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

                                   FORM 10-Q/A

(MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 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>
                            PIONEER COMPANIES, INC.

RESTATEMENT OF FINANCIAL INFORMATION

      In October 2001, based on an internal review, Pioneer became aware of
derivative transactions that occurred during the second quarter of 2001 but were
not recorded. A subsequent analysis determined that these transactions amounted
to an unrealized loss of $29.8 million at June 30, 2001 which was not previously
reflected in the consolidated financial statements.

      As a result of the above, Pioneer's unaudited consolidated condensed
financial statements and related disclosures as of and for the three-month and
six-month periods ended June 30, 2001 have been restated from amounts previously
reported. The principal effects of these adjustments on the accompanying
financial statements are set forth in Note 3 of the Notes to Consolidated
Financial Statements.

      For purposes of this Form 10-Q/A, and in accordance with Rule 12B-15 under
the Securities Exchange Act of 1934, as amended, each item of the 2001 second
quarter Form 10-Q as filed on August 14, 2001 that was affected by the
restatement has been amended and restated in its entirety. No attempt has been
made in this Form 10-Q/A to modify or update other disclosures (excluding
disclosures related to the status of the Chapter 11 proceedings) as presented in
the original Form 10-Q except as required to reflect the effects of the
restatement. In particular, and without limitation, in "Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
Pioneer has given certain information about the business environment applicable
to Pioneer, the business outlook and certain forward looking information. This
information has not been revised from the information provided in the Form 10-Q
for the quarter ended June 30, 2001 because it was not affected by the
restatement. For current information regarding Pioneer's business environment,
outlook and this forward looking information, see Pioneer's Quarterly Report on
Form 10-Q for its fiscal quarter ended September 30, 2001.

      Pioneer Companies, Inc. ("Pioneer") hereby amends Items 1, 2 and 3 of Part
I in its Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2001 (SEC File No. 1-9859) (the "10-Q") for the effect of the above-described
matter.

                                       2
<PAGE>
                             PIONEER COMPANIES, INC.

                                TABLE OF CONTENTS

                          PART I--FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
<S>       <C>                                                                                            <C>
Item 1.   Consolidated Financial Statements
          Consolidated Balance Sheets--June 30, 2001 and December 31, 2000                                 4

          Consolidated Statements of Operations--Three Months Ended June 30, 2001 and 2000 and
              Six Months Ended June 30, 2001 and 2000                                                      5

          Consolidated Statements of Cash Flows--Six Months Ended June 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
</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.

                                       3
<PAGE>
                         PART I --FINANCIAL INFORMATION
                    ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
                             PIONEER COMPANIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                            (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                 JUNE 30,    DECEMBER 31,
                                                                                   2001         2000
                                                                                ---------     ---------
                                                                               (AS RESTATED
                                    ASSETS                                    - SEE NOTE 3)
<S>                                                                             <C>           <C>
Current assets:
   Cash and cash equivalents                                                    $   5,058     $   5,935
   Accounts receivable, net of allowance for doubtful accounts of $1,650 at
     June 30, 2001 and $1,392 at December 31, 2000                                 58,473        49,571
   Inventories                                                                     21,002        25,067
   Prepaid expenses and other current assets                                        1,651         2,302
                                                                                ---------     ---------
        Total current assets                                                       86,184        82,875
Property, plant and equipment:

   Land                                                                            10,622        10,622
   Buildings and improvements                                                      61,338        61,334
   Machinery and equipment                                                        349,991       348,695
   Construction in progress                                                        19,844        15,138
                                                                                ---------     ---------
                                                                                  441,795       435,789
   Less: accumulated depreciation                                                (152,637)     (135,405)
                                                                                ---------     ---------
                                                                                  289,158       300,384
Other assets, net of accumulated amortization of $14,561 at June 30, 2001
   and $12,004 at December 31, 2000                                                23,490        27,218
Excess cost over fair value of net assets acquired, net of accumulated
   amortization of $44,327 at June 30, 2001 and $39,945 at December 31, 2000      175,177       179,560
                                                                                ---------     ---------
        Total assets                                                            $ 574,009     $ 590,037
                                                                                =========     =========
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable                                                             $  31,395     $  43,738
   Accrued liabilities                                                             73,329        44,082
    Derivative liability (Note 2)                                                   2,762          --
   Current portion of long-term debt                                              600,004       597,715
                                                                                ---------     ---------
        Total current liabilities                                                 707,490       685,535
Long-term debt, less current portion                                                3,717         4,086
Accrued pension and other employee benefits                                        15,797        14,984
Derivative liability (Note 2)                                                      27,001          --
Other long-term liabilities                                                        11,890        12,256
Commitments and contingencies
Redeemable preferred stock: $.01 par value, 10,000 shares authorized,
   55 issued and outstanding                                                        5,500         5,500
Stockholders' deficit:
   Common stock:
     Class A, $.01 par value,  46,000 shares authorized, 10,679 issued
        and outstanding at June 30, 2001 and December 31, 2000                        106           106
     Class B, $.01 par value, 4,000 shares authorized, 859 issued and
        outstanding at June 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                                                              (252,618)     (187,556)
    Accumulated other comprehensive income                                            (76)          (76)
                                                                                ---------     ---------
Total stockholders' deficit                                                      (197,386)     (132,324)
                                                                                ---------     ---------
Total liabilities and stockholders' deficit                                     $ 574,009     $ 590,037
                                                                                =========     =========
</TABLE>
                 See notes to consolidated financial statements.

                                       4
<PAGE>
                             PIONEER COMPANIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED          SIX MONTHS ENDED
                                                                JUNE 30,                   JUNE 30,
                                                         ---------------------     -----------------------
                                                           2001         2000         2001          2000
                                                         --------     --------     ---------     ---------
                                                      (AS RESTATED               (AS RESTATED
                                                      - SEE NOTE 3)              - SEE NOTE 3)
<S>                                                      <C>          <C>          <C>           <C>
Revenues                                                 $ 88,304     $ 89,157     $ 176,035     $ 173,461
Cost of sales                                              75,338       77,095       152,457       150,063
                                                         --------     --------     ---------     ---------
Gross profit                                               12,966       12,062        23,578        23,398
Selling, general and administrative expenses                9,787       11,341        20,369        22,612
Change in fair value of derivatives                        29,763         --          29,763          --
Unusual items                                               2,590          (86)        6,852           786
                                                         --------     --------     ---------     ---------
Operating income (loss)                                   (29,174)         807       (33,406)         --
Interest expense, net                                     (14,650)     (13,311)      (30,313)      (26,803)
Other income (expense), net                                  (471)       3,812           832         3,940
                                                         --------     --------     ---------     ---------
Loss before taxes                                         (44,295)      (8,692)      (62,887)      (22,863)
Income tax expense (benefit)                                  637       (2,817)        2,175        (7,402)
                                                         --------     --------     ---------     ---------
Net loss                                                 $(44,932)    $ (5,875)    $ (65,062)    $ (15,461)
                                                         ========     ========     =========     =========
Per Share Information:
    Net loss - basic and diluted                         $  (3.89)    $  (0.51)    $   (5.64)    $   (1.34)

Weighted average number of common shares outstanding:
    Basic and diluted                                      11,538       11,538        11,538        11,533
</TABLE>
                 See notes to consolidated financial statements.

                                       5
<PAGE>
                             PIONEER COMPANIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                      SIX MONTHS ENDED
                                                                           JUNE 30,
                                                                     ---------------------
                                                                       2001         2000
                                                                     --------     --------
                                                                   (AS RESTATED -
                                                                    SEE NOTE 3)
<S>                                                                  <C>          <C>
Operating activities:
   Net loss                                                          $(65,062)    $(15,461)
   Adjustments to reconcile net loss to net cash flows
     from operating activities:
        Depreciation and amortization                                  24,193       25,460
        Net change in deferred taxes                                    2,124       (7,320)
            Change in fair value of derivatives                        29,763         --
        Gain on disposals of assets                                      (119)      (2,516)
        Foreign exchange (gain) loss                                     (110)         417
        Net effect of changes in operating assets and liabilities      12,361       (2,291)
                                                                     --------     --------
Net cash flows from operating activities                                3,150       (1,711)
                                                                     --------     --------
Investing activities:
   Capital expenditures                                                (5,898)      (8,420)
   Proceeds received from disposals of assets                             119        3,896
                                                                     --------     --------
Net cash flows from investing activities                               (5,779)      (4,524)
                                                                     --------     --------
Financing activities:
   Net proceeds under revolving credit arrangements                     2,290       13,185
   Payments on long-term debt                                            (369)      (1,220)
    Issuance of common stock                                             --             18
                                                                     --------     --------
Net cash flows from financing activities                                1,921       11,983
                                                                     --------     --------
Effect of exchange rate changes on cash                                  (169)        (825)
                                                                     --------     --------
Net change in cash and cash equivalents                                  (877)       4,923
Cash and cash equivalents at beginning of period                        5,935        5,510
                                                                     --------     --------
Cash and cash equivalents at end of period                           $  5,058     $ 10,433
                                                                     ========     ========
</TABLE>
                 See notes to consolidated financial statements.

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

1. ACCOUNTING POLICIES

BASIS OF PRESENTATION AND MANAGEMENT PLANS

GENERAL

     The consolidated balance sheet at June 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 six 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.
Per share amounts presented in the tabulations in the notes to the
consolidated financial statements are presented in whole dollars; all other
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 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.

     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 will be necessary as a consequence of implementing the Proposed
Plan. 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.

                                       7
<PAGE>
     Prior to Pioneer's filing for bankruptcy protection, Pioneer delayed making
payments on various debt obligations due to insufficient liquidity. As a result,
Pioneer is not in compliance with the terms of certain of its debt agreements.
Accordingly, approximately $600 million of debt outstanding under various
agreements is classified as a current liability on Pioneer's consolidated
balance sheet.

     Effective July 31, 2001, 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 GAAP 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.

     In October 2001, based on an internal review, management became aware of
CRC's unauthorized trading activities in derivatives. A subsequent analysis
determined that these transactions amounted to a net unrealized loss of $29.8
million for the three months ended June 30, 2001. The net unrealized loss is
attributable to three forward purchase contracts and one option contract
executed by CRC and approved by Pioneer. As a result of the above, Pioneer's
unaudited consolidated condensed financial statements and related disclosures as
of and for the three-month and six month periods ended June 30,2001 have been
restated from amounts previously reported.

     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

                                       8
<PAGE>
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 June 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 option
positions outstanding as of June 30, 2001 ($ in thousands, except per mwh
amounts, and volumes in megawatt hours ("mwh")).
<TABLE>
<S>                                                             <C>
     Electricity Futures Contracts:
       Contract volume (mwh)                                        910,675
       Range of expirations (years)                             .50 to 5.00
       Weighted average years until expiration                         4.68
       Weighted average contract price (per mwh)                 $    51.74
       Notional amount                                           $   47,120
       Weighted average fair value (per mwh)                     $    28.91
       Unrealized (loss)                                         $  (20,791)

     Electricity Option Contract:
       Notional amount                                           $   30,700
       Term (years)                                                    5.00
       Strike price                                              $    50.00
       Unrealized (loss)                                         $   (8,972)
</TABLE>

3.   RESTATEMENT ADJUSTMENTS

     As described in Note 2 to the Consolidated Financial Statements, Pioneer
became aware of derivative transactions that were not being recorded subsequent
to the issuance of its consolidated financial statements as of and for the
periods ended June 30, 2001. The financial effects of recording these derivative
positions are as follows:


                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                       AS PREVIOUSLY
                                                                          REPORTED              RESTATEMENTS             AS RESTATED
                                                                       -------------            ------------             -----------
<S>                                                                      <C>                      <C>                     <C>
Total current liabilities                                                $ 704,728                $  2,762                $ 707,490
Non-current derivative liability                                              --                    27,001                   27,001
Retained deficit                                                          (222,855)                (29,763)                (252,618)
Total stockholders' deficit                                               (167,623)                (29,763)                (197,386)
</TABLE>

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                       THREE MONTHS ENDED JUNE 30, 2001
                                                                         ----------------------------------------------------------
                                                                        AS PREVIOUSLY           RESTATEMENT
                                                                           REPORTED             ADJUSTMENTS             AS RESTATED
                                                                         ------------           -----------             -----------
<S>                                                                       <C>                     <C>                      <C>
Change in fair value of derivatives                                       $   --                  $(29,763)                $(29,763)
Operating income (loss)                                                        589                 (29,763)                 (29,174)
Loss before taxes                                                          (14,532)                (29,763)                 (44,295)
Net loss                                                                   (15,169)                (29,763)                 (44,932)
Net loss per share - basic and diluted                                    $  (1.31)               $  (2.58)                $  (3.89)
</TABLE>

                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                                                       SIX MONTHS ENDED JUNE 30, 2001
                                                                         ----------------------------------------------------------
                                                                        AS PREVIOUSLY           RESTATEMENT
                                                                           REPORTED             ADJUSTMENTS             AS RESTATED
                                                                         ------------           -----------             -----------
<S>                                                                       <C>                    <C>                     <C>
Change in fair value of derivatives                                       $   --                 $(29,763)               $(29,763)
Operating income (loss)                                                     (3,643)               (29,763)                (33,406)
Loss before taxes                                                          (33,124)               (29,763)                (62,887)
Net loss                                                                   (35,299)               (29,763)                (65,062)
Net loss per share - basic and diluted                                    $  (3.06)              $  (2.58)               $  (5.64)
</TABLE>

4. SUPPLEMENTAL CASH FLOW INFORMATION

      Net effect of changes in operating assets and liabilities are as follows:
<TABLE>
<CAPTION>
                                                                                           SIX MONTHS ENDED
                                                                                                JUNE 30,
                                                                                   ---------------------------------
                                                                                     2001                      2000
                                                                                   --------                  -------
<S>                                                                                <C>                       <C>
Accounts receivable                                                                $ (8,985)                 $(1,290)
Inventories                                                                           3,973                   (2,292)
Prepaid expenses                                                                      1,578                      515
Other assets                                                                           (953)                   6,545
Accounts payable                                                                    (12,051)                  (3,054)
Accrued liabilities                                                                  28,313                    1,140
Other long-term liabilities
                                                                                        486                   (3,855)
                                                                                   --------                  -------
     Net change in operating assets and liabilities                                $ 12,361                  $(2,291)
                                                                                   ========                  =======

</TABLE>

     Following are supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
                                                                                           SIX MONTHS ENDED
                                                                                                JUNE 30,
                                                                                   ---------------------------------
                                                                                     2001                      2000
                                                                                   --------                  -------
<S>                                                                                <C>                       <C>
     Cash payments for:
         Interest                                                                  $2,031                    $28,177
         Income taxes                                                                 210                         11
</TABLE>

5. INVENTORIES

      Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                                   JUNE 30,                DECEMBER 31,
                                                                                     2001                      2000
                                                                                   --------                  -------
<S>                                                                                <C>                       <C>
      Raw materials, supplies and parts                                             $13,963                  $ 14,329
      Finished goods and work-in-process                                              7,294                     9,391
      Inventories under exchange agreements                                            (255)                    1,347
                                                                                    -------                  --------
                                                                                    $21,002                  $ 25,067
                                                                                    =======                  ========
</TABLE>

6. 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.

                                       10
<PAGE>
     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.

     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.

7. LONG-TERM DEBT

      Long-term debt consisted of the following:
<TABLE>
<CAPTION>
                                                                                                   JUNE 30,             DECEMBER 31,
                                                                                                     2001                  2000
                                                                                                   ---------             ---------
<S>                                                                                                <C>                   <C>
Revolving credit facility; variable interest rates based on U.S.
   prime rate plus  1/2% and Canadian prime rate plus 1 1/4%                                       $  29,870             $  27,581
9 1/4% Senior Secured Notes, due June 15, 2007                                                       200,000               200,000
9 1/4% Senior Secured Notes, due October 15, 2007                                                    175,000               175,000
June 1997 term facility, due in quarterly installments of $250 with
   the balance due 2006; variable interest rate based on LIBOR or
   base rate                                                                                          96,750                96,750
November 1997 term facility, due in quarterly installments of $250
   with the balance due 2006; variable interest rate based on LIBOR
   or base rate                                                                                       80,000                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                                                            10,638                11,007
                                                                                                   ---------             ---------
          Total                                                                                      603,721               601,801
Current portion of long-term debt                                                                   (600,004)             (597,715)
                                                                                                   ---------             ---------
          Long-term debt, less current portion                                                     $   3,717             $   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 $100 million term facility and the $83 million 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 is in effect for
the term facilities. When Pioneer defaulted on the $200 million of 9 1/4 %
Senior Secured Notes due June 15, 2007, it constituted an event of default under
the indenture for the $175 million of 9 1/4% Senior Secured Notes due October
15, 2007. Accordingly, amounts outstanding under these agreements have been
classified as a current liability at June 30, 2001.

       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 provides 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, secure borrowings under the facility. The borrowing base at June 30,
2001 was $49.7 million, subject to a reserve of $5 million until the ratio of
EBITDA to fixed charges, as defined in the Revolving Facility, exceeds 1.15:1
for a period of two consecutive quarters. As of June 30, 2001, there were
letters of credit outstanding of $4.5 million and loans outstanding of $29.9
million. Based on the cross default provisions contained in the Revolving
Facility agreement, the facility is currently in default, may be subject to a
default rate of interest and is classified as a current liability at June 30,
2001.

      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

                                       11
<PAGE>
consolidated net income of PCA since June 1997. As of June 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 June 30, 2001, PCA did not meet this requirement and
accordingly, additional new indebtedness, other than borrowing available under
the Revolving Facility, was not allowed.

      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 $50.0 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.

8.   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 $0.9 million were made during the six months ended
June 30, 2001, resulting in accrued severance of $2.6 million at June 30, 2001.

     The $2.6 million of unusual charges recorded during the quarter ended June
30, 2001 are primarily comprised of professional fees related to Pioneer's
financial reorganization.

9.   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 six months ended June 30, 2001 was $4.4
million.

10.  EARNINGS (LOSS) PER SHARE

     Pioneer accounts for earnings (loss) per share in accordance with the
Financial Accounting Standards SFAS 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 months and six months ended June 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. 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 six
months ended June 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.

                                       12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     As described in Note 3 to the Consolidated Financial Statements, Pioneer's
consolidated financial statements as of and for the periods ended June 30, 2001
have been restated. The following discussion and analysis gives effect to that
restatement and 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. 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 consummation, 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. Certain unsecured creditors will receive 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.

     Prior to Pioneer's filing for protection under Chapter 11 of the U.S.
Bankruptcy Code, Pioneer did not make scheduled interest and principal payments
on various debt obligations due to insufficient liquidity. As a result, Pioneer
is not in compliance with the terms of certain of its debt agreements.
Accordingly, approximately $600 million of debt outstanding under various
agreements is classified as a current liability on Pioneer's consolidated
balance sheet.

     Effective July 31, 2001, Pioneer entered into a $50 million
debtor-in-possession financing agreement (the "DIP Facility") with an existing
lender. 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 that 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 July 31,
2001, unused available borrowing capacity under the DIP Facility was $9.9
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
$15.0 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
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.

                                       13
<PAGE>
      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 six months of
2001, Pioneer generated cash of $3.2 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 first six months of 2001 totaled $5.8 million, which was
primarily attributable to capital expenditures.

      Net Cash Flows from Financing Activities. Cash inflows from financing
activities during the first six months of 2001 totaled approximately $1.9
million due primarily to net borrowing under the Revolving Facility of $2.3
million, offset by scheduled debt payments made on two secured notes.

      Working Capital. Pioneer's working capital deficiency was $621.3 million
at June 30, 2001 compared to a deficiency of $602.7 million at December 31,
2000. This $18.6 million increase in working capital deficiency decrease was
primarily due to an increase in accrued interest and the current portion of the
derivative liability, offset by a decrease in accounts payable and an increase
in accounts receivable.

RESULTS OF OPERATIONS

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

      Revenues. Revenues decreased by $0.9 million, or approximately 1%, to
$88.3 million for the three months ended June 30, 2001, as compared to the three
months ended June 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 $3.7 million decrease
from 2000 to 2001. These decreases were offset somewhat by increased sales
prices. Pioneer's average electrochemical unit ("ECU") price during the second
quarter of 2001 was $359, a $36 increase from a year ago.

      Cost of Sales. Cost of sales decreased $1.8 million, or approximately 2%,
for the three months ended June 30, 2001, as compared to the same period in
2000. The decrease was primarily due to lower sales volumes and a $3.3 million
decrease due to the Kemwater sale, offset by higher power costs.

      Gross Profit. Gross profit margin increased to 15% in 2001 from 14% in
2000, primarily as a result of increased ECU pricing.

     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.

     In October 2001, based on an internal review, management became aware of
CRC's unauthorized trading activities in derivatives. A subsequent analysis
determined that these transactions amounted to an unrealized loss of $29.8
million for the three months ended June 30, 2001. The unrealized loss is the
result of three forward purchase contracts and one option contract that were
executed by CRC and approved by Pioneer. See further discussion in Note 2 to the
Consolidated Financial Statements.

      Unusual Items. Unusual charges for the three months ended June 30, 2001
were primarily comprised of professional fees related to Pioneer's
reorganization.

                                       14
<PAGE>
      Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by $1.6 million, or approximately 14%, for the
three months ended June 30, 2001. The components of this decrease include $0.7
million resulting from the Kemwater sale, with the remainder primarily
attributable to cost savings resulting from the organizational restructuring.

      Interest Expense, Net. Interest expense, net increased in 2001 primarily
as a result of decreased cash balances and higher variable interest rates in
2001 as compared to 2000 resulting from default interest rates being in effect
on several of the debt instruments.

      Other Income (Expense), Net. Other income, net for the quarter ended June
30, 2001 was primarily comprised of a foreign exchange loss. 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 quarter ended
June 30, 2001 was $0.6 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 June 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 $2.8 million was recorded for the quarter
ended June 30, 2000.

      Net Loss. Due to the factors described above, net loss for the three
months ended June 30, 2001 was $44.9 million, compared to a net loss of $5.9
million for the same period in 2000.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

      Revenues. Revenues increased by $2.6 million, or approximately 1%, to $176
million for the six months ended June 30, 2001, as compared to the six months
ended June 30, 2000. The increase in revenues was primarily attributable to
increased sales prices, partially offset by lower sales volumes, particularly at
the Tacoma chlor-alkali facility. The average ECU price during the six months
ended June 30, 2001 was $366, a $52 increase from a year ago. In addition, the
sale of the operations of Kemwater in 2000 resulted in a $7.1 million decrease
in revenues for the six months ended June 30, 2001 as compared to the same
period in 2000.

      Cost of Sales. Cost of sales increased $2.4 million, or approximately 2%,
for the six months ended June 30, 2001, as compared to the same period in 2000.
The increase was primarily due to higher power costs, offset by a $7 million
decrease due to the Kemwater sale.

      Gross Profit. Gross profit margin of 13% in 2001 was unchanged from 2000.

      Change in fair value of derivatives. In October 2001, based on an internal
review, management became aware of CRC's unauthorized trading activities in
derivatives. A subsequent analysis determined that these transactions amounted
to a net unrealized loss of $29.8 million for the six months ended June 30,
2001. The net unrealized loss is the result of three forward purchase contracts
and one option contract that were executed by CRC and approved by Pioneer. See
further discussion in Note 2 to the Consolidated Financial Statements.

      Unusual Items. Unusual charges for the six months ended June 30, 2001
were primarily comprised of severance expense and professional fees related to
Pioneer's reorganization. Unusual charges for the six months ended June 30, 2000
included a $0.9 million loss related to the disposition of Pioneer's alum
coagulant business at Antioch, California.

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased by $2.2 million, or approximately 10%, for the
six months ended June 30, 2001. The components of this decrease include $1.4
million resulting from the Kemwater sale, with the remainder primarily
attributable to cost savings resulting from an organizational restructuring.

      Interest Expense, Net. Interest expense, net increased in 2001 primarily
as a result of decreased cash balances and higher variable interest rates in
2001 as compared to 2000 resulting from default interest rates being in effect
on several of the debt instruments.

                                       15
<PAGE>
      Other Income, Net. Other income for the six months ended June 30, 2001 was
primarily comprised of a sales tax refund of $0.5 million, a gain on asset sale
of $0.1 million, 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 six months ended
June 30, 2001 was $2.2 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 six months
ended June 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 $7.4 million was recorded for the six
months ended June 30, 2000.

     Net Loss. Due to the factors described above, net loss for the six months
ended June 30, 2001 was $65.1 million, compared to a net loss of $15.5 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 six months ended June 30, 2001 was $4.4
million.

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 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

                                       16
<PAGE>
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.

     In October 2001, based on an internal review, management became aware of
CRC's unauthorized trading activities in derivatives. A subsequent analysis
determined that these transactions amounted to a net unrealized loss of $29.8
million for the three months ended June 30, 2001. The net unrealized loss is the
result of three forward purchase contracts and one option contract that CRC
executed and were approved by Pioneer.

     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 June 30, 2001.

     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 option
positions outstanding as of June 30, 2001 ($ in thousands, except per mwh
amounts, and volumes in megawatt hours ("mwh")).

<TABLE>
<S>                                                          <C>
       Electricity Futures Contracts:
         Contract volume (mwh)                                   910,675
         Range of expirations (years)                        .50 to 5.00
         Weighted average years until expiration                    4.68
         Weighted average contract price (per mwh)           $     51.74
         Notional amount                                     $    47,120
         Weighted average fair value (per mwh)               $     28.91
         Unrealized (loss)                                   $   (20,791)

       Electricity Option Contract:
         Notional amount                                     $    30,700
         Term (years)                                               5.00
         Strike price                                        $     50.00
         Unrealized (loss)                                   $    (8,972)
</TABLE>


                                       17
<PAGE>
    The information in the tables below presents the electricity futures and
option positions outstanding as of June 30, 2001 allocated over the lives of the
contracts ($ in thousands, except per mwh amounts, and volumes in megawatt hours
("mwh")):
<TABLE>
<CAPTION>
                                                                                     EXPECTED MATURITY
                                                         -------------------------------------------------------------------------
                                                        SIX MONTHS
                                                          ENDED         FISCAL       FISCAL       FISCAL       FISCAL     FISCAL
                                                         12/31/01        2002         2003         2004         2005        2006
                                                         --------      --------     --------     --------     -------     -------
<S>                                                      <C>           <C>          <C>          <C>          <C>         <C>
Electricity Futures Contracts:
  Contract volume (mwh)                                    63,875       169,360      169,360      169,360     169,360     169,360
  Weighted average contract price (per mwh)              $  57.15      $  51.33     $  51.33     $  51.33     $ 51.33     $ 51.33
  Notional amount                                        $  3,650      $  8,694     $  8,694     $  8,694     $ 8,694     $ 8,694
  Weighted average fair value (per mwh)                  $  37.20      $  34.66     $  25.92     $  25.53     $ 26.79     $ 28.53
  Unrealized (loss)                                      $ (1,274)     $ (2,824)    $ (4,304)    $ (4,371)    $(4,156)    $(3,862)

Electricity Option Contract:
  Notional amount                                        $     -       $  6,140     $  6,140     $  6,140     $ 6,140     $ 6,140
  Strike price                                           $     -       $  50.00     $  50.00     $  50.00     $ 50.00     $ 50.00
  Unrealized (loss)                                      $     -       $ (1,173)    $ (1,928)    $ (2,036)    $(1,979)    $(1,856)
</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 six months ended June 30, 2001.


                                   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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