          $  12,005         $  43,738
      Accrued liabilities                                                                           7,324            44,082
      Derivative liability (Note 2)                                                               180,414              --
      Current portion of long-term debt                                                             2,251           597,715
      Debtor-in-possession credit facility                                                         11,780              --
                                                                                                ---------         ---------
                Total current liabilities                                                         213,774           685,535

Long-term debt, less current portion                                                                3,742             4,086
Accrued pension and other employee benefits                                                        14,892            14,984
Derivative liability (Note 2)                                                                     218,159              --
Other long-term liabilities                                                                         8,438            12,256
Liabilities subject to compromise under reorganization proceedings:
      Secured debt                                                                                366,183              --
      Unsecured debt                                                                              189,179              --
      Unsecured accounts payable and other liabilities                                            100,721              --
Commitments and contingencies
Redeemable preferred stock: $.01 par value, 10,000 shares authorized,
      55 issued and outstanding (subject to compromise)                                             5,500             5,500
Stockholders' deficit:
      Common stock (subject to compromise):
           Class A, $.01 par value, 46,000 shares authorized, 10,679 issued and
                outstanding at September 30, 2001 and December 31, 2000                               106               106
           Class B, $.01 par value, 4,000 shares authorized, 859 issued and outstanding
                at September 30, 2001 and December 31, 2000, convertible share for share
                into Class A shares                                                                     9                 9
      Additional paid-in capital                                                                   55,193            55,193
      Retained deficit                                                                           (324,498)         (187,556)
      Accumulated other comprehensive income                                                          (76)              (76)
                                                                                                ---------         ---------
Total stockholders' deficit                                                                      (269,266)         (132,324)
                                                                                                ---------         ---------
                                                                                                $ 851,322         $ 590,037
                                                                                                =========         =========
</TABLE>
                 See notes to consolidated financial statements.

                                       4
<PAGE>
                             PIONEER COMPANIES, INC.
                             (DEBTOR-IN-POSSESSION)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED                   NINE MONTHS ENDED
                                                                   SEPTEMBER 30,                       SEPTEMBER 30,
                                                              -------------------------         ---------------------------
                                                                2001             2000              2001              2000
                                                              --------         --------         ---------         ---------
<S>                                                           <C>              <C>              <C>               <C>
Revenues                                                      $ 78,701         $ 87,363         $ 254,736         $ 260,824
Cost of sales                                                   65,272           83,840           217,729           233,903
                                                              --------         --------         ---------         ---------
Gross profit                                                    13,429            3,523            37,007            26,921
Selling, general and administrative expenses                    10,092           10,327            30,461            32,939
Change in fair value of derivatives                             63,377             --              93,140              --
Unusual items                                                    2,368             (561)            9,220               225
                                                              --------         --------         ---------         ---------
Operating income (loss)                                        (62,408)          (6,243)          (95,814)           (6,243)
Interest expense (contractual interest expense:
     $14,092 and $44,405 for the three months and nine
      months ended September 30, 2001, respectively)            (5,170)         (14,922)          (35,483)          (41,725)
Reorganization items                                            (1,897)            --              (1,897)             --
Other income (expense), net                                        407              (38)            1,239             3,902
                                                              --------         --------         ---------         ---------
Loss before taxes                                              (69,068)         (21,203)         (131,955)          (44,066)
Income tax expense (benefit)                                     2,812           (7,845)            4,987           (15,247)
                                                              --------         --------         ---------         ---------
Net loss                                                      $(71,880)        $(13,358)        $(136,942)        $ (28,819)
                                                              ========         ========         =========         =========

     Net loss per share - basic and diluted                   $  (6.23)        $  (1.16)        $  (11.87)        $   (2.50)

Weighted average number of common shares outstanding:
     Basic and Diluted                                          11,538           11,538            11,538            11,534
</TABLE>

                 See notes to consolidated financial statements.

                                       5
<PAGE>
                             PIONEER COMPANIES, INC.
                             (DEBTOR-IN-POSSESSION)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                  NINE MONTHS ENDED
                                                                                    SEPTEMBER 30,
                                                                               --------------------------
                                                                                  2001             2000
                                                                               ---------         --------
<S>                                                                            <C>               <C>
Operating activities:
     Net loss                                                                  $(136,942)        $(28,819)
     Adjustments to reconcile net loss to net cash flows
          from operating activities:
              Depreciation and amortization                                       35,521           38,111
              Net change in deferred taxes                                         4,803          (14,841)
              Change in fair value of derivatives                                 93,140             --
              Gain on disposals of assets                                            (60)          (2,258)
              Foreign exchange (gain) loss                                          (663)             768
              Net effect of changes in operating assets and liabilities           24,388           14,829
                                                                               ---------         --------
Net cash flows from operating activities                                          20,187            7,790
                                                                               ---------         --------
Investing activities:
     Capital expenditures                                                         (8,293)         (12,746)
     Proceeds received from disposals of assets                                      119            2,878
                                                                               ---------         --------
Net cash flows from investing activities                                          (8,174)          (9,868)
                                                                               ---------         --------
Financing activities:
     Debtor-in-possession credit facility, net                                    11,780             --
     Pre-petition revolving credit borrowings, net                               (27,581)           4,997
     Payments on long-term debt                                                     (514)          (1,855)
     Issuance of common stock                                                       --                 18
                                                                               ---------         --------
Net cash flows from financing activities                                         (16,315)           3,160
                                                                               ---------         --------
Effect of exchange rate changes on cash                                             (534)          (1,570)
                                                                               ---------         --------
Net changes in cash and cash equivalents                                          (4,836)            (488)

Cash and cash equivalents at beginning of period                                   5,935            5,510
                                                                               ---------         --------
Cash and cash equivalents at end of period                                     $   1,099         $  5,022
                                                                               =========         ========
</TABLE>
                 See notes to consolidated financial statements.

                                       6
<PAGE>
                             PIONEER COMPANIES, INC.
                             (DEBTOR-IN-POSSESSION)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.  ACCOUNTING POLICIES

BASIS OF PRESENTATION AND MANAGEMENT PLANS

     The consolidated balance sheet at September 30, 2001 and the consolidated
statements of operations and cash flows for the periods presented are unaudited
and reflect all adjustments, consisting of normal recurring items, which
management considers necessary for a fair presentation. Operating results for
the first nine months of 2001 are not necessarily indicative of results to be
expected for the year ending December 31, 2001. The consolidated financial
statements include the accounts of Pioneer Companies, Inc. ("PCI") and its
subsidiaries (collectively referred to as "Pioneer"). All significant
intercompany balances and transactions have been eliminated in consolidation.
All dollar amounts in the tabulations in the notes to the consolidated financial
statements are stated in thousands of dollars unless otherwise indicated.
Certain amounts have been reclassified in prior years to conform to the current
year presentation.

     The consolidated balance sheet at December 31, 2000 is derived from the
December 31, 2000 audited consolidated financial statements, but does not
include all disclosures required by accounting principles generally accepted in
the United States of America ("GAAP"), since certain information and disclosures
normally included in the notes to the financial statements have been condensed
or omitted as permitted by the rules and regulations of the Securities and
Exchange Commission. The accompanying unaudited financial statements should be
read in conjunction with the financial statements contained in the Annual Report
on Form 10-K for the year ended December 31, 2000.

     On July 31, 2001, PCI and each of its direct and indirect wholly-owned
subsidiaries filed a petition for relief under Chapter 11 of the U.S. Bankruptcy
Code (the "Bankruptcy Code") in Houston, Texas. On the same day, a parallel
filing under the Canadian Companies' Creditors Arrangements Act was filed in
Superior Court in Montreal, Canada, by PCI's Canadian subsidiary, PCI Chemicals
Canada Inc. Pioneer is managing its business as a debtor-in-possession pursuant
to the Bankruptcy Code. Certain terms of Pioneer's proposed plan of
reorganization, as amended (the "Proposed Plan"), were pre-negotiated between
Pioneer and certain of its senior secured creditors. The Proposed Plan was
confirmed by the United States Bankruptcy Court, Southern District of Texas,
Houston Division on November 28, 2001. The reorganization proceedings are
expected to be completed within Pioneer's fiscal year ending December 31, 2001.

     The Proposed Plan provides that, upon emergence, approximately $552 million
of outstanding indebtedness (plus accrued interest) will be exchanged for $200
million of new debt and 97% of the common stock of the reorganized company.
Unsecured creditors will hold the remaining 3% of the common stock of the
reorganized company. All of Pioneer's current outstanding common stock and
preferred stock will be cancelled, and the holders of those shares will not
share in the value of the reorganized company.

     Pioneer has applied the accounting principles provided for in the American
Institute of Certified Public Accountants' Statement of Position 90-7,
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code,"
("SOP 90-7") for the period since July 31, 2001. Accordingly, pre-petition
liabilities subject to compromise have been segregated in the accompanying
consolidated balance sheet, unamortized debt issuance costs related to debt that
is subject to compromise have been reclassified against the related debt
balances, and reorganization costs have been excluded from operating income.
Contractual interest amounting to $9 million has not been recorded in the
accompanying financial statements as it is not expected to be paid.

     Pursuant to the provisions of the Bankruptcy Code, all actions to collect
upon any of Pioneer's liabilities as of the petition date or to enforce
pre-petition contractual obligations were automatically stayed. Absent approval
from the Bankruptcy Court, Pioneer is prohibited from paying pre-petition
obligations. The Bankruptcy Court has approved payment of certain pre-petition
obligations such as employee wages and benefits, taxes, customer claims and
rebates, and amounts owed to certain critical vendors. Additionally, the
Bankruptcy Court has approved the retention of various legal, financial and
other professionals. As a debtor-in-possession, Pioneer has the right, subject
to Bankruptcy Court approval and certain other conditions, to assume or reject
pre-petition executory contracts and unexpired leases.

                                       7
<PAGE>
    The accompanying unaudited consolidated financial statements have been
prepared on the going-concern basis of accounting, which contemplates continuity
of operations, realization of assets and the satisfaction of liabilities in the
normal course of business. As a result of the Chapter 11 filing, such
realization of assets and satisfaction of liabilities is subject to uncertainty.
Further, implementation of the Proposed Plan will materially change the amounts
reported in the consolidated financial statements. These financial statements do
not give effect to any adjustments to the carrying value of assets or amounts of
liabilities that might be necessary as a consequence of implementing a plan of
reorganization. The ability of Pioneer to continue as a going concern is
dependent upon, among other things, emerging from the Chapter 11 proceedings,
the ability to generate sufficient cash from operations and financing sources to
meet obligations and ultimately, its return to future profitable operations.
Additionally, the accompanying unaudited condensed consolidated financial
statements do not include any adjustments that would be required were Pioneer to
be liquidated.

    Prior to Pioneer's filing for bankruptcy protection, Pioneer delayed making
payments on various debt obligations due to insufficient liquidity. As a result,
Pioneer was not in compliance with the terms of certain of its debt agreements.

    Pioneer entered into a debtor-in-possession financing agreement (the "DIP
Facility") which, as approved by the Bankruptcy Court in August 2001, provides
for up to $50 million of revolving borrowings as a source of liquidity during
the reorganization. Availability under the DIP Facility was reduced by the
remaining amounts outstanding under the pre-petition revolving credit facility.
The DIP Facility matures on the earlier of September 24, 2002, or when a plan of
reorganization becomes effective. The interest rates on borrowings under the DIP
Facility are at 1 1/4% per annum in excess of the US prime rate as to US dollar
loans and 2% per annum in excess of the Canadian prime rate as to Canadian
dollar loans.

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires estimates
and assumptions that affect the reported amounts as well as certain disclosures.
Pioneer's financial statements include amounts that are based on management's
best estimates and judgements. Actual results could differ from those estimates.

2.    DERIVATIVE INSTRUMENTS

     Pioneer adopted the accounting and reporting standards of Statement of
Financial Accounting Standard 133, "Accounting for Derivative Instruments and
Hedging Activities", as amended by SFAS 137 and SFAS 138, and as interpreted by
the Financial Accounting Standards Board's ("FASB") Derivatives Implementation
Group ("DIG"), collectively hereafter referred to as "SFAS 133" , as of January
1, 2001. This statement establishes accounting and reporting standards for
derivative instruments and hedging activities. SFAS No. 133 requires a company
to recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The change in
the fair value of derivatives that are not hedges must be recognized currently
as a gain or loss in the statement of operations. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of derivatives
are either offset against the change in fair value of assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is settled. Under hedge accounting, the ineffective
portion of a derivative's change in fair value will be immediately recognized in
earnings. Based upon the contracts in effect at January 1, 2001, the adoption of
SFAS 133 had no effect on the consolidated financial statements at that date.

     The Colorado River Commission ("CRC") supplies power to Pioneer's Henderson
facility pursuant to three basic contracts covering hydro-generated power, power
requirements in excess of hydro-power, and power transmission and supply
balancing services. CRC is a state agency established in 1940 to manage federal
hydro-power contracts with utilities and other customers, including Pioneer's
Henderson facility, in Southern Nevada. Since the low cost hydro-power supplied
by CRC does not entirely meet Henderson's power demands and those of its other
customers, CRC purchases supplemental power from various sources and resells it
to Pioneer and other customers.

     Effective as of March 13, 2001, Pioneer and CRC entered into a supplemental
electric power supply services contract (the "supplemental power contract")
under which CRC was to provide any needed electric power including that which
exceeded the power provided to Pioneer's Henderson facility from hydroelectric
sources. CRC maintains that it has entered into various derivative positions, as
defined by SFAS 133, under the supplemental power contract, including forward
purchases and sales of electricity as well as options that have been purchased
or written for electric power. Pioneer maintains that CRC has engaged in
speculative trading that was not in accordance with the supplemental power
contract, that CRC did not obtain proper approval for most of the trades in
accordance with procedures agreed upon by Pioneer and CRC and that the trades
entered into by CRC purportedly on Pioneer's behalf were excessive in relation
to Pioneer's electric power requirements.

                                       8
<PAGE>
     At September 30, 2001, Pioneer recorded a net unrealized loss of $93.1
million for various derivative positions executed by CRC purportedly for the
benefit of Pioneer under the supplemental power contract. Of the net liability,
$30.7 million is attributed to five forward purchase contracts and three option
contracts that CRC executed and that were approved by Pioneer in accordance with
procedures agreed upon by Pioneer and CRC. In September 2001, CRC presented to
Pioneer a confirmation (the "global confirmation") that included numerous trades
allegedly made on behalf of Pioneer by CRC under the supplemental power
contract. Although a representative of Pioneer signed the global confirmation,
Pioneer is currently disputing that these derivative positions are its
responsibility. Pioneer has recorded a net liability of $62.4 million associated
with these derivative positions, because the ultimate outcome of its dispute
with CRC cannot be predicted at this time. Pioneer intends to vigorously dispute
the claim by CRC that these contracts are Pioneer's responsibility.

     CRC has also allocated derivative positions to Pioneer that were not
approved, either individually or collectively, by Pioneer. The net unrealized
loss for these unapproved positions exceeded $30 million at September 30, 2001.
Pioneer believes that CRC has no legal basis for its allocation of these
derivative positions to Pioneer. Pioneer intends to vigorously dispute CRC's
claims and believes that it will ultimately be successful in its assertion that
these derivative positions are not its responsibility. Accordingly, Pioneer has
not recorded these derivative positions in its consolidated financial statements
as of September 30, 2001.

     The derivative positions include many types of contracts with varying
strike prices and maturity dates (extending through 2006). The fair value of the
derivative positions was determined by Pioneer using available market
information and appropriate valuation methodologies. Considerable judgement,
however, is necessary to interpret market data and develop the related estimates
of fair value. Accordingly, the estimates for the fair value of the derivative
positions are not necessarily indicative of the amounts that could currently be
realized upon disposition of the derivative positions or the ultimate amount
that would be paid or received when the positions are settled. The use of
different market assumptions and/or estimation methodologies would result in
different fair values. The fair value of the instruments will vary over time
based upon market circumstances. Management of Pioneer believes that the market
information, methodologies and assumptions used to fair value the derivative
positions produces a reasonable estimation of the fair value of the derivative
positions at September 30, 2001.

     Notional amounts, presented in the table below, represent the total
purchase or sale price of the units of the commodity covered by the derivative
in financial trades. It does not represent the price at which the derivative
instrument could be bought or sold, which the fair value process determines. The
information in the tables below presents the electricity futures and options
positions outstanding as of September 30, 2001 ($ in thousands, except per mwh
amounts, and volumes in megawatt hours ("mwh")), whether approved or disputed.
<TABLE>
<CAPTION>
                                                            APPROVED            DISPUTED*
                                                          ------------        ------------
<S>                                                      <C>                  <C>
Electricity Futures Contracts:
  Contract volume (mwh)                                      1,097,338          23,525,100
  Range of expirations (years)                             .25 to 5.00         .25 to 5.00
  Weighted average years until expiration                         4.01                2.73
  Weighted average contract price (per mwh)               $      48.99        $      61.59
  Notional amount                                         $     53,759        $  1,448,951
  Weighted average fair value (per mwh)                   $      29.74        $      58.15
  Unrealized gain (loss)                                  $    (21,128)       $    (81,030)

Electricity Option Contracts:
  Notional amount                                         $     36,820        $    395,971
  Range of expirations (years)                            0.25 to 5.00        0.25 to 5.00
  Weighted average years until expiration                         4.21                2.84
  Weighted average strike price                           $      50.00        $      64.60
  Unrealized gain (loss)                                  $     (9,577)       $     18,595
</TABLE>
*   Represents trades included in the global confirmation.


                                       9
<PAGE>
3.  SUPPLEMENTAL CASH FLOW INFORMATION

      Net effect of changes in operating assets and liabilities are as follows:
<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                                 -------------------------
                                                                   2001             2000
                                                                 --------         --------
<S>                                                              <C>              <C>
     Accounts receivable                                         $ (6,882)        $  1,866
     Inventories                                                    1,975           (2,138)
     Prepaid expenses                                                (150)           1,046
     Other assets                                                    (848)           5,092
     Pre-petition accounts payable and other liabilities           10,964            8,963
     Post-petition accounts payable and other liabilities          19,329             --
                                                                 --------         --------
          Net change in operating assets and liabilities         $ 24,388         $ 14,829
                                                                 ========         ========
</TABLE>
     Following are supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                                 -------------------------
                                                                   2001             2000
                                                                 --------         --------
<S>                                                              <C>              <C>
     Cash payments for:
        Interest                                                  $2,846           $35,438
        Income taxes                                                 210                11
</TABLE>

     Non-Cash financing activity:

           In accordance with SOP 90-7, $12.4 million of unamortized debt
     issuance costs related to compromised debt has been reclassified against
     the related debt balance in Pioneer's consolidated balance sheet.

4.  INVENTORIES

Inventories consist of the following:
<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,    DECEMBER 31,
                                                                  2001             2000
                                                              -------------    ------------
<S>                                                              <C>              <C>
     Raw materials, supplies and parts                           $ 13,615         $14,329
     Finished goods and work-in-process                             9,302           9,391

     Inventories under exchange agreements                           (189)          1,347
                                                                 --------         -------
                                                                 $ 22,728         $25,067
                                                                 ========         =======
</TABLE>

5.  COMMITMENTS AND CONTINGENCIES

     Pioneer and its operations are subject to extensive United States and
Canadian federal, state, provincial and local laws, regulations, rules and
ordinances relating to pollution, the protection of the environment and the
release or disposal of regulated materials. The operation of any chemical
manufacturing plant and the distribution of chemical products entail certain
obligations under current environmental laws. Present or future laws may affect
Pioneer's capital and operating costs relating to compliance, may impose cleanup
requirements with respect to site contamination resulting from past, present or
future spills and releases and may affect the markets for Pioneer's products.
Pioneer believes that its operations are currently in general compliance with
environmental laws and regulations, the violation of which could result in a
material adverse effect on Pioneer's business, properties or results of
operations on a consolidated basis. There can be no assurance, however, that
material costs will not be incurred as a result of instances of noncompliance or
new regulatory requirements.

     Pioneer relies on indemnification from the previous owners in connection
with certain environmental liabilities at its chlor-alkali plants and other
facilities. There can be no assurance, however, that such indemnification
arrangements will be adequate to protect Pioneer from environmental liabilities
at these sites or that such third parties will perform their obligations under
the respective indemnification arrangements, in which case Pioneer would be
required to incur significant expenses for environmental liabilities, which
would have a material adverse effect on Pioneer.

                                       10
<PAGE>
     Pioneer is subject to various legal proceedings and potential claims
arising in the ordinary course of its business. In the opinion of management,
Pioneer has adequate legal defenses and/or insurance coverage with respect to
these matters, and management does not believe that they will materially affect
Pioneer's operations or financial position.

6.    LONG-TERM DEBT

    Long-term debt (pre-petition amounts shown are net of unamortized debt issue
costs) consisted of the following:
<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30,      DECEMBER 31,
                                                                                2001              2000
                                                                            -------------      ------------
<S>                                                                            <C>               <C>
    Debtor-in-possession credit facility, variable interest rates
       based on U.S. prime rate plus 1 1/4% and Canadian prime
       rate plus 2%                                                            $  11,780         $    --
    Revolving credit facility; variable interest rates based on
       U.S. prime rate plus  1/2% and Canadian prime rate plus 1 1/4%               --              27,581
    9 1/4% Senior Secured Notes, due June 15, 2007                               195,950           200,000
    9 1/4% Senior Secured Notes, due October 15, 2007                            170,233           175,000
    June 1997 term facility, due in quarterly installments of $250
       with the balance due 2006; variable interest rate based on LIBOR
       plus 250 basis points or base rate plus 125 basis points                   95,013            96,750
    November 1997 term facility, due in quarterly installments of
       $250 with the balance due 2006; variable interest rate based on
       LIBOR plus 287.5 basis points or base rate plus
       162.5 basis points                                                         78,203            80,000
    Promissory notes, interest at 8% per annum and payable
       quarterly, due April 20, 2005                                              11,463            11,463
    Other notes, maturing in various years through 2014, with
       various installments, at various interest rates                            10,493            11,007
                                                                               ---------         ---------
              Total                                                              573,135           601,801
    Long-term debt subject to compromise                                        (555,362)             --
    Current portion of long-term debt                                            (14,031)         (597,715)
                                                                               ---------         ---------
              Long-term debt, less current portion                             $   3,742         $   4,086
                                                                               =========         =========
</TABLE>

      See Note 1 for discussion of the filings by PCI and its subsidiaries for
protection under Chapter 11 of the U.S. Bankruptcy Code and the filing by PCI's
Canadian subsidiary under the Canadian Companies' Creditors Arrangements Act in
Superior Court in Montreal.

      Effective December 15, 2000, Pioneer suspended payments of interest on the
$200 million of Senior Secured Notes which, after a 30 day grace period, created
a default under the indenture. Additionally, Pioneer did not make principal
payments under its June 1997 term facility and the November 1997 term facility
that were due on December 28, 2000, which created an event of default under the
terms of the facilities. Accordingly, the default interest rate, which is the
non-default rate plus 2%, is in effect for the term facilities. When Pioneer
defaulted on the $200 million Senior Secured Notes, it constituted an event of
default under the indenture for the $175 million of Senior Secured Notes.

       In September 1999, Pioneer Corporation of America ("PCA"), a subsidiary
of PCI, entered into a $50 million three-year revolving credit facility (the
"Revolving Facility") that provided for revolving loans in an aggregate amount
up to $50 million, subject to borrowing base limitations related to the level of
accounts receivable and inventory, which, together with certain other
collateral, secured borrowings under the facility. Effective July 31, 2001,
Pioneer entered into a Ratification and Amendment Agreement that converted the
Revolving Facility into the DIP Facility. The DIP Facility continues to provide
for revolving loans in an aggregate amount of up to $50 million, subject to
borrowing base limitations related to the level of accounts receivable and
inventory, which, together with certain other collateral, secure borrowings
under the facility. The interest rates on borrowings under the DIP Facility are
at 1 1/4% per annum in excess of the US prime rate as to US dollar loans and
2% per annum in excess of the Canadian prime rate as to Canadian dollar loans.
The reserve of $5 million under the Revolving Facility was replaced with a
reserve of $1 million under the DIP Facility, which increased borrowing
availability by $4 million. The borrowing base at September 30, 2001 was $46.9
million, subject to a reserve of $1 million. As of September 30, 2001, there
were letters of credit outstanding of $4.5 million and loans outstanding of
$11.8 million.

                                       11
<PAGE>
      Pioneer's long-term debt agreements contain various restrictions which,
among other things, limit the ability of Pioneer to incur additional
indebtedness and to acquire or dispose of assets or operations. PCA is
restricted in paying dividends to PCI and providing cash to the unrestricted
subsidiaries, as defined, to the sum of $5.0 million plus 50% of the cumulative
consolidated net income of PCA since June 1997. As of September 30, 2001, no
additional distributions were allowable under the debt covenants. PCA's ability
to incur additional new indebtedness is restricted by a covenant requiring an
interest coverage ratio of at least 2.0 to 1.0 for the prior four fiscal
quarters. As of September 30, 2001, PCA did not meet this requirement and
accordingly, additional new indebtedness, other than borrowing available under
the DIP Facility, was not allowed. Additional new indebtedness was also
restricted by the Bankruptcy Court.

7.   UNUSUAL ITEMS

     In March 2001, Pioneer announced a fifty percent curtailment in the
capacity of its Tacoma plant due to an inability to obtain sufficient power at
reasonable prices. The Tacoma curtailment resulted in the termination of 55
employees, for which $1.9 million of accrued severance expense was recorded
prior to March 31, 2001. Additionally, in connection with an organizational
restructuring undertaken by Pioneer, $1.6 million of severance expense was
accrued prior to March 31, 2001 relating to terminations of 19 employees at
other locations, all whom were terminated prior to June 30, 2001. Severance
payments of approximately $1.6 million were made during the nine months ended
September 30, 2001, resulting in accrued severance of $1.9 million at September
30, 2001.

     The $2.4 million of unusual items recorded during the quarter ended
September 30, 2001, and $5.7 million of the $9.2 million unusual items recorded
during the nine-months ended September 30, 2001 are primarily comprised of
professional fees related to Pioneer's financial reorganization incurred prior
to the Chapter 11 filing on July 31, 2001.

8.   RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets". The statements will change the accounting for business
combinations and goodwill in two significant ways. SFAS No. 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. Use of the pooling-of-interest method will be
prohibited.

     SFAS No. 142 requires that an intangible asset that is acquired shall be
initially recognized and measured based on its fair value. The statement also
provides that goodwill should not be amortized, but must be tested for
impairment annually, or more frequently if circumstances indicate potential
impairment, through a comparison of fair value to its carrying amount. Existing
goodwill will continue to be amortized through the remainder of fiscal 2001 at
which time amortization will cease and Pioneer will perform a transitional
goodwill impairment test. SFAS No. 142 is effective for fiscal periods beginning
after December 15, 2001. Pioneer is currently evaluating the impact of the new
accounting standards on existing goodwill and other intangible assets. While the
ultimate impact of the new accounting standards has yet to be determined,
goodwill amortization expense for the nine months ended September 30, 2001 was
$6.6 million.

     In June 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", which is effective for fiscal years beginning after June 15, 2002.
SFAS No. 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. The adoption of SFAS No. 143 will not have a material
impact on Pioneer's financial position, results of operations, or cash flows.

     In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long- Lived Assets", which is effective for fiscal years beginning
after December 15, 2001. SFAS No. 144 addresses accounting and reporting for the
impairment or disposal of a segment of a business. The adoption of SFAS No. 144
will not have a material impact on Pioneer's financial position, results of
operations or cash flows.

9.   EARNINGS (LOSS) PER SHARE

     Pioneer accounts for earnings (loss) per share in accordance with the
Financial Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share." Basic earnings (loss) per
share are based on the weighted average number of common shares outstanding
during the period. Diluted earnings (loss) per share considers, in addition to
the above, the dilutive effect of potentially issuable common shares during the
period which includes options and preferred stock. Loss per share for the three
and nine months ended September 30, 2001 and 2000 was not affected by
outstanding options to acquire approximately 1.4 million shares of common stock
because their effect was anti-dilutive and the exercise prices of those options
were greater than the average market price of Pioneer's common stock.

                                       12
<PAGE>
Each share of preferred stock is convertible at the option of the shareholder
into 9.8 shares of Pioneer's Class A Common Stock. Loss per share for the three
and nine months ended September 30, 2001 and 2000 was not affected by the 55,000
issued and outstanding preferred shares that could be converted into 539,000
shares of common stock because their effect was anti-dilutive.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
the consolidated financial statements and the related notes thereto.

LIQUIDITY AND CAPITAL RESOURCES

      On July 31, 2001, PCI and each of its direct and indirect wholly-owned
subsidiaries filed a petition for relief under Chapter 11 of the U.S. Bankruptcy
Code (the "Bankruptcy Code") in the U.S. Bankruptcy Court in Houston, Texas. On
the same day, a parallel filing under the Canadian Companies' Creditors
Arrangements Act was filed in Superior Court in Montreal, Canada, by PCI's
Canadian subsidiary, PCI Chemicals Canada Inc. Pioneer is managing its business
as a debtor-in-possession pursuant to the Bankruptcy Code. Certain terms of
Pioneer's proposed plan of reorganization, as amended (the "Proposed Plan"),
were pre-negotiated between Pioneer and certain of its senior secured creditors.
The Proposed Plan was confirmed by the United States Bankruptcy Court, Southern
District of Texas, Houston Division, on November 28, 2001. The reorganization
proceedings are expected to be completed within Pioneer's fiscal year ending
December 31, 2001.

      The Proposed Plan provides that, upon emergence, approximately $552
million of outstanding indebtedness (plus accrued interest) will be exchanged
for $200 million of new debt and 97% of the common stock of the reorganized
company. Unsecured creditors will hold the remaining 3% of the common stock of
the reorganized company. All of Pioneer's current outstanding common stock and
preferred stock will be cancelled, and the holders of those shares will not
share in the value of the reorganized company.

      As of the petition date, actions to collect pre-petition indebtedness are
stayed, and other contractual obligations may not be enforced against Pioneer.
In addition, Pioneer may reject executory contracts and lease obligations, and
parties affected by these rejections may file claims with the Bankruptcy Court
in accordance with the reorganization process. Substantially all liabilities as
of the petition date are subject to compromise under the Proposed Plan.

      Pioneer entered into a debtor-in-possession financing agreement (the "DIP
Facility") which, as approved by the Bankruptcy Court in August 2001, provides
for up to $50 million of revolving borrowings as a source of liquidity during
the reorganization. Availability under the DIP Facility was reduced by the
remaining amounts outstanding under the pre-petition revolving credit facility.
The DIP Facility continues to provide for revolving loans in an aggregate amount
of up to $50 million, subject to borrowing base limitations related to the level
of accounts receivable and inventory, which, together with certain other
collateral, secure borrowings under the facility. The terms of the DIP Facility
provide Pioneer with $4 million more financing than was available under the
previous revolving credit facility. The DIP Facility matures on the earlier of
September 24, 2002, or when a plan of reorganization becomes effective. The
interest rates on borrowings under the DIP Facility are at 1 1/4% per annum in
excess of the US prime rate as to US dollar loans and 2% per annum in excess
of the Canadian prime rate as to Canadian dollar loans. On November 30, 2001,
unused available borrowing capacity under the DIP Facility was $25.6 million.
The Company believes that the DIP Facility will provide adequate financing to
meet the Company's working capital and operational needs during the
reorganization.

      The sufficiency of Pioneer's liquidity and capital resources is dependent
upon Pioneer's emerging from Chapter 11, the ability to comply with
debtor-in-possession agreements, generating sufficient positive cash from
operations and financing sources to meet obligations, and ultimately, its return
to future profitable operations. Now that the Proposed Plan has been confirmed,
Pioneer believes the Proposed Plan will be implemented in a timely manner.

      Pioneer's capital expenditures for fiscal 2001 are expected to approximate
$15 million, primarily for environmental, safety and production replacement
projects.

      Foreign Operations and Exchange Rate Fluctuations. Pioneer has operating
activities in Canada and engages in export sales to various countries.
International operations and exports to foreign markets are subject to a number
of risks, including currency exchange rate fluctuations, trade barriers,
exchange controls, political risks and risks of increases in duties, taxes and

                                       13
<PAGE>
governmental royalties, as well as changes in laws and policies governing
foreign-based companies. In addition, earnings of foreign subsidiaries and
intracompany payments are subject to foreign taxation rules.

      A portion of Pioneer's sales and expenditures are denominated in Canadian
dollars, and accordingly, Pioneer's results of operations and cash flows have
been and may continue to be affected by fluctuations in the exchange rate
between the United States dollar and the Canadian dollar. Currently, Pioneer is
not engaged in forward foreign exchange contracts, but may enter into such
hedging activities in the future.

      Net Cash Flows from Operating Activities. During the first nine months of
2001, Pioneer generated cash of $20.2 million from operating activities. The
cash flow was primarily attributable to changes in working capital.

      Net Cash Flows from Investing Activities. Cash used in investing
activities during the nine months of 2001 totaled $8.2 million, which was
primarily attributable to capital expenditures.

      Net Cash Flows from Financing Activities. Cash used in financing
activities during the first nine months of 2001 totaled approximately $16.3
million due primarily to net repayments on the Revolving Facility of $27.6
million offset by borrowings under the DIP Facility of $11.8 million.

      Working Capital. Pioneer's working capital was $57.1 million at September
30, 2001 compared to a deficiency of $602.7 million at December 31, 2000. This
$659.8 million increase in working capital was primarily due to the
reclassification of liabilities subject to compromise in Pioneer's consolidated
balance sheet.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2000

      Revenues. Revenues decreased by $8.7 million, or approximately 10%, to
$78.7 million for the three months ended September 30, 2001, as compared to the
three months ended September 30, 2000. The decrease in revenues was primarily
attributable to lower sales volumes, particularly at the Tacoma chlor-alkali
facility, and the sale of the operations of Kemwater North America Company and
KWT, Inc. (collectively, "Kemwater") in 2000 which resulted in a $1.7 million
decrease from 2000 to 2001. Additionally, Pioneer's average electrochemical unit
("ECU") price during the third quarter of 2001 decreased $11 from a year ago to
$319.

      Cost of Sales. Cost of sales decreased $18.6 million, or approximately
22%, for the three months ended September 30, 2001, as compared to the same
period in 2000. The decrease was primarily due to lower power costs, lower sales
volumes and a $1.6 million decrease due to the Kemwater sale.

     Gross Profit. Gross profit margin increased to 17% in 2001 from 4% in 2000,
primarily as a result of decreased power costs.

     Change in Fair Value of Derivatives. Effective as of March 13, 2001,
Pioneer and CRC entered into a supplemental electric power supply services
contract (the "supplemental power contract") under which CRC was to provide any
needed electric power including that which exceeded the power provided to
Pioneer's Henderson facility from hydroelectric sources. CRC maintains that it
has entered into various derivative positions, as defined by SFAS 133, under the
supplemental power contract, including forward purchases and sales of
electricity as well as options that have been purchased or written for electric
power . Pioneer maintains that CRC has engaged in speculative trading that was
not in accordance with the supplemental power contract, that CRC did not obtain
proper approval for most of the trades in accordance with procedures agreed upon
by both parties and that the trades entered into by CRC purportedly on
Pioneer's behalf were excessive in relation to Pioneer's electric power
requirements.

     For the three months ended September 30, 2001, the change in fair value of
the derivative positions was an unrealized loss of $63.4 million principally
because market power rates decreased substantially. Of the $63.4 million, $62.4
million related to transactions included under a global confirmation that are
being disputed by Pioneer. The remaining $1.0 million related to transactions
approved by Pioneer. See discussion in Note 2 of the Consolidated Financial
Statements.

     Unusual Items. Unusual items for the three months ended September 30, 2001
of $2.4 million were primarily comprised of professional fees incurred related
to Pioneer's reorganization prior to the Chapter 11 filings. Unusual items for
the three months ended September 30, 2000 related to the Kemwater sale.

                                       14
<PAGE>
      Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by $0.2 million, or approximately 2%, for the
three months ended September 30, 2001. The decrease included $0.5 million
resulting from the Kemwater sale and cost savings resulting from the
organizational restructuring, offset by a $0.5 million increase in bad debt
expense.

      Interest Expense, Net. Interest expense, net decreased in 2001 as a result
of contractual interest expense of $9.0 million on debt subject to compromise in
the Chapter 11 proceedings not being recorded in accordance with SOP 90-7.
Interest cost decreased $0.8 million for the three months ended September 30,
2001, primarily as a result of lower average debt outstanding under the
revolving credit facility.

      Reorganization Items. Reorganization items for the three months ended
September 30, 2001 were comprised of professional fees related to Pioneer's
reorganization incurred subsequent to the Chapter 11 filings.

      Other Income (Expense), Net. Other income, net of $0.4 million for the
quarter ended September 30, 2001 was primarily comprised of a foreign exchange
gain.

      Income Tax Expense (Benefit). Income tax expense for the quarter ended
September 30, 2001 was $2.8 million, reflecting foreign tax expense on the
income of Pioneer's Canadian operations. Due to recurring losses of Pioneer's
U.S. operations and uncertainty as to the effect of Pioneer's reorganization on
the availability and use of Pioneer's U.S. net operating loss carryforwards, a
100% valuation allowance amounting to $67.8 million was recorded in connection
with Pioneer's U.S. deferred tax assets at December 31, 2000. During the quarter
ended September 30, 2001 Pioneer recorded a valuation allowance in an amount
equal to the benefit from income taxes generated by the losses from Pioneer's
U.S. operations. An income tax benefit of $7.8 million was recorded for the
quarter ended September 30, 2000.

      Net Loss. Due to the factors described above, net loss for the three
months ended September 30, 2001 was $71.9 million, compared to a net loss of
$13.4 million for the same period in 2000.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 2000

      Revenues. Revenues decreased by $6.1 million, or approximately 2%, to
$254.7 million for the nine months ended September 30, 2001, as compared to the
nine months ended September 30, 2000. The decrease in revenues was primarily
attributable to the sale of the operations of Kemwater in 2000, which resulted
in a $8.8 million decrease in revenues for the nine months ended September 30,
2001 as compared to the same period in 2000. In addition, sales volumes
decreased, particularly at the Tacoma chlor-alkali facility. These decreases
were offset somewhat by increased sales prices. The average ECU price during the
nine months ended September 30, 2001 was $350, a $31 increase from a year ago.

      Cost of Sales. Cost of sales decreased $16.2 million, or approximately 7%,
for the nine months ended September 30, 2001, as compared to the same period in
2000. The decrease was primarily due to lower power costs, decreased sales
volumes and an $8.6 million reduction due to the Kemwater sale.

     Gross Profit. Gross profit margin increased to 15% in 2001 compared with
10% in 2000.

      Change in Fair Value of Derivatives. For the nine months ended September
30, 2001, the change in fair value of the derivative positions was a net
unrealized loss of $93.1 million. Of the $93.1 million, $62.4 million related to
transactions included under the global confirmation that are being disputed by
Pioneer. The remaining $30.7 million related to transactions approved by
Pioneer. See discussion in Note 2 of the Consolidated Financial Statements.

      Unusual Items. Unusual items for the nine months ended September 30, 2001
of $9.2 million were primarily comprised of severance expense and professional
fees related to Pioneer's reorganization. Unusual items for the nine months
ended September 31, 2000 were related to the Kemwater sale.

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by $2.5 million, or approximately 8%, for the
nine months ended September 30, 2001. The components of this decrease include $2
million resulting from the Kemwater sale, with the remainder primarily
attributable to cost savings resulting from an organizational restructuring,
offset somewhat by increases in bad debt expense.

                                       15
<PAGE>
      Interest Expense, Net. Interest expense, net decreased in 2001 as a result
of contractual interest expense of $9.0 million on debt subject to compromise in
the Chapter 11 proceedings not being recorded in accordance with SOP 90-7.
Interest cost increased $2.8 million for the nine months ended September 30,
2001 as a result of higher interest rates and higher borrowing levels. The
interest rates related to the DIP Facility are greater than the rates that had
been in effect under the previous revolving facility.

      Reorganization Items. Reorganization items for the nine months ended
September 31, 2001 were comprised of professional fees related to Pioneer's
reorganization incurred subsequent to the Chapter 11 filings.

      Other Income, Net. Other income for the nine months ended September 30,
2001 of $1.2 million was primarily comprised of a sales tax refund of $0.5
million and a gain of $0.1 million on an asset sale, with the remainder
attributable to foreign exchange gain. The 2000 amount was primarily a $3.3
million gain from sale of certain excess property.

      Income Tax Expense (Benefit). Income tax expense for the nine months ended
September 30, 2001 was $5.0 million, reflecting foreign tax expense on the
income of Pioneer's Canadian operations. Due to recurring losses of Pioneer's
U.S. operations and uncertainty as to the effect of Pioneer's restructuring on
the availability and use of Pioneer's U.S. net operating loss carryforwards, a
100% valuation allowance amounting to $67.8 million was recorded in connection
with Pioneer's U.S. deferred tax assets at December 31, 2000. During the nine
months ended September 30, 2001 Pioneer recorded a valuation allowance in an
amount equal to the benefit from income taxes generated by the losses from
Pioneer's U.S. operations. An income tax benefit of $15.2 million was recorded
for the nine months ended September 30, 2000.

     Net Loss. Due to the factors described above, net loss for the nine months
ended September 30, 2001 was $136.9 million, compared to a net loss of $28.8
million for the same period in 2000.

RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets". SFAS No. 141 requires that all business combinations be accounted for
under the purchase method. The statement further requires separate recognition
of intangible assets that meet one of two criteria. The statement applies to all
business combinations initiated after June 30, 2001.

     SFAS No. 142 requires that an intangible asset that is acquired shall be
initially recognized and measured based on its fair value. The statement also
provides that goodwill should not be amortized, but must be tested for
impairment annually, or more frequently if circumstances indicate potential
impairment, through a comparison of fair value to its carrying amount. Existing
goodwill will continue to be amortized through the remainder of fiscal 2001 at
which time amortization will cease and Pioneer will perform a transitional
goodwill impairment test. SFAS No. 142 is effective for fiscal periods beginning
after December 15, 2001. Pioneer is currently evaluating the impact of the new
accounting standards on existing goodwill and other intangible assets. While the
ultimate impact of the new accounting standards has yet to be determined,
goodwill amortization expense for the nine months ended September 30, 2001 was
$6.6 million.

     In June 2001, FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations", which is effective for fiscal years beginning after June 15, 2002.
SFAS No. 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. The adoption of SFAS No. 143 will not have a material
impact on Pioneer's financial position, results of operations, or cash flows.

     In August 2001, FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long- Lived Assets", which is effective for fiscal years beginning
after December 15, 2001. SFAS No. 144 addresses accounting and reporting for the
impairment or disposal of a segment of a business. The adoption of SFAS No. 144
will not have a material impact on Pioneer's financial position, results of
operations or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Pioneer adopted the accounting and reporting standards of Statement of
Financial Accounting Standard 133, "Accounting for Derivative Instruments and
Hedging Activities", as amended by SFAS 137 and SFAS 138, and as interpreted by
the Financial Accounting Standards Board's ("FASB") Derivatives Implementation
Group ("DIG"), collectively, hereafter referred to as "SFAS 133", as of January
1, 2001. This statement establishes accounting and reporting standards for
derivative instruments and hedging activities. SFAS No. 133 requires a company
to recognize all derivatives as either assets or liabilities

                                       16
<PAGE>
in the statement of financial position and measure those instruments at fair
value. The change in the fair value of derivatives that are not hedges must be
recognized currently as a gain or loss in the statement of operations. If the
derivative is a hedge, depending on the nature of the hedge, changes in the fair
value of derivatives are either offset against the change in fair value of
assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is settled. Under hedge accounting,
the ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. Based upon the contracts in effect at
January 1, 2001, the adoption of SFAS 133 had no effect on the consolidated
financial statements at that date.

     The Colorado River Commission ("CRC") supplies power to Pioneer's Henderson
facility pursuant to three basic contracts covering hydro-generated power, power
requirements in excess of hydro-power, and power transmission and supply
balancing services. CRC is a state agency established in 1940 to manage federal
hydro-power contracts with utilities and other customers, including Pioneer's
Henderson facility, in Southern Nevada. Since the low cost hydro-power supplied
by CRC does not entirely meet Henderson's power demands and those of its other
customers, CRC purchases supplemental power from various sources and resells it
to Pioneer and other customers.

     Effective as of March 13, 2001, Pioneer and CRC entered into a supplemental
electric power supply services contract (the "supplemental power contract")
under which CRC was to provide any needed electric power including that which
exceeded the power provided to Pioneer's Henderson facility from hydroelectric
sources. CRC maintains that it has entered into various derivative positions, as
defined by SFAS 133, under the supplemental power contract,including forward
purchases and sales of electricity as well as options that have been purchased
or written for electric power. Pioneer maintains that CRC has engaged in
speculative trading that was not in accordance with the supplemental power
contract, that CRC did not obtain proper approval for most of the trades in
accordance with procedures agreed upon by Pioneer and CRC and that the trades
entered into by CRC purportedly on Pioneer's behalf were excessive in relation
to Pioneer's electric power requirements.

     At September 30, 2001, Pioneer recorded a net unrealized loss of $93.1
million for various derivative positions executed by CRC purportedly for the
benefit of Pioneer under the supplemental power contract. Of the net unrealized
loss, $30.7 million is attributed to five forward purchase contracts and three
option contracts that CRC executed and that were approved by Pioneer in
accordance with procedures agreed upon by Pioneer and CRC. In September 2001,
CRC presented to Pioneer a confirmation (the "global confirmation") that
included numerous trades allegedly made on behalf of Pioneer by CRC under the
supplemental power contract. Although a representative of Pioneer signed the
confirmation, Pioneer is currently disputing that these derivative positions are
its responsibility. Pioneer has recorded a net liability of $62.4 million
associated with these derivative positions, because the ultimate outcome of its
dispute with CRC cannot be predicted at this time. Pioneer intends to vigorously
dispute the claim by CRC that these contracts are Pioneer's responsibility.

     CRC has also allocated derivative positions to Pioneer that were not
approved, either individually or collectively, by Pioneer. The net liability for
these unapproved positions exceeded $30 million at September 30, 2001. Pioneer
believes that CRC has no legal basis for its allocation of these derivative
positions to Pioneer. Pioneer intends to vigorously dispute CRC's claims and
believes that it will ultimately be successful in its assertion that these
derivative positions are not its responsibility. Accordingly, Pioneer has not
recorded these derivative positions in its consolidated financial statements as
of September 30, 2001.

     The derivative positions include many types of contracts with varying
strike prices and maturity dates extending through 2006. The fair value of the
derivative positions was determined by Pioneer using available market
information and appropriate valuation methodologies. Considerable judgement,
however, is necessary to interpret market data and develop the related estimates
of fair value. Accordingly, the estimates for the fair value of the derivative
positions are not necessarily indicative of the amounts that could currently be
realized upon disposition of the derivative positions or the ultimate amount
that would be paid or received when the positions are settled. The use of
different market assumptions and/or estimation methodologies would result in
different fair values. The fair value of the instruments will vary over time
based upon market circumstances. Management of Pioneer believes that the
market information, methodologies and assumptions used to fair value the
derivative positions produces a reasonable estimation of the fair value of the
derivative positions at September 30, 2001.

                                       17
<PAGE>
     Notional amounts, presented in the following tables, represent the total
purchase or sale price of the units of the commodity covered by the derivative
in financial trades. It does not represent the price at which the derivative
instrument could be bought or sold, which the fair value process determines. The
information in the tables below presents the electricity futures and options
positions outstanding as of September 30, 2001 ($ in thousands, except per mwh
amounts, and volumes in megawatt hours ("mwh")), whether approved or disputed
(see Note 2 to Consolidated Financial Statements for amounts of "Approved" and
"Disputed" derivative positions).

<TABLE>
<S>                                                                  <C>
     Electricity Futures Contracts:
       Contract volume (mwh)                                           24,622,438
       Range of expirations (years)                                   .25 to 5.00
       Weighted average years until expiration                               2.79
       Weighted average contract price (per mwh)                     $      61.03
       Notional amount                                               $  1,502,710
       Weighted average fair value (per mwh)                         $      56.88
       Unrealized (loss)                                             $   (102,158)

     Electricity Option Contracts:
       Notional amount                                               $    432,791
       Range of expirations (years)                                  0.25 to 5.00
       Weighted average years until expiration                               2.99
       Weighted average strike price                                 $      63.04
       Unrealized gain                                               $      9,018
</TABLE>

     The information in the tables below presents the electricity futures and
options positions outstanding as of September 30, 2001 allocated over the lives
of the contracts ($ in thousands, except per mwh amounts, and volumes in
megawatt hours ("mwh")), whether approved or disputed:
<TABLE>
<CAPTION>
                                                                                 EXPECTED MATURITY
                                                    -----------------------------------------------------------------------------
                                                      FOURTH
                                                     QUARTER       FISCAL      FISCAL        FISCAL        FISCAL        FISCAL
                                                      2001          2002        2003          2004          2005          2006
                                                    ---------    ---------    ---------     ---------     ---------     ---------
<S>                                                 <C>          <C>          <C>           <C>           <C>           <C>
Electricity Futures Contracts:
  Contract volume (mwh)                             2,975,639    7,006,360    2,798,110     3,947,843     3,947,243     3,947,243
  Weighted average contract price (per mwh)         $   68.51    $   79.47    $   56.39     $   49.44     $   49.35     $   49.35
  Notional amount                                   $ 203,870    $ 556,786    $ 157,272     $ 195,176     $ 194,803     $ 194,803
  Weighted average fair value (per mwh)             $   68.43    $   80.43    $   47.93     $   41.45     $   41.87     $   43.15
  Unrealized gain (loss)                            $    (245)   $   6,768    $ (23,148)    $ (31,527)    $ (29,517)    $ (24,489)

Electricity Option Contracts:
  Notional amount                                   $    --      $ 163,643    $  23,721     $  81,809     $  81,809     $  81,809
  Weighted average strike price                     $    --      $   95.21    $   51.04     $   52.42     $   52.42     $   52.42
  Unrealized gain (loss)                            $    --      $   3,772    $  (1,047)    $   2,080     $   2,103     $   2,110
</TABLE>

      Other than noted above, Pioneer's market risk disclosures set forth in
PCI's Annual Report on Form 10-K for the year ended December 31, 2000 have not
changed significantly through the nine months ended September 30, 2001.

                                       18
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      Prior to the filings for protection under Chapter 11 of the U.S.
Bankruptcy Code on July 31, 2001, and the concurrent filing by PCI's Canadian
subsidiary under the Canadian Companies' Creditors Arrangements Act in Superior
Court in Montreal, Pioneer had suspended payments of interest and principal
under various debt agreements, which created an event of default under Pioneer's
Senior Secured Notes, term loans, and certain other indebtedness.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits

         None

     (b) Reports on Form 8-K

         On August 1, 2001, PCI filed a report on Form 8-K. Under Item 5, "Other
         Events," Pioneer reported the issuance of a press release announcing
         that it and each of its direct and indirect wholly owned subsidiaries
         had filed petitions for protection from creditors under Chapter 11 of
         the U.S. Bankruptcy Code, and that PCI's Canadian subsidiary, PCI
         Chemicals Canada Inc., had also filed a similar petition under the
         Companies' Creditors Arrangements Act in Canada.


                                   SIGNATURES


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

                                          PIONEER COMPANIES, INC.


December 28, 2001                         By:  /s/ Philip J. Ablove
                                               -----------------------------
                                               Philip J. Ablove
                                               Executive Vice President and
                                               Chief Financial Officer
                                               (Principal Financial Officer)


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