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 April 4, 1999

                                       OR

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

                        Commission File Number 000-29764

                      INTERNATIONAL SPECIALTY PRODUCTS INC.
             (Exact name of registrant as specified in its charter)


        Delaware                                               51-0376469
(State of Incorporation)                                  (I. R. S. Employer
                                                           Identification No.)

 300 Delaware Avenue, Wilmington, Delaware                       19801
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code           (302) 429-8641

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  / /


As of May 14, 1999,  68,300,400 shares of International  Specialty Products Inc.
common stock (par value $.01 per share) were outstanding.



<PAGE>



          


                         Part I - FINANCIAL INFORMATION
                          Item 1 - FINANCIAL STATEMENTS


                      INTERNATIONAL SPECIALTY PRODUCTS INC.

                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                      (Thousands, except per share amounts)


                                                  Quarter Ended
                                             ----------------------
                                              March 29,   April 4,
                                                1998        1999
                                             ----------  ----------
Net sales.............................       $ 200,703   $ 212,170

Cost of products sold.................        (119,177)   (125,405)
Selling, general and administrative...         (40,421)    (43,317)
Gain on sale of assets................               -       8,541
Goodwill amortization.................          (3,339)     (4,195)
                                             ----------  ----------

Operating income......................          37,766      47,794
Interest expense......................         (17,938)    (20,276)
Equity in earnings of joint venture...           1,455           -
Other income (expense), net...........           9,955      (8,999)
                                             ----------  ----------

Income before income taxes............          31,238      18,519
Income taxes..........................         (11,354)     (6,497)
Minority interest in income of
  subsidiary..........................          (4,212)          -
                                             ----------  ----------

Net income............................       $  15,672   $  12,022
                                             ==========  ==========


Earnings per common share:

  Basic...............................       $     .29   $     .17
                                             ==========  ==========
  Diluted.............................       $     .29   $     .17
                                             ==========  ==========

Weighted average number of common and
 common equivalent shares outstanding:

  Basic...............................          53,833      68,760
                                             ==========  ==========
  Diluted.............................          53,833      68,978
                                             ==========  ==========





The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.

                                      1
<PAGE>


                      INTERNATIONAL SPECIALTY PRODUCTS INC.

                           CONSOLIDATED BALANCE SHEETS

                                                                 April 4,
                                                  December 31,    1999
                                                      1998     (Unaudited)
                                                  ------------ -----------
                                                         (Thousands)
ASSETS
Current Assets:
  Cash and cash equivalents.....................  $   24,638   $   31,553
  Investments in trading securities.............      67,333       66,636
  Investments in available-for-sale securities..     233,625      271,232
  Investments in held-to-maturity securities....      12,287        4,306
  Other short-term investments..................      41,708       34,300
  Accounts receivable, trade, net...............      82,227       96,202
  Accounts receivable, other....................      21,748       44,819
  Receivable from related parties, net..........       7,769       13,095
  Inventories...................................     138,888      133,736
  Other current assets..........................      19,624       20,150
                                                  ----------   ----------
Total Current Assets............................     649,847      716,029
Property, plant and equipment, net..............     553,195      555,296
Goodwill, net...................................     526,928      522,727
Other assets....................................      35,653       34,234
                                                  ----------   ----------
Total Assets....................................  $1,765,623   $1,828,286
                                                  ==========   ==========


LIABILITIES AND STOCKHOLDERS' EQUITY
 Current Liabilities:
  Short-term debt...............................  $   87,937   $  131,454
  Current maturities of long-term debt..........         583          524
  Accounts payable..............................      61,722       75,914
  Accrued liabilities...........................      84,534       88,636
  Income taxes..................................       8,417        9,083
                                                  ----------   ----------
    Total Current Liabilities...................     243,193      305,611
                                                  ----------   ----------
Long-term debt less current maturities..........     896,095      902,944
                                                  ----------   ----------
Deferred income taxes...........................      60,282       55,859
                                                  ----------   ----------
Other liabilities...............................      64,330       66,022
                                                  ----------   ----------
Stockholders' Equity:
  Preferred stock, $.01 par value per share;
    20,000,000 shares authorized:
    no shares issued............................           -            -
  Common stock, $.01 par value per share;
    300,000,000 shares authorized:  69,546,456
    shares issued ..............................         695          695
  Additional paid-in capital....................     489,285      489,463
  Treasury stock, at cost - 735,744 and
    1,056,848 shares, respectively..............      (8,388)     (10,859)
  Retained earnings.............................      44,892       56,914
  Accumulated other comprehensive loss..........     (24,761)     (38,363)
                                                  ----------   ----------
    Total Stockholders' Equity..................     501,723      497,850
                                                  ----------   ----------

Total Liabilities and Stockholders' Equity......  $1,765,623   $1,828,286
                                                  ==========   ==========

The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.

                                         2
<PAGE>


                      INTERNATIONAL SPECIALTY PRODUCTS INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

                                                             Quarter Ended
                                                           --------------------
                                                           March 29,  April 4,
                                                             1998       1999
                                                           ---------- ---------
                                                               (Thousands)

Cash and cash equivalents, beginning of period...........   $ 20,495  $ 24,638
                                                            --------- ---------
Cash provided by (used in) operating activities:
  Net income.............................................     15,672    12,022
  Adjustments to reconcile net income to net cash
    provided by operating activities:
      Gain on sale of assets.............................          -    (8,541)
      Depreciation.......................................     10,639    12,207
      Goodwill amortization..............................      3,339     4,195
      Deferred income taxes..............................      7,488    (2,939)
  Increase in working capital items......................    (12,411)  (15,462)
  Purchases of trading securities........................    (23,173)  (44,742)
  Proceeds from sales of trading securities..............     50,724    52,336
  (Increase) decrease in net receivable from related
    parties..............................................     (2,891)   (5,326)
  Change in cumulative translation adjustment............     (2,661)  (11,065)
  Change in minority interest in subsidiary..............      3,745         -
  Other, net.............................................      7,206    (5,979)
                                                            --------- ---------

    Net cash provided by (used in) operating activities..     57,677   (13,294)
                                                            --------- ---------
Cash provided by (used in) investing activities:
  Capital expenditures and acquisition...................    (75,139)  (14,383)
  Proceeds from sale-leaseback transaction...............     56,050         -
  Proceeds from sale of assets...........................          -    11,533
  Purchases of available-for-sale securities.............   (157,285)  (52,006)
  Proceeds from sales of available-for-sale securities...     80,853     6,920
  Proceeds from held-to-maturity securities..............        311    11,440
  Proceeds from sales of other short-term investments....          -     8,935
                                                            --------- ---------
   Net cash used in investing activities.................    (95,210)  (27,561)
                                                            --------- ---------

Cash provided by (used in) financing activities:
  Proceeds from sale of accounts receivable..............      3,126         -
  Increase in short-term debt............................     12,852    43,517
  Increase in borrowings under revolving credit facility.     17,000   207,000
  Repayments of long-term debt...........................       (132) (200,097)
  Repurchases of common stock............................          -    (3,046)
  Other, net.............................................        511       396
                                                            --------- ---------
Net cash provided by financing activities................     33,357    47,770
                                                            --------- ---------
Net change in cash and cash equivalents..................     (4,176)    6,915
                                                            --------- ---------
Cash and cash equivalents, end of period.................   $ 16,319  $ 31,553
                                                            ========= =========


                                         3
<PAGE>



                                                                  


                      INTERNATIONAL SPECIALTY PRODUCTS INC.

        CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) -- (Continued)


                                                       Quarter Ended
                                                    --------------------
                                                    March 29,   April 4,
                                                       1998       1999
                                                    ---------  ---------
                                                         (Thousands)

Supplemental Cash Flow Information:
  Cash paid during the period for:
    Interest (net of amount capitalized)........... $ 19,881   $ 25,500
    Income taxes...................................    2,802      8,674









































The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.

                                     4
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The consolidated financial statements for International  Specialty Products
Inc. (the  "Company")  reflect,  in the opinion of management,  all  adjustments
necessary to present  fairly the  financial  position of the Company at April 4,
1999,  and the results of operations  and cash flows for the periods ended March
29, 1998 and April 4, 1999. All  adjustments are of a normal  recurring  nature.
These  financial  statements  should  be read in  conjunction  with  the  annual
financial  statements and notes thereto  included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998 (the "Form 10-K").


Note 1.  Disposition of Assets

     On April 4,  1999,  the  Company  sold its  pigments  business,  a non-core
product  line that was part of the Personal  Care  business  segment,  for $11.5
million.  The sale resulted in a first quarter pre-tax gain of $8.5 million. The
pigments  product line  accounted for $4.9 million of the Company's net sales in
1998.  As a result,  the sale will not have a material  impact on the  Company's
results of operations.


Note 2.  Comprehensive Income

                                                    Quarter Ended
                                                 --------------------
                                                 March 29,   April 4,
                                                   1998        1999
                                                 ---------  ---------
                                                     (Thousands)
Net income.................................      $ 15,672   $ 12,022
                                                 ---------  ---------
Other comprehensive loss, net of tax:
  Change in unrealized gains (losses)
    on available-for-sale securities:
  Unrealized holding gains (losses)
    arising during the period, net of
    income tax (provision) benefit of
    $(2,838) and $1,363....................         6,306     (2,259)
  Less:  reclassification adjustment
   for gains included in net income, net
   of income taxes of $3,690 and $120......         8,316        278
                                                 ---------  ---------
  Total....................................        (2,010)    (2,537)
  Foreign currency translation adjustment..        (2,661)   (11,065)
                                                 ---------  ---------
Total other comprehensive loss.............        (4,671)   (13,602)
                                                ----------  ---------
Comprehensive income (loss)................     $  11,001   $ (1,580)
                                                ==========  =========

                                          



                                         5

<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 2.  Comprehensive Income (Continued)

     Changes in the components of "Accumulated other comprehensive loss" for the
quarter ended April 4, 1999 are as follows:

                            Unrealized  Cumulative
                            Losses on   Foreign     Minimum    Accumulated
                            Available-  Currency    Pension    Other
                            for-sale    Translation Liability  Comprehensive
                            Securities  Adjustment  Adjustment Loss
                            ----------  ----------- ---------- -------------
                                             (Thousands)
Balance, December 31, 1998.. $(24,037)   $  3,991    $ (4,715)   $(24,761)
Change for the period.......   (2,537)    (11,065)          -     (13,602)
                             --------    ---------   --------    --------
Balance, April 4, 1999...... $(26,574)   $ (7,074)   $ (4,715)   $(38,363)
                             ========    =========   ========    ========


Note 3.  Business Segment Information

     The  Company  operates  its  Specialty  Chemicals  business  through  three
reportable  business  segments,  in addition to the Mineral  Products and Filter
Products segments.  As of January 1, 1999, the Company  transferred its solvents
line of products  from the  Pharmaceutical,  Agricultural  and Beverage  ("PAB")
segment to the  Performance  Chemicals,  Fine Chemicals and Industrial  segment.
Accordingly,  prior year financial  information for these two segments have been
reclassified to conform to the 1999  presentation.  The effect on the total year
1998 was to reduce sales and  operating  income for the PAB segment by $41.7 and
$7.2 million,  respectively,  and increase  sales and  operating  income for the
Performance Chemicals, Fine Chemicals and Industrial segment by like amounts.















                                        6
<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 3.  Business Segment Information (Continued)

                                                           Quarter Ended
                                                       ----------------------
                                                       March 29,    April 4,
                                                         1998         1999
                                                       ---------   ----------
                                                             (Thousands)
Net sales:
  Personal Care....................................    $  54,255   $  52,272
  Pharmaceutical, Agricultural and Beverage........       44,566      46,012
  Performance Chemicals, Fine Chemicals and
    Industrial.....................................       69,087      80,200
                                                       ----------  ----------
    Total Specialty Chemicals......................      167,908     178,484
  Mineral Products (1).............................       23,257      23,164
  Filter Products..................................        9,538      10,522
                                                       ----------  ----------
Net sales..........................................    $ 200,703   $ 212,170
                                                       ==========  ==========

Operating income:
  Personal Care (2)................................    $  11,946   $  18,932
  Pharmaceutical, Agricultural and Beverage........       11,272      12,057
  Performance Chemicals, Fine Chemicals and
    Industrial.....................................        9,732      11,416
                                                       ----------    --------
    Total Specialty Chemicals......................       32,950      42,405
  Mineral Products...................................      4,618       4,213
  Filter Products....................................        730         991
                                                       ----------  ----------
    Total segment operating income.................       38,298      47,609
  Unallocated corporate office.....................         (532)        185
                                                       ----------  ----------
Total operating income.............................       37,766      47,794
Interest expense and other, net....................       (6,528)    (29,275)
                                                       ----------  ----------
Income before income taxes.........................    $  31,238   $  18,519
                                                       ==========  ==========

(1)  Includes sales to Building Materials  Corporation of America, an affiliate,
     and its  subsidiaries,  of $15.6 and $16.2 million for the first quarter of
     1998 and 1999, respectively.

(2)  Personal  Care  operating  income for the first  quarter of 1999 includes a
     pre-tax gain of $8.5 million  from the sale of the pigments  product  line.
     See Note 1.







                                         7
<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 4.  Inventories

     Inventories comprise the following:

                                       December 31,   April 4,
                                           1998         1999
                                       ------------   --------
                                              (Thousands)
     Finished goods................     $ 87,241      $ 82,776
     Work in process...............       24,862        21,725
     Raw materials and supplies....       30,065        32,697
                                        --------      --------
     Total.........................      142,168       137,198
     Less LIFO reserve.............       (3,280)       (3,462)
                                        --------      --------

     Inventories...................     $138,888      $133,736
                                        ========      ========


Note 5.  Long-term Debt

     On March 1, 1999,  the  Company  repaid its 9% Senior  Notes due March 1999
with $200 million of long-term  borrowings  under the Company's  bank  revolving
credit facility.  In addition,  $200 million notional value of fixed to floating
interest rate swaps matured on March 1, 1999. On March 1, 1999, the Company also
terminated  forward-starting  interest  rate swaps  entered  into in 1998 in the
aggregate notional amount of $125 million.  The cost to the Company to terminate
such swaps was insignificant. On March 18, 1999, the Company received a one-year
extension,  to  April  11,  2000,  on its  $38.1  million  mortgage  obligation.
Accordingly,  such mortgage  obligation  is classified as long-term  debt on the
Consolidated Balance Sheet.


Note 6.  Restructuring Reserves

     The Company recorded $73.0 million in 1998 for provisions for restructuring
and  impairment  loss,  primarily  related  to its  decision  to shut  down  its
butanediol production unit at its Calvert City, Kentucky manufacturing facility.
The total  charge  included  an  accrual  of $7.5  million  for cash costs to be
incurred,  mainly  over the next  twelve to  eighteen  months,  principally  for
decommissioning,  demolition and remediation,  and severance  costs.  During the
first  quarter of 1999,  $1.5  million of costs  were  charged to this  accrual,
principally for  decommissioning  activities,  leaving a reserve balance of $6.0
million as of the end of the quarter. In addition, in the third quarter of 1998,
the  Company  reserved  $3.0  million  for the  consolidation  of offices in its
European  operations,  consisting of costs to be incurred for lease obligations,
severance costs and for relocation of headquarters  operations and other related
expenses.  Charges  against  this reserve  since the third  quarter of 1998 have
totaled  $1.7  million,  including  $0.6  million in the first  quarter of 1999,
leaving a reserve balance of $1.3  million  as of  the end of the first quarter.
This  program is expected to be  substantially  completed by the end of the year
1999.

                                       8
<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 7.  New Accounting Standard

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging  Activities."  SFAS No. 133  establishes  accounting and
reporting  standards  requiring that every derivative  instrument be recorded in
the balance  sheet as either an asset or  liability  measured at its fair value.
SFAS No. 133 requires that changes in the derivative's  fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting  for  qualifying  hedges  allows a  derivative's  gains and losses to
offset related results on the hedged item in the income statement.

     SFAS No. 133 is effective for fiscal years  beginning  after June 15, 1999,
but may be adopted  earlier.  The Company has not yet  determined  the effect of
adoption of SFAS No. 133 and has not determined the timing or method of adoption
of the statement. Adoption of SFAS No. 133 could increase volatility in earnings
and other comprehensive income.


Note 8.  Contingencies

Environmental Litigation

     The  Company,  together  with other  companies,  is a party to a variety of
proceedings  and  lawsuits  involving   environmental  matters   ("Environmental
Claims"),  in which  recovery is sought for the cost of cleanup of  contaminated
sites,  a number of which  Environmental  Claims are in the early stages or have
been dormant for protracted periods.

     In  the  opinion  of  the  Company's  management,  the  resolution  of  the
Environmental  Claims  should  not be  material  to  the  business,  results  of
operations or financial position of the Company.  However,  adverse decisions or
events, particularly as to the liability and the financial responsibility of the
Company's  insurers  and of the other  parties  involved  at each site and their
insurers,  could cause the Company to increase its estimate of its  liability in
respect of such matters.  It is not currently possible to estimate the amount or
range of any additional liability.

     For further information regarding environmental matters,  reference is made
to Note 16 to Consolidated Financial Statements contained in the Form 10-K.

Tax Claim against GAF

     Certain  subsidiaries  of the Company were  members of the GAF  Corporation
("GAF")  consolidated  Federal  income tax group (the "GAF  Group") in 1990 and,
accordingly, would be severally liable for any tax liability of the GAF Group in
respect of such year.  Effective as of January 1, 1997,  neither the Company nor
any of its subsidiaries are members of the GAF Group.

     On  September  15, 1997,  GAF  received a notice from the Internal  Revenue
Service (the "IRS") of a deficiency in the amount of $84.4 million (after taking
into account the use of net operating  losses and foreign tax credits  otherwise
available  for use in later years) in  connection  with the formation in 1990 of
Rhone-Poulenc Surfactants and Specialties, L.P. (the "surfactants

                                       9   
<PAGE>

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Note 8.  Contingencies (Continued)

partnership"),  a  partnership  in which a  subsidiary  of GAF,  GAF  Fiberglass
Corporation,  held an interest. The claim of the IRS for interest and penalties,
after  taking  into  account the effect on the use of net  operating  losses and
foreign tax credits, could result in GAF incurring liabilities  significantly in
excess of the deferred tax liability of $131.4  million that it recorded in 1990
in  connection  with this  matter.  GAF has advised the Company that it believes
that it will prevail in this matter,  although there can be no assurance in this
regard.  The Company believes that the ultimate  disposition of this matter will
not have a  material  adverse  effect on its  business,  financial  position  or
results  of  operations.  GAF and  certain  subsidiaries  of GAF have  agreed to
jointly and severally indemnify the Company against any tax liability associated
with the surfactants  partnership,  which the Company would be severally  liable
for,  together  with GAF and  several  current and former  subsidiaries  of GAF,
should GAF be unable to satisfy such liability.



















                                          10
<PAGE>


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

Results of Operations - First Quarter 1999 Compared With
                        First Quarter 1998

     The Company  recorded  first  quarter 1999 net income of $12.0  million (17
cents diluted  earnings per share) compared with $15.7 million (29 cents diluted
earnings  per  share) in the first  quarter  of 1998.  The lower net  income was
attributable  to lower  other  income  (expense)  and higher  interest  expense,
partially  offset by higher operating income which included an $8.5 million gain
from the sale of a product line.

     Net sales for the first quarter of 1999 were $212.2  million  compared with
$200.7 million for the same period in 1998. The 6% sales growth was attributable
to the  Company's  acquisition,  effective  April 1, 1998,  of the remaining 50%
interest in its joint venture with Huls AG,  GAF-Huls  Chemie GmbH ("ISP Marl"),
which  accounted for $14.6  million of sales in the first  quarter of 1999.  Net
sales for the quarter also reflected  higher sales in the Performance  Chemicals
business  in  Europe  and the Fine  Chemicals  business  in the  United  States,
partially  offset by lower  sales for the  Industrial  business  (excluding  the
impact of the sales of ISP Marl) and the Personal  Care  business  segment.  The
higher sales  reflected  increased  sales in the United States,  offset by lower
sales in Europe (excluding the impact of the ISP Marl sales),  Latin America and
the Asia-Pacific region.

     Operating  income for the first quarter of 1999 was $47.8 million  compared
with $37.8  million  for the first  quarter of 1998.  The  results for the first
quarter of 1999  included a pre-tax  gain of $8.5  million  from the sale of the
Company's  pigments  business,  a  non-core  product  line  that was part of the
Personal Care business  segment.  Excluding this gain,  operating income for the
quarter was $39.3  million,  a 4% increase over the first  quarter of 1998.  The
increased operating income was primarily attributable to higher operating income
for the Performance  Chemicals,  Fine Chemicals and Industrial  business segment
(up $1.7 million), reflecting the operating results of ISP Marl.

     Interest  expense for the first  quarter of 1999 was $20.3  million  versus
$17.9 million for the same period last year,  with the increase due primarily to
higher average borrowings.  Other expense, net, for the quarter was $9.0 million
compared with other income,  net, of $10.0 million in the first quarter of 1998,
with the decrease resulting from investment losses in the quarter.

Business Segment Review

     A  discussion  of  operating  results  for each of the  Company's  business
segments follows.  The Company operates its Specialty Chemicals business through
three  reportable  business  segments,  in addition to the Mineral  Products and
Filter Products segments.

Personal Care

     Sales in the first  quarter  of 1999 were  $52.3  million,  a $2.0  million
decrease  compared with $54.3  million for the same period last year.  The lower
sales were  attributable  to skin care products  which  experienced  lower 

                                        11
<PAGE>

sales  volumes  and  lower  average  price levels  in  some  products.  Sales of
hair care products were flat with the prior year's quarter.

     Operating  income  for the  first  quarter  of 1999 was $18.9  million  and
included a pre-tax gain of $8.5 million from the sale of the pigments  business.
Excluding this gain, operating income for the quarter was $10.4 million compared
with $11.9  million in last  year's  quarter.  The decline in  operating  income
reflected  lower sales and gross margins for skin care products due to the lower
average price levels.

Pharmaceutical, Agricultural and Beverage ("PAB")

     Sales for the PAB segment were $46.0 million for the first quarter of 1999,
a 3% increase  compared with $44.6 million for the first quarter of 1998,  while
operating  income  increased by 7% to $12.1  million  versus $11.3  million last
year.  The increased  sales  reflected  higher sales volumes (up $0.4  million),
favorable  pricing and a favorable  foreign exchange impact ($0.5 million).  The
increased operating results reflected the higher sales levels and improved gross
margins due to the favorable pricing and favorable manufacturing costs.

Performance Chemicals, Fine Chemicals and Industrial

     The   Performance   Chemicals,   Fine  Chemicals  and  Industrial   segment
experienced  a 16%  increase in sales in the first  quarter of 1999,  with sales
increasing to $80.2 million from $69.1 million for the same period in 1998.  The
sales  increase  reflected  the first  quarter  1999  sales of ISP Marl of $14.6
million. Excluding the effects of the ISP Marl acquisition, the remainder of the
segment showed a $3.5 million (5%) decline in sales due to unfavorable  pricing,
partially offset by higher sales volumes (up $1.1 million).

     Operating  income  for  the  Performance  Chemicals,   Fine  Chemicals  and
Industrial  segment was $11.4 million for the first quarter of 1999, an increase
of $1.7  million  (17%) over the $9.7 million  recorded in the first  quarter of
1998.  The higher  operating  income  reflected the first quarter 1999 operating
results for ISP Marl,  partially offset by lower gross margins for the remainder
of the segment, reflecting the unfavorable pricing.

Mineral Products

     Sales for the Mineral  Products  segment for the first quarter of 1999 were
$23.2  million,  down  slightly  from the $23.3  million  recorded  in the first
quarter  of  1998.  Sales to  Building  Materials  Corporation  of  America,  an
affiliate, increased by $0.6 million to $16.2 million on sales volume increases,
offset  by $0.7  million  lower  sales to  trade  customers  due to lower  sales
volumes.  Operating  income  for the  first  quarter  of 1999 was  $4.2  million
compared  with  $4.6  million  for the same  period in 1998,  with the  decrease
resulting from the lower sales volumes and higher operating expenses.

Filter Products

     Sales for the Filter Products segment  increased by 10% to $10.5 million in
the first  quarter of 1999,  compared  with $9.5 million in the
   
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first  quarter  of   1998,   principally   reflecting   higher   sales  volumes.
Operating  income  improved 36% to $1.0 million  compared with $0.7 million last
year, resulting from the higher sales and improved gross margins.


Liquidity and Financial Condition

     During the first quarter of 1999,  the  Company's  net cash outflow  before
financing  activities was $40.9  million,  including the use of $13.3 million of
cash for operations,  the  reinvestment  of $14.4 million for capital  programs,
$11.5  million  of cash  generated  from  the  sale  of  assets  (see  Note 1 to
Consolidated Financial Statements), and the use of $24.7 million of cash for net
purchases  of  available-for-sale  and  held-to-maturity  securities  and  other
short-term investments.

     Cash invested in additional  working  capital  totaled $15.5 million during
the first  quarter  of 1999,  mainly  reflecting  a $37.0  million  increase  in
receivables,  partially  offset by a $20.0  million  increase  in  payables  and
accrued  liabilities.  The  increase in  receivables  reflected a $14.0  million
increase in trade  receivables due to higher sales in March 1999 versus December
1998,  a $9.8  million  increase in the  receivable  from the  purchaser  of the
Company's  domestic trade accounts  receivable,  and a $13.2 million increase in
other receivables due primarily to higher VAT receivables. The net cash used for
operating  activities  was net of a $7.6  million  cash inflow from net sales of
trading securities.

     Net cash provided by financing  activities during the first quarter of 1999
totaled $47.8 million,  reflecting a $207 million  increase in borrowings  under
the Company's  bank  revolving  credit  facility in order to repay the Company's
$200 million 9% Senior Notes due March 1999,  and also a $43.5 million  increase
in short-term  borrowings.  In addition,  financing  activities  included a $3.0
million cash outlay for  repurchases  of common stock  pursuant to the Company's
repurchase  program.  The  Company  announced  in March  1999  that its Board of
Directors had approved the repurchase of 1.5 million shares of its common stock.
This amount is in addition to the repurchase of one million shares, announced in
September  1998.  The  repurchased  shares  will be held for  general  purposes,
including the issuance of shares under the Company's stock option plan.

     As a result of the foregoing factors,  cash and cash equivalents  increased
by $6.9 million  during the first  quarter of 1999 to $31.6  million,  excluding
$376.5 million of trading,  available-for-sale  and held-to-maturity  securities
and other short-term investments.

     The Company recorded $73.0 million in 1998 for provisions for restructuring
and  impairment  loss,  primarily  related  to its  decision  to shut  down  its
butanediol production unit at its Calvert City, Kentucky manufacturing facility.
The total  charge  included  an  accrual  of $7.5  million  for cash costs to be
incurred,  mainly  over the next  twelve to  eighteen  months,  principally  for
decommissioning,  demolition and remediation,  and severance  costs.  During the
first  quarter of 1999,  $1.5  million of costs  were  charged to this  accrual,
principally for  decommissioning  activities,  leaving a reserve balance of $6.0
million as of the end of the quarter. In addition, in the third quarter of 1998,
the  Company  reserved  $3.0  million  for the  consolidation  of offices in its
European  operations,  consisting of costs to be incurred for lease obligations,
severance costs and for relocation of headquarters  operations and other related
 
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expenses. Charges  against  this  reserve  since  the third quarter of 1998 have
totaled  $1.7  million,  including  $0.6  million in the first  quarter of 1999,
leaving a reserve  balance of $1.3  million as of the end of the first  quarter.
This  program is expected to be  substantially  completed by the end of the year
1999. 

     See Note 8 to Consolidated  Financial Statements for information  regarding
contingencies.


Year 2000 Compliance

     The Company has  implemented  a formal  Year 2000  program  (the "Year 2000
Program")  to (i) address the  inability of some of its  information  technology
("IT") and "non-IT"  equipment  that the Company  believes is significant to its
business, including certain devices with embedded technology, to accurately read
and process certain dates, including dates in the year 2000 and afterwards) (the
"Year  2000  Issues");  (ii)  investigate  Year  2000  Issues  of third  parties
significant to the Company's  business;  and (iii) establish  contingency  plans
where appropriate.

     The Company has completed the  installation  of a new  Enterprise  Resource
Planning  System  ("ERP  System")  and has  replaced or  remediated  most of its
personal  computers  and other IT  equipment  that may have  Year  2000  Issues.
Although the ERP System was implemented for purposes other than remediating Year
2000 Issues,  management believes that the ERP System is Year 2000 compliant. In
this regard,  the Company has performed  Year 2000 testing of the ERP system and
did not  discover  any major  Year  2000  Issues.  With  respect  to its  non-IT
equipment,   the  Company  and  its  consultants  are  presently   inventorying,
evaluating,  remediating  and testing  this  equipment.  The Company  expects to
substantially  complete  its Year 2000  Program for IT and non-IT  equipment  by
mid-1999.

     The Company is also requesting information on the Year 2000 Issues of third
parties  significant  to the Company's  business.  The Company is evaluating the
responses  from many of these  entities and is requesting  more  information  as
appropriate.  Based on the information  gathered from its Year 2000 Program, the
Company is  developing  contingency  plans to  minimize  the impact of Year 2000
Issues on its business.  The Company  expects to  substantially  complete  these
activities by mid-1999.

     The Company  does not believe  that the costs of its Year 2000 Program will
be  material  to its  financial  position  or results of  operations.  While the
Company believes that it addressed most of its IT Year 2000 Issues by installing
the ERP System and  replacing or  remediating  personal  computers,  neither the
timing nor extent of these  activities  were  directly  related to the Company's
Year 2000 Program.  The Company also has incurred outside costs of approximately
$100,000  in  connection  with  evaluating  year 2000  compliance  of its non-IT
systems.  The Company  anticipates  that  additional  costs to remediate  should
approximate no more than $1.5 million in the aggregate. The Company expects that
the source of any funds that may be necessary to pay the costs of addressing its
Year 2000 Issues  will be provided  from cash  balances or cash  generated  from
operations.  The Company  intends to charge such costs  against  earnings as the
costs are incurred.

     Management  believes that it has taken  reasonable  steps in developing its
Year 2000 Program. Notwithstanding these actions, there can be no assurance

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<PAGE>

that  all  of  the  Company's  Year 2000  Issues or those of its key  suppliers,
service  providers  or customers  will be resolved or  addressed  satisfactorily
before the Year 2000 commences.  Management  believes that the reasonably likely
"worst case  scenario"  resulting  from Year 2000 Issues could be the failure by
the  Company's  key  suppliers,  service  providers,  customers  and other third
parties to address their Year 2000 Issues. If this were to occur, and there were
no alternatives  available to the Company,  then the Company's usual channels of
supply and  distribution  could be  disrupted,  in which event the Company could
experience a material  adverse impact on its business,  results of operations or
financial position.

                                   * * *

Forward-looking Statements

     This   Quarterly   Report  on  Form  10-Q  contains  both   historical  and
forward-looking  statements.  All statements other than statements of historical
fact are, or may be deemed to be, forward-looking  statements within the meaning
of section 27A of the  Securities  Act of 1933 and section 21E of the Securities
Exchange Act of 1934. These forward-looking  statements are only predictions and
generally can be identified  by use of statements  that include  phrases such as
"believe," "expect," "anticipate," "intend," "plan," "foresee" or other words or
phrases of similar  import.  Similarly,  statements  that describe the Company's
objectives,  plans or goals also are forward-looking  statements.  The Company's
operations  are  subject to certain  risks and  uncertainties  that could  cause
actual  results to differ  materially  from those  contemplated  by the relevant
forward-looking  statement.  The forward-looking  statements included herein are
made only as of the date of this  Quarterly  Report on Form 10-Q and the Company
undertakes no obligation to publicly update such  forward-looking  statements to
reflect  subsequent  events or  circumstances.  No assurances  can be given that
projected results or events will be achieved.














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                Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK


     Reference  is made to  Management's  Discussion  and  Analysis of Financial
Condition  and  Results  of  Operations  in the Form  10-K for a  discussion  of
"Market-Sensitive  Instruments  and Risk  Management."  As of December 31, 1998,
equity-related  financial  instruments  employed by the Company to reduce market
risk included short contracts  valued at $276.7  million.  At April 4, 1999, the
value of short  contracts  was $85.0  million.  All such  short  contracts  were
terminated as of May 6, 1999. Since the Company marks-to-market such instruments
each  month,  there was no  economic  cost to the  Company  to  terminate  these
instruments.  In  addition,  the  Company's  9% Senior  Notes  and $200  million
notional  value of fixed to  floating  interest  rate swaps  matured on March 1,
1999, and the Company  terminated  $125 million  notional  amount of floating to
fixed  forward-starting  interest  rate swaps on March 1, 1999.  The cost to the
Company to terminate such swaps was insignificant.





















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                                     PART II


                                OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     27 - Financial  Data  Schedule,  which is submitted  electronically  to the
Securities and Exchange Commission for information only.

(b) No Reports on Form 8-K were filed during the quarter ended April 4, 1999.























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                                   SIGNATURES



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


                      INTERNATIONAL SPECIALTY PRODUCTS INC.




DATE:  May 18, 1999          BY:  /s/Randall R. Lay
       ------------               -----------------

                                  Randall R. Lay
                                  Senior Vice President and
                                    Chief Financial Officer
                                  (Principal Financial and
                                    Accounting Officer)

















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