EXHIBIT 99.4

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Georgia Gulf Corporation:

We have audited the accompanying consolidated balance sheets of Georgia Gulf
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1998
and 1997 and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Georgia Gulf Corporation and
subsidiaries as of December 31, 1998 and 1997 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.

Arthur Andersen LLP
Atlanta, Georgia
October 26, 1999

GEORGIA GULF CORPORATION

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS,
EXCEPT SHARE DATA
ASSETS
Cash and cash equivalents................................... $ 1,244 $ 1,621
Receivables, net of allowance for doubtful accounts of
$2,400 in 1998 and 1997................................... 69,994 61,453
Inventories................................................. 69,339 87,890
Prepaid expenses............................................ 2,227 6,508
Deferred income taxes....................................... 6,492 7,409
-------- --------
Total current assets...................................... 149,296 164,881
-------- --------
Property, plant and equipment, at cost...................... 656,527 624,532
Less accumulated depreciation............................. 268,334 227,791
-------- --------
Property, plant and equipment, net...................... 388,193 396,741
-------- --------
Goodwill.................................................... 85,154 --
-------- --------
Other assets................................................ 29,626 25,831
-------- --------
Net assets of discontinued operations....................... 13,319 14,107
-------- --------
Total assets................................................ $665,588 $601,560
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 65,270 $ 85,184
Interest payable............................................ 2,272 2,218
Accrued compensation........................................ 6,814 7,281
Accrued pension............................................. 378 2,257
Other accrued liabilities................................... 12,833 13,632
-------- --------
Total current liabilities................................. 87,567 110,572
-------- --------
Long-term debt.............................................. 459,475 393,040
-------- --------
Deferred income taxes....................................... 89,665 62,345
-------- --------
Stockholders' equity
Preferred stock--$0.01 par value; 75,000,000 shares
Authorized; no shares issued............................ -- --
Common stock--$0.01 par value; 75,000,000 shares
Authorized; shares issued and outstanding:
30,883,754 in 1998 and 32,781,439 in 1997............... 309 328
Retained earnings......................................... 28,572 35,275
-------- --------
Total stockholders' equity.............................. 28,881 35,603
-------- --------
Total liabilities and stockholders' equity.................. $665,588 $601,560
======== ========

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

GEORGIA GULF CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997 1996
---------- ---------- ----------

IN THOUSANDS, EXCEPT PER SHARE DATA
Net sales................................................ $ 825,292 $ 871,384 $ 829,374
Operating costs and expenses
Cost of sales.......................................... 652,347 710,114 666,176
Selling and administrative expense..................... 42,455 45,401 41,305
---------- ---------- ----------
Total operating costs and expenses................... 694,802 755,515 707,481
---------- ---------- ----------
Operating income......................................... 130,490 115,869 121,893
Other income (expense)
Gain on sale of assets................................. -- 8,600 --
Loss on interest rate hedge agreement.................. (9,500) -- --
Interest expense....................................... (30,867) (24,693) (20,833)
Interest income........................................ 49 60 67
---------- ---------- ----------
Income from continuing operations before income taxes.... 90,172 99,836 101,127
Provision for income taxes............................... 33,587 37,813 38,423
---------- ---------- ----------
Income from continuing operations........................ 56,585 62,023 62,704
Discontinued operations,
(Loss)/earnings from discontinued operations, net...... (306) 19,178 8,916
---------- ---------- ----------
Net income............................................... $ 56,279 $ 81,201 $ 71,620
========== ========== ==========
Earnings/(loss) per share
Basic
Continuing operations................................ $ 1.80 $ 1.84 $ 1.75
Discontinued operations.............................. (0.01) 0.57 0.25
---------- ---------- ----------
$ 1.79 $ 2.41 $ 2.00
========== ========== ==========
Diluted
Continuing operations.................................. $ 1.78 $ 1.83 $ 1.73
Discontinuing operations............................... (0.01) 0.56 0.25
---------- ---------- ----------
$ 1.77 $ 2.39 $ 1.98
========== ========== ==========

Weighted average common shares........................... 31,474 33,629 35,759
---------- ---------- ----------
Weighted average common shares and equivalents........... 31,787 33,947 36,248
---------- ---------- ----------

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

GEORGIA GULF CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- --------- ---------

IN THOUSANDS
Cash flows from operating activities:
Net income.................................................. $ 56,279 $ 81,201 $ 71,620
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 44,023 36,318 37,495
Gain on sale of assets.................................... -- (8,600) --
Provision for deferred income taxes....................... 28,237 11,306 3,405
Tax benefit related to stock plans........................ 1,406 1,252 2,210
Loss (gain) from discontinued operations.................. 306 (19,178) (8,916)
Change in operating assets and liabilities, net of effects
of acquisition:
Receivables............................................. 2,575 (1,167) 26,281
Inventories............................................. 23,347 (5,158) (15,333)
Prepaid expenses........................................ 4,361 3,426 2,174
Accounts payable........................................ (27,764) (1,534) 13,542
Interest payable........................................ 54 (692) 173
Accrued income taxes.................................... 0 (704) (1,944)
Accrued compensation.................................... (2,664) 1,644 (9,078)
Accrued pension......................................... (1,879) 118 (168)
Accrued liabilities..................................... (1,995) 150 1,552
Other................................................... (3,397) (8,218) (19,851)
--------- --------- ---------
Net cash provided by continuing operations.................. 122,889 90,164 103,162
--------- --------- ---------
Net cash provided by discontinued operations................ 482 18,807 10,338
--------- --------- ---------
Net cash provided by operating activities................... 123,371 108,971 113,500
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures...................................... (25,374) (56,545) (118,706)
Proceeds from sales of assets............................. -- 16,477 6,062
Acquisition, net of cash acquired......................... (99,902) -- --
--------- --------- ---------
Net cash used in investing activities....................... (125,276) (40,068) (112,644)
--------- --------- ---------
Cash flows form financing activities:
Long-term debt proceeds................................... 207,485 187,440 268,500
Long-term debt payments................................... (141,550) (190,000) (165,300)
Proceeds from issuance of common stock.................... 4,497 4,598 5,084
Repurchase and retirement of common stock................. (58,880) (59,307) (99,586)
Dividends paid............................................ (10,024) (10,711) (11,386)
--------- --------- ---------
Net cash provided by (used in) financing activities......... 1,528 (67,980) (2,688)
--------- --------- ---------
Net change in cash and cash equivalents..................... (377) 923 (1,832)
Cash and cash equivalents at beginning of year.............. 1,621 698 2,530
--------- --------- ---------
Cash and cash equivalents at end of year.................... $ 1,244 $ 1,621 $ 698
========= ========= =========

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

GEORGIA GULF CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

COMMON STOCK ADDITIONAL TOTAL
--------------------- PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
---------- -------- ----------- --------- --------------

IN THOUSANDS, EXCEPT SHARE DATA
Balance, December 31, 1995..... 37,240,252 $ 372 $ 31,312 $ 18,944 $ 50,628
Net income..................... -- -- -- 71,620 71,620
Dividends paid................. -- -- -- (11,386) (11,386)
Tax benefit realized from stock
option plans................. -- -- 2,210 -- 2,210
Common stock issued upon
exercise of stock options.... 340,770 3 1,662 -- 1,665
Common stock issued under stock
purchase plan................ 152,178 2 3,417 -- 3,419
Repurchase and retirement of
common stock................. (3,148,400) (31) (38,601) (60,954) (99,586)
---------- ------ -------- -------- --------
Balance, December 31, 1996..... 34,584,800 346 -- 18,224 18,570

Net income..................... -- -- -- 81,201 81,201
Dividends paid................. -- -- -- (10,711) (10,711)
Tax benefit realized from stock
option plans................. -- -- 1,252 -- 1,252
Common stock issued upon
exercise of stock options.... 185,045 2 1,435 -- 1,437
Common stock issued under stock
purchase plan................ 140,694 1 3,160 -- 3,161
Repurchase and retirement of
common stock................. (2,129,100) (21) (5,847) (53,439) (59,307)
---------- ------ -------- -------- --------
Balance, December 31, 1997..... 32,781,439 328 -- 35,275 35,603

Net income..................... -- -- -- 56,279 56,279
Dividends paid................. -- -- -- (10,024) (10,024)
Tax benefit realized from stock
option plans................. -- -- 1,406 -- 1,406
Common stock issued upon
exercise of stock options.... 169,830 2 1,440 -- 1,442
Common stock issued under stock
purchase plan................ 228,585 2 3,053 -- 3,055
Repurchase and retirement of
common stock................. (2,296,100) (23) (5,899) (52,958) (58,880)
---------- ------ -------- -------- --------
Balance, December 31, 1998..... 30,883,754 $ 309 $ -- $ 28,572 $ 28,881
========== ====== ======== ======== ========

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

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include the
accounts of Georgia Gulf Corporation and its subsidiaries (the "Company"). All
significant intercompany balances and transactions are eliminated in
consolidation.

NATURE OF OPERATIONS--The Company is a manufacturer and international marketer
of chemical products. The Company's products are primarily intermediate
chemicals sold for further processing into a wide variety of end-use
applications including plastic pipe and pipe fittings, siding and window frames,
bonding agents for wood products, high-quality plastics, acrylic sheeting and
gasoline additives.

USE OF ESTIMATES--Management of the Company is required to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes prepared in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS--The Company considers all highly liquid investments
with an original maturity of three months or less to be the equivalent of cash
for the purposes of financial statement presentation.

INVENTORIES--Inventories are valued at the lower of cost (first-in, first-out)
or market. Costs include raw materials, direct labor and manufacturing overhead.
Market is based on current replacement cost for raw materials and supplies and
on net realizable value for finished goods.

PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at cost.
Maintenance and repairs are charged to expense as incurred, and major renewals
and improvements are capitalized. Interest expense attributable to funds used in
financing the construction of major plant and equipment is capitalized. Interest
expense capitalized during 1998, 1997 and 1996 was $667,000, $2,802,000 and
$4,826,000, respectively. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets for book purposes, with
accelerated methods being used for income tax purposes.

The estimated useful lives of the assets are as follows:

Buildings and land improvements............................. 20-30 years
Machinery and equipment..................................... 3-15 years

GOODWILL--Goodwill of $86,725,000 was capitalized in connection with the
acquisition of North American Plastics, Inc. in 1998 (See Note 18). The goodwill
is being amortized over a 35-year period. Goodwill amortized to cost of sales
was $1,571,000 during 1998. The Company periodically evaluates goodwill for
impairment. In completing this evaluation, the Company estimates the future
undiscounted cash flows of the businesses to which goodwill relates in order to
ensure that the carrying amount of goodwill has not been impaired.

OTHER ASSETS--Other assets comprised primarily deposits for long-term raw
material purchase contracts and debt issuance costs. Deposits are being
amortized as additional raw material cost over the remaining 16-year life of the
related contracts in proportion to raw material delivery. Debt issuance costs
are amortized to expense using the effective interest rate method over the term
of the related indebtedness.

FINANCIAL INSTRUMENTS--The Company does not use derivatives for trading
purposes. Interest rate swap and cap agreements, forms of derivatives, are used
by the Company to manage interest costs on certain portions of the Company's
long-term debt (see Note 15). These financial statements do not reflect

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

temporary market gains and losses on derivative financial instruments, although
the estimated fair value is disclosed in Note 15. If subsequent to being hedged,
underlying transactions are no longer likely to occur, the related derivative
gains and losses are recognized currently as income or expense. Amounts paid or
received on the interest rate swap agreements are recorded to interest expense
as incurred. As of December 31, 1998 and 1997, interest rate swap agreements
were the only form of derivative financial instrument outstanding.

ENVIRONMENTAL EXPENDITURES--Environmental expenditures related to current
operations or future revenues are expensed or capitalized consistent with the
Company's capitalization policy. Expenditures that relate to an existing
condition caused by past operations and that do not contribute to future
revenues are expensed. Liabilities are recognized when environmental assessments
or cleanups are probable and the costs can be reasonably estimated.

EARNINGS PER SHARE--Basic earnings per share is computed based on the weighted
average number of common shares outstanding during the respective periods.
Diluted earnings per share is computed based on the weighted average number of
common shares outstanding, adjusted for dilutive potential issuances of common
stock.

STOCK-BASED COMPENSATION--Stock-based compensation is recognized using the
intrinsic value method. Pro forma net income and earnings per share impacts are
presented in Note 10 as if the fair value method had been applied.

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which
requires additional disclosure and presentation of amounts comprising
comprehensive income beyond net income. The Company had no comprehensive income
amounts for the periods presented. As a result, the adoption had no impact on
the Company's reporting under generally accepted accounting principles.

During June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
Statement 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 and 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 derivative
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate and
assess the effectiveness of transactions that receive hedge accounting. In June
1999, the FASB issued SFAS No. 137 which deferred the effective date of SFAS
No. 133 for fiscal quarters of all fiscal years beginning after June 15, 2000,
although earlier adoption is permitted. SFAS No. 133 cannot be applied
retroactively. Management has not yet quantified the impacts of adopting SFAS
No. 133 on the Company's financial statements.

NOTE 3: DISCONTINUED OPERATIONS

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3: DISCONTINUED OPERATIONS (CONTINUED)

of expected proceeds, and an accrual for estimated losses during the phase-out
period. Georgia Gulf will fulfill customer contracts with purchased methanol
until December 31, 1999. The methanol plant remains idle and management intends
to dismantle the facility at some time in the future. A number of methanol sales
contracts have been assigned and Georgia Gulf's customer list has been sold.
Proceeds from the sale of the methanol railcars, customer list and other
discontinued plant assets are estimated at $2.9 million. The disposition of the
methanol operations represents the disposal of a business segment under APB
Opinion No. 30. Accordingly, results of these operations have been classified as
discontinued and prior periods have been restated, including the reallocation of
fixed overhead charges to other business segments. For business segment
reporting purposes, the methanol business results were previously classified as
the segment "Gas Chemicals."

Net sales and income from discontinued operations are as follows (in
thousands):

YEAR ENDED
------------------------------
1998 1997 1996
-------- -------- --------

Net sales....................................... $49,726 $ 94,266 $66,812
======= ======== =======
Pretax (loss) income from discontinued
operations.................................... $ (487) $ 30,932 $14,380
Income tax benefit (expense).................... 181 (11,754) (5,464)
------- -------- -------
Net (loss) income from discontinued
operations.................................... $ (306) $ 19,178 $ 8,916
======= ======== =======

Net assets and liabilities of discontinued operations were as follows (in
thousands):

DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------

Current assets...................................... $ 4,536 $11,131
Property, plant, and equipment, net................. 12,956 14,119
Current liabilities................................. (1,189) (7,968)
Long term liabilities............................... (2,984) (3,175)
------- -------
Net assets of discontinued operations............... $13,319 $14,107
======= =======

NOTE 4: RECEIVABLES

The Company has entered into an agreement pursuant to which it sold a
percentage ownership interest in a defined pool of the Company's trade
receivables. As collections reduce accounts receivable included in the pool, the
Company sells participating interests in new receivables to bring the amount
sold up to the $50,000,000 permitted by the agreement. The receivables are sold
at a discount, which approximates the purchaser's financing cost of issuing its
own commercial paper backed by these accounts receivable. The ongoing costs of
this program of $2,807,000, $3,045,000 and $2,882,000 for 1998, 1997 and 1996,
respectively, were charged to selling and administrative expense in the
accompanying consolidated statements of income.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: INVENTORIES

The major classes of inventories were as follows:

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS
Raw materials and supplies................................ $26,462 $34,451
Finished goods............................................ 42,877 53,439
------- -------
Inventories............................................... $69,339 $87,890
======= =======

NOTE 6: PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS
Machinery and equipment................................. $583,561 $570,642
Land improvements....................................... 23,760 23,009
Buildings............................................... 23,937 20,771
Construction in progress................................ 25,269 10,110
-------- --------
Property, plant and equipment, at cost.................. $656,527 $624,532
======== ========

NOTE 7: OTHER ASSETS

Other assets, net of accumulated amortization, consisted of the following:

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS
Deposits for long-term purchase contracts................. $23,635 $20,684
Debt issuance costs....................................... 2,613 3,035
Other..................................................... 3,378 2,112
------- -------
Other assets.............................................. $29,626 $25,831
======= =======

Debt issuance costs amortized as interest expense during 1998, 1997 and 1996
were $527,000, $448,000 and $440,000, respectively.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8: LONG-TERM DEBT

Long-term debt consisted of the following:

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS
Revolving credit loan................................... $223,000 $155,000
Term loan............................................... 100,000 100,000
7 5/8% notes due 2005................................... 100,000 100,000
Other................................................... 36,475 38,040
-------- --------
Long-term debt.......................................... $459,475 $393,040
======== ========

The Company's credit agreement provides for an unsecured revolving credit
facility which permits borrowings of up to $350,000,000. The revolving credit
facility terminates and related outstanding loans, if any, are due in
March 2000. As of December 31, 1998, the Company had availability to borrow up
to $127,000,000 under the terms of the revolving credit facility. An annual
commitment fee, which ranges from 0.10 percent to 0.25 percent (currently at
0.25 percent), is required to be paid on the revolving credit facility
commitment. The interest rate on the revolving credit facility is based on LIBOR
and averaged 5.97 percent and 5.98 percent for 1998 and 1997, respectively.

The Company has $100,000,000 principal amount of unsecured 7 5/8 percent
notes outstanding, which are due in November 2005. Interest on the Notes is
payable semiannually on May 15 and November 15 of each year. The Notes are not
redeemable prior to maturity.

Under the credit agreement, term loan and notes, the Company is subject to
certain restrictive covenants, the most significant of which require the Company
to maintain certain financial ratios and to limit the amount of dividends and
repurchases of common stock. The Company's limit for dividends and repurchases
of common stock was $62,476,000 as of December 31, 1998.

Cash payments for interest during 1998, 1997 and 1996 were $30,398,000,
$27,739,000 and $22,945,000, respectively.

NOTE 9: STOCKHOLDERS' EQUITY

During 1998 and 1997, the Company repurchased 2,296,100 shares of its common
stock for $58,880,000 and 2,129,100 shares for $59,307,000, respectively. As of
December 31, 1998, the Company had authorization to repurchase up to 5,225,600
additional shares under the current common stock repurchase program, subject to
certain restrictions as described in Note 8.

Each outstanding share of common stock is accompanied by a preferred stock
purchase right, which entitles the holder to purchase from the Company 1/100th
of a share of Junior Participating Preferred Stock for $45.00, subject to
adjustment in certain circumstances. The rights expire on April 27, 2000 and may
be redeemed by the Company for $0.01 per right until ten days following the
earlier to occur of the announcement that a person or group beneficially owns
15 percent or more of the Company's outstanding shares of common stock, or the
commencement of or announcement by any person or group of an intent to commence
a tender or exchange offer that would result in such person or group
beneficially owning 15 percent or more of the Company's outstanding shares of
common stock (the earliest of any such date, the "Distribution Date"). The
rights first become exercisable on the

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9: STOCKHOLDERS' EQUITY (CONTINUED)

Distribution Date. Subject to certain conditions, if a person or group becomes
the beneficial owner of 15 percent or more of the Company's outstanding shares
of common stock, each right will entitle its holder (other than certain
acquiring persons) to receive, upon exercise, common stock having a value equal
to two times the right's exercise price. In addition, subject to certain
conditions, if the Company is involved in a merger or certain other business
combination transactions, each right will entitle its holder (other than certain
acquiring persons) to receive, upon exercise, common stock of the acquiring
company having a value equal to two times the right's exercise price.

In connection with the stock purchase rights described above, 30,000,000 of
the authorized shares of preferred stock are designated Junior Participating
Preferred Stock. If issued, the Junior Participating Preferred Stock would be
entitled, subject to the prior rights of any senior preferred stock, to a
dividend equal to the greater of $0.01 or that which is paid on the common
shares.

NOTE 10: STOCK OPTION AND PURCHASE PLANS

Options to purchase common stock of the Company have been granted to
employees under plans adopted in 1990 and 1998. Under the 1998 Equity and
Performance Incentive Plan approved by the Company's stockholders, the Company
may grant options to purchase up to 2,000,000 shares to employees and
non-employee directors. Option prices are equal to the closing price of the
Company's stock on the date of grant. Options vest ratably over a five-year
period for the 1990 option plan and vest over a one- or three-year period for
the 1998 Equity and Performance Incentive Plan from the date of grant and expire
no more than ten years after grant.

The following is a summary of all stock option information:

YEAR ENDED DECEMBER 31,
------------------------------------------
1998 1997 1996
------------ ------------ ------------

Options outstanding at beginning of year............. 768,116 956,561 1,299,031
Granted at $17.75-$35.25 per share................. 440,000 -- --
Exercised.......................................... (168,830) (185,045) (340,770)
Forfeited or canceled.............................. (85,900) (3,400) (1,700)
------------ ------------ ------------
Outstanding at year end.............................. 952,386 768,116 956,561
============ ============ ============

Option exercise price per share range................ $7.75-$36.50 $7.75-$36.50 $6.36-$36.50
Weighted average exercise price...................... $25.75 $16.13 $14.54
Weighted average remaining contractual life (in
years)............................................. 5.4 3.6 4.4
Options exercisable.................................. 519,386 684,116 830,561
Options available for grant.......................... 1,664,827 18,927 15,527

The Company's stockholders have approved a qualified, non-compensatory
employee stock purchase plan, which allows employees to acquire shares of common
stock through payroll deductions over a twelve-month period. The purchase price
is equal to 85 percent of the fair market value of the common stock on either
the first or last day of the subscription period, whichever is lower. Purchases
under the plan are limited to 15 percent of an employee's base salary. In
connection with this stock purchase plan, 278,543 shares of common stock are
reserved for future issuances. Under this plan and similar plans, 228,585,
140,694 and 152,178 shares of common stock were issued at $13.36, $22.47 and
$22.47 per share during 1998, 1997 and 1996, respectively.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10: STOCK OPTION AND PURCHASE PLANS (CONTINUED)

The Company accounts for its stock-based compensation plans in accordance
with Accounting Principles Board opinion No. 25, "Accounting for Stock Issued to
Employees," and complies with SFAS No. 123, "Accounting for Stock-Based
Compensation," for disclosure purposes. Under these provisions, no compensation
was recognized in 1998, 1997 and 1996 for the Company's stock option plans or
its stock purchase plans.

In accordance with the disclosure requirements of SFAS No. 123, the Company
is required to calculate the pro forma compensation cost of all stock options
and purchase rights granted after December 31, 1994, using an option pricing
model. Stock options granted in 1998 and stock purchase rights granted in
connection with the Company's stock purchase plan are subject to this
calculation.

For SFAS No. 123 purposes, the fair value of each stock option and stock
purchase right for 1998, 1997 and 1996 has been estimated as of the date of the
grant using the Black-Scholes option pricing model with the following weighted
average assumptions for 1998, 1997 and 1996, respectively: risk-free interest
rates of 5.44 percent, 5.66 percent and 5.09 percent; dividend yields of
1.00 percent, 1.20 percent and 1.04 percent; and expected volatilities of 0.32,
0.23 and 0.30. The expected life of a right and option was assumed to be one
year and three years, respectively, for all years. Using these assumptions, the
fair market value of the stock option grants for 1998 was $3,493,000. Also using
these assumptions, the fair values of the stock purchase plan rights for 1998,
1997 and 1996 were $1,224,000, $977,000 and $1,062,000, respectively. Had
compensation cost been determined consistently with SFAS No. 123, utilizing the
assumptions detailed above, the Company's net income and earnings per common
share would have been the following pro forma amounts:

YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------

IN THOUSANDS, EXCEPT PER SHARE
DATA
Net income
As reported.................................... $56,279 $81,201 $71,620
Pro forma...................................... 53,317 80,594 70,962
Basic earnings per share
As reported.................................... $ 1.79 2.41 2.00
Pro forma...................................... 1.69 2.40 1.98
Diluted earnings per share
As reported.................................... $ 1.77 2.39 1.98
Pro forma...................................... 1.68 2.37 1.96

NOTE 11: EMPLOYEE BENEFIT PLANS

The Company has certain pension, savings and profit sharing plans that cover
substantially all of its employees. The expense incurred for these plans was
approximately $2,434,000, $3,798,000 and $4,522,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.

Most employees are covered by defined contribution plans under which the
Company makes contributions to individual employee accounts and by defined
benefit plans for which the benefits are based on years of service and the
employee's compensation or for which the benefit is a specific monthly amount
for each year of service. The Company's policy on funding the defined benefit
plans is

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11: EMPLOYEE BENEFIT PLANS (CONTINUED)

to contribute an amount within the range of the minimum required and the maximum
tax-deductible contribution.

During 1998, the Company restructured several of its executive benefit plans
whereby certain plan benefits were replaced by new retirement agreements funded
by life insurance contracts. The elimination of the benefits under the previous
plans resulted in a reduction to pension expense for 1998 of $1,520,000. The
total expense related to the new agreements for 1998 was $693,000, which
represented the current year cost of the insurance contracts, net of the
increase in the cash surrender value of the contracts.

In 1998, the Company adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Post-retirement Benefits." The Statement standardizes the
disclosure requirements for pensions and other post-retirement benefits to the
extent practicable.

On a weighted average basis, the following assumptions were used in the
accounting for the net periodic benefit costs and for the defined benefit plans:

YEAR ENDED DECEMBER
31,
------------------------------------
1998 1997 1996
-------- -------- --------

Discount rate......................................... 7.00% 7.25% 7.50%
Expected return on plan assets........................ 9.00% 9.00% 9.00%
Rate of compensation increase......................... 5.50% 5.50% 5.50%

The amount of net periodic benefit cost recognized includes the following
components:

YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------

IN THOUSANDS
Components of periodic benefit cost:
Service cost.................................... $ 1,946 $ 1,765 $ 2,060
Interest cost................................... 3,156 2,867 2,730
Expected return on assets....................... (4,808) (4,034) (3,503)
Amortization of:
Transition obligation......................... 343 343 343
Prior service cost............................ 103 103 103
Actuarial gain................................ (634) (478) (185)
------- ------- -------
106 566 1,548
Settlement benefit................................ (1,520) -- --
------- ------- -------
Total net periodic benefit (income) cost.......... $(1,414) $ 566 $ 1,548
======= ======= =======

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11: EMPLOYEE BENEFIT PLANS (CONTINUED)

The reconciliation of the beginning and ending balances of the benefit
obligation for the Company's defined benefit plans and the fair value of plan
assets were as follows:

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS
Change in benefit obligation:
Net benefit obligation at beginning of year............. $42,590 $37,729
Service cost............................................ 1,946 1,765
Interest cost........................................... 3,156 2,867
Actuarial loss.......................................... 721 1,220
Settlements............................................. (2,410) --
Gross benefits paid..................................... (918) (991)
------- -------
Net benefit obligation at end of year..................... $45,085 $42,590
======= =======

Change in plan assets:
Fair value of plan assets at beginning of year.......... $53,705 $45,093
Actual return on plan assets............................ 8,567 9,369
Employer contributions.................................. 282 234
Gross benefits paid..................................... (918) (991)
------- -------
Fair value of plan assets at end of year.................. $61,636 $53,705
======= =======

The funded status of the Company's defined benefit plans and the amounts
recognized in the statement of financial position were as follows:

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS
Reconciliation of funded status:
Funded status at end of year.......................... $ 16,551 $ 11,115
Unrecognized net actuarial gain....................... (18,847) (15,941)
Unrecognized prior service cost....................... 264 754
Unrecognized net transition obligation................ 2,227 2,571
-------- --------
Net amount recognized at end of year.................... $ 195 $ (1,501)
======== ========

Amounts recognized in the statement of financial
position:
Prepaid benefit cost.................................. $ 4,702 $ 4,047
Accrued benefit cost.................................. (4,507) (5,548)
Additional minimum liability.......................... (574) (672)
Intangible asset...................................... 574 672
-------- --------
Net amount recognized at end of year.................... $ 195 $ (1,501)
======== ========

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12: INCOME TAXES

The provision for income taxes was as follows:

YEAR ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------

IN THOUSANDS
Current:
Federal........................................ $ 6,046 $24,015 $31,586
State.......................................... (696) 2,492 3,432
------- ------- -------
5,350 26,507 35,018
------- ------- -------

Deferred:
Federal........................................ 24,651 9,825 2,394
State.......................................... 3,586 1,481 1,011
------- ------- -------
28,237 11,306 3,405
------- ------- -------
Provision for income taxes....................... $33,587 $37,813 $38,423
======= ======= =======

The difference between the statutory federal income tax rate and the
Company's effective income tax rate is summarized as follows:

YEAR ENDED DECEMBER
31,
------------------------------------
1998 1997 1996
-------- -------- --------

IN THOUSANDS
Statutory federal income tax rate..................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit............ 2.1 2.5 2.9
Other................................................. 0.1 0.4 0.1
---- ---- ----
Effective income tax rate............................. 37.2% 37.9% 38.0%
==== ==== ====

Cash payments for income taxes during 1998, 1997 and 1996 were $11,004,000,
$38,124,000 and $28,685,000, respectively.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12: INCOME TAXES (CONTINUED)

The Company's net deferred tax liability consisted of the following major
items:

DECEMBER 31,
-------------------
1998 1997
-------- --------

IN THOUSANDS
Deferred tax assets:
Receivables........................................... $ 710 $ 858
Inventories........................................... 1,316 1,691
Vacation accruals..................................... 1,403 1,393
Other................................................. 3,063 3,467
-------- --------
Total deferred tax assets........................... 6,492 7,409
Deferred tax liability:
Property, plant and equipment......................... (86,363) (62,345)
Other................................................. (3,302) --
-------- --------
Net deferred tax liability.............................. $(83,173) $(54,936)
======== ========

Management believes, based on its history of operating earnings and
expectations for the future, that future taxable income will be sufficient to
fully utilize the deferred tax assets at December 31, 1998.

NOTE 13: COMMITMENTS AND CONTINGENCIES

LEASES--The Company leases railcars, storage terminals, computer equipment,
manufacturing facilities and warehouse and office space under noncancelable
operating leases with varying maturities through the year 2010. Future minimum
payments under these noncancelable operating leases as of December 31, 1998 were
$23,301,000 for 1999, $16,735,000 for 2000, $6,575,000 for 2001, $5,469,000 for
2002, $4,317,000 for 2003 and $14,086,000 thereafter. Total lease expense was
approximately $25,734,000, $16,414,000 and $13,275,000 for the years ended
December 31, 1998, 1997 and 1996, respectively.

The Company makes lease payments under an operating lease agreement for a
250-megawatt cogeneration facility at the Company's Plaquemine, Louisiana
complex. The total cost of assets covered by the lease is $115,000,000. The
initial lease term, which began in October 1997, is three years with options to
renew the lease for two one-year periods and to purchase the facility at its
estimated fair market value at any time during the lease term. The lease
provides for substantial residual value guarantees by the Company at the
termination of the lease if the then estimated fair value of the facility is not
recovered by the owner via sale to a third party.

PURCHASE COMMITMENTS--The Company has certain take-or-pay raw material purchase
agreements with various terms extending through 2014. The aggregate amount of
the fixed and determinable portion of the required payments under these
agreements as of December 31, 1998 was $7,143,000 for each of the years 1999
through 2007 and $4,648,000 for the year 2008.

LEGAL PROCEEDINGS--The Company is a party to numerous individual and several
class-action lawsuits filed against the Company, among other parties, arising
out of an incident that occurred in September 1996 in which workers were exposed
to a chemical substance on the Company's premises in Plaquemine, Louisiana. The
substance was later identified to be a form of mustard agent, a chemical

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13: COMMITMENTS AND CONTINGENCIES (CONTINUED)

which is not manufactured as part of the Company's ordinary operations, but
instead occurred as a result of an unforseen chemical reaction. The Company
presently believes there are approximately 2,000 plaintiffs, of which
approximately 650 are workers claiming to have been on-site at the time of the
incident. All of the actions claim one or more forms of compensable damages,
including past and future wages, past and future physical and emotional pain and
suffering, and medical monitoring. The lawsuits were originally filed in
Louisiana State Court in Iberville Parish.

Discovery has been occurring in these cases. The Company continues to
develop information relating to the extent of damages suffered, as well as
evaluating the merit of such claims, defenses available and liability of other
persons.

In September 1998, the plaintiffs filed amended petitions that added the
additional allegations that the Company had engaged in intentional conduct
against the plaintiffs. These additional allegations raised a coverage issue
under the Company's general liability insurance policies. In December 1998, as
required by the terms of the insurance policies, the insurers demanded
arbitration to determine whether coverage is required for the alleged
intentional conduct in addition to the coverage applicable to the other
allegations of the case. The date for the arbitration has not yet been
established.

As a result of the arbitration relating to the insurance issue, as permitted
by federal statute, the insurers removed the cases to United States District
Court in December, 1998. By order entered March 2, 1999, the federal court
denied the plaintiff's motion to remand the cases back to state court and
retained federal jurisdiction.

Settlements have been reached with a majority of the original workers,
including the majority of those claimants believed to be the most severely
injured. The majority of cases have been dismissed or are pending dismissal
before the court. Additionally, settlements have been reached or are being
negotiated with other parties named as defendants whereby such parties have
made, or are being requested to make, contributions to the recoveries made by
the plaintiffs. Negotiations for the resolution of the remaining claims are
continuing.

Notwithstanding the foregoing, the Company is asserting and pursuing
defenses to the claims. Based on the present status of the proceedings, the
Company believes the liability ultimately imposed will not have a material
effect on the financial position or on results of operations of the Company.

In addition, the Company is subject to other claims and legal actions that
may arise in the ordinary course of business. Management believes that the
ultimate liability, if any, with respect to these other claims and legal
actions, will not have a material effect on the financial position or on results
of operations of the Company.

NOTE 14: SIGNIFICANT CUSTOMER AND EXPORT SALES

SIGNIFICANT CUSTOMER--The Company has supply contracts, subject to certain
limitations, for a substantial percentage of Georgia-Pacific Corporation's
requirements for certain chemicals at prices approximating market. These supply
contracts have various expiration dates (depending on the product) from 1999
through 2003 and may be extended year-to-year upon expiration. The sales to
Georgia-Pacific Corporation under these supply contracts for the years ended
December 31, 1998, 1997 and 1996 amounted to approximately 9 percent, 9 percent
and 13 percent of net sales, respectively. Receivables

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14: SIGNIFICANT CUSTOMER AND EXPORT SALES (CONTINUED)

outstanding from these sales were $66,501,000 and $113,619,000 at December 31,
1998 and 1997, respectively.

EXPORT SALES--Export sales were approximately 18 percent, 17 percent and
13 percent of the Company's net sales for the years ended December 31, 1998,
1997 and 1996, respectively. The principal international markets served by the
Company include Canada, Mexico, Latin America, Europe and Asia.

NOTE 15: DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS

The Company entered into two interest rate swap agreements in June 1995, for
a total notional amount of $100,000,000 maturing in June 2002, to fix the
interest rate on a term loan. The fixed interest rate paid on the two interest
rate swap agreements was 6.31 percent, while the floating interest rate received
averaged 5.68 percent for 1998 and 1997. The Company also entered into an
interest rate swap agreement for a notional amount of $100,000,000 as a cash
flow hedge for the cogeneration facility operating lease agreement. This
interest rate swap agreement became effective in August 1997 and will mature in
August 2002 with a fixed interest rate to be paid of 5.88 percent. The floating
interest rate received averaged 5.62 percent and 5.73 percent for 1998 and 1997,
respectively.

In June 1998, the Company filed a shelf registration with the Securities and
Exchange Commission for the issuance of $200,000,000 of long-term bonds. Shortly
after the filing, the Company entered into an agreement to lock in interest
rates on a portion of the long-term bonds. During the third quarter of 1998,
treasury yields dropped to their lowest levels in 30 years, while at the same
time, investors' preference for treasury bonds and weakened demand for corporate
bonds limited the Company's ability to issue longer term bonds. As a result, the
Company's plans to issue long-term bonds were postponed indefinitely and the
interest rate lock agreements were terminated, resulting in a pre-tax loss of
$9,500,000 in the third quarter of 1998.

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

DEBT--The fair value of the 7 5/8% notes was based on quoted market prices. The
carrying amounts of the revolving credit loan and the term loan were assumed to
approximate fair value due to the floating market interest rates to which the
respective agreements are subject.

INTEREST RATE SWAP AGREEMENTS--The fair value of the interest rate swap
agreements was estimated by obtaining quotes from brokers.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15: DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS (CONTINUED)

The estimated fair value of financial instruments was as follows:

DECEMBER 31,
-----------------------------------------
1998 1997
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------

IN THOUSANDS
Debt:
Revolving credit loan............................. $223,000 $223,000 $155,000 $155,000
Term loan......................................... 100,000 100,000 100,000 100,000
7 5/8% notes due 2005............................. 100,000 99,700 100,000 102,419
Other............................................. 36,475 36,475 38,040 38,040
Interest rate swap agreements in payable position... -- (6,412) -- (971)

NOTE 16: EARNINGS PER SHARE

There are no adjustments to "Net income" or "Income from continuing
operations" for the diluted earnings per share computations.

The following table reconciles the denominator for the basic and diluted
earnings per share computations shown on the consolidated statements of income:

YEARS ENDED DECEMBER 31,
------------------------------
1998 1997 1996
-------- -------- --------

IN THOUSANDS
Weighted average common shares...................... 31,474 33,629 35,759
Plus incremental shares from assumed conversions:
Options........................................... 217 289 446
Employee stock purchase plan rights............... 96 29 43
------ ------ ------
Weighted average common shares and equivalents...... 31,787 33,947 36,248
====== ====== ======

NOTE 17. DISPOSITION

In July 1997, the Company completed the sale of certain oil and gas
properties representing substantially all of the assets of Great River Oil & Gas
Corporation, a subsidiary of the Company. Net proceeds from this sale were
$16,477,000, on which the Company recorded a pretax gain of $8,600,000
($5,300,000, net of income taxes). Historically, the operating results for this
subsidiary have not been material to the financial statements of the Company.

NOTE 18. ACQUISITION

On May 11, 1998, the Company acquired all the issued and outstanding common
stock of North American Plastics, Inc., a privately held manufacturer of
flexible vinyl compounds with a production capacity of 190,000,000 pounds. North
American Plastics has two manufacturing locations in Mississippi and generated
approximately $90,000,000 in revenue in 1997. Its vinyl compounds are used in
wire and cable for construction, automobiles and appliances, as well as various
other consumer and industrial products.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18. ACQUISITION (CONTINUED)

The stock of North American Plastics was acquired in exchange for net cash
consideration of $99,902,000 plus the assumption of $500,000 in debt. The cash
portion of the acquisition was financed with proceeds from the Company's
existing revolving credit facility. The transaction was accounted for as a
purchase, and the consideration exchanged exceeded the fair market value of the
net tangible assets of North American Plastics by $86,725,000. This excess was
allocated to goodwill and is being amortized on a straight-line basis over a
period of 35 years. The results of operations of the acquired business have been
included in the Company's consolidated financial statements from the date of
acquisition. Pro forma results of operations have not been presented because the
effect of this acquisition was not significant.

NOTE 19. SEGMENT INFORMATION

SFAS No. 131--"Disclosures about Segments of an Enterprise and Related
Information" became effective for fiscal year 1998 and for all succeeding
interim reporting periods. In accordance with the requirements of SFAS No. 131,
the Company has identified two reportable segments through which it conducts its
operating activities: chlorovinyls and aromatics. These two segments reflect the
organization used by Company management for internal reporting. The chlorovinyls
segment is a highly integrated chain of products which includes chlorine,
caustic soda, vinyl chloride monomer and vinyl resins and compounds. The
aromatics segment is also vertically integrated and includes cumene and the
co-products phenol and acetone. A third product segment, gas chemicals, which
included methanol and, prior to July 1997, the Company's oil and gas exploration
activities, was discontinued in the third quarter of 1999. See Note 17 for a
description of the Company's disposition of its oil and gas operations and
Note 3 for a description of the disposal of the methanol operations.

Earnings of industry segments exclude interest income and expense,
unallocated corporate expenses and general plant services, provision for income
taxes, and income and expense items reflected as "other income (expense)" on the
Company's consolidated statements of income. Intersegment sales and transfers
are insignificant.

Identifiable assets consist of plant and equipment used in the operations of
the segment, as well as inventory, receivables and other assets directly related
to the segment. Corporate and general plant service assets include cash, certain
corporate receivables, data processing equipment and spare parts

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 19. SEGMENT INFORMATION (CONTINUED)

inventory as well as property (i.e., land) on which the manufacturing plants are
located. The Company has no significant assets located outside of the United
States.

CORPORATE
AND GENERAL
GAS PLANT
INDUSTRY SEGMENTS CHLOROVINYLS AROMATICS CHEMICALS SERVICES TOTAL
- ----------------- ------------ --------- --------- ----------- --------

IN THOUSANDS
Year Ended December 31, 1998:
Net sales............................. $515,411 $309,881 $ 0 $ 0 $825,292
Operating income (loss)............... 73,737 71,377 0 (14,624)(1) 130,490

Depreciation and amortization......... 26,488 13,724 0 3,811 44,023
Capital expenditures.................. 18,694 3,312 0 3,368 25,374
Total Assets.......................... 429,757 144,154 13,319 78,367 665,597

Year Ended December 31, 1997:
Net sales............................. $492,651 $373,698 $ 5,035 $ 0 $871,384
Operating income (loss)............... 65,711 69,055 (499) (18,398)(1) 115,869

Depreciation and amortization......... 21,544 10,751 835 3,188 36,318
Capital expenditures.................. 23,282 20,431 2,813 10,019 56,545
Total Assets.......................... 349,810 172,782 16,211 62,757 601,560

Year Ended December 31, 1996:
Net sales............................. $510,924 $306,385 $12,065 $ 0 $829,374
Operating income (loss)............... 77,583 53,997 3,146 (12,833)(1) 121,893

Depreciation and amortization......... 16,253 11,744 7,099 2,399 37,495
Capital expenditures.................. 88,301 27,937 1,745 723 118,706

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

(1) Includes shared services, administrative and legal expense, along with the
cost of the Company's receivables program.

YEAR ENDED DECEMBER 31,
------------------------------
GEOGRAPHIC AREAS 1998 1997 1996
- ---------------- -------- -------- --------

IN THOUSANDS
Net sales:
Domestic...................................... $678,245 $726,426 $720,828
Foreign....................................... 147,047 144,958 108,546
-------- -------- --------
Total......................................... $825,292 $871,384 $829,374
======== ======== ========

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 20. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table sets forth certain quarterly financial data for the
periods indicated:

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------

IN THOUSANDS, EXCEPT PER SHARE DATA
1998
Net sales......................................... $215,386 $214,810 $208,517 $186,579
Gross margin...................................... 41,233 47,146 46,636 37,930
Operating income.................................. 30,545 36,740 34,672 28,535
Earnings from continuing operations............... 14,596 18,172 10,840 12,976
Net earnings (loss) from discontinued
operations...................................... 2,360 (1,666) (665) (334)
Net income........................................ 16,956 16,506 10,175 12,642
Basic earnings (loss) per share
Continuing operations........................... 0.45 0.57 0.35 0.42
Discontinued operations......................... 0.07 (0.05) (0.02) (0.01)
-------- -------- -------- --------
Total......................................... 0.52 0.52 0.33 0.41

Diluted earnings (loss) per share
Continuing operations........................... 0.45 0.57 0.35 0.42
Discontinued operations......................... 0.07 (0.05) (0.02) (0.01)
-------- -------- -------- --------
Total......................................... 0.52 0.52 0.33 0.41
Dividends per common share........................ 0.08 0.08 0.08 0.08

1997
Net sales......................................... $215,313 $232,864 $212,272 $210,935
Gross margin...................................... 29,745 41,096 44,513 45,916
Operating income.................................. 18,727 29,302 33,257 34,583
Earnings from continuing operations............... 8,378 14,007 22,115 17,523
Net earnings from discontinued operations......... 3,683 6,573 5,609 3,313
Net income........................................ 12,061 20,580 27,724 20,836
Basic earnings per share
Continuing operations........................... 0.24 0.41 0.66 0.53
Discontinued operations......................... 0.11 0.19 0.17 0.10
-------- -------- -------- --------
Total......................................... 0.35 0.61 0.83 0.63

Diluted earnings per share
Continuing operations........................... 0.24 0.41 0.66 0.53
Discontinued operations......................... 0.11 0.19 0.17 0.10
-------- -------- -------- --------
Total......................................... 0.35 0.60 0.83 0.63
Dividends per common share........................ 0.08 0.08 0.08 0.08

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

(1) Includes a loss on an interest rate hedge agreement, which resulted in a
decrease to net income of $6,014,000.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 20. QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)

(2) Includes adjustments to reduce maintenance expense by $3,200,000 after-tax
for the deferment of certain plant turnarounds and a reduction of pension
expense by $1,345,000 after-tax primarily for a restructuring of the
executive benefit plan.

(3) Includes a gain from the sale of certain oil and gas properties, which
resulted in an increase to net income of $5,300,000.

NOTE 21. SUBSEQUENT EVENTS (UNAUDITED)

ACQUISITION OF THE VINYLS BUSINESS OF CONDEA VISTA COMPANY

On August 30, 1999, the Company signed a definitive agreement to acquire the
assets of the vinyls business of CONDEA Vista Company ("VISTA") for
approximately $270 million (the "Acquisition"). The purchase includes
substantially all of the assets and the net working capital of the vinyls
business as of the closing date. The Acquisition will be accounted for by the
purchase method of accounting for business combinations, and accordingly, the
operating results of VISTA's vinyls business will be included in the Company's
consolidated results of operations commencing on the closing date of the
Acquisition.

THE OFFERING

The Company plans to proceed with an offering (the "Offering") of
$200 million of senior subordinated notes (the "Notes"). The Notes are expected
to mature in 2007. The Company plans to raise $194.3 million, net of discounts
and estimated expenses, through the issuance of the Notes. The Company
anticipates using the net proceeds to fund the Acquisition, refinance certain of
its existing indebtedness, and to pay related fees and expenses. Available
proceeds will also be used to purchase assets leased pursuant to a cogeneration
facility lease.

NEW SENIOR CREDIT FACILITY

The new senior credit facility (the "New Senior Credit Facility") will
provide for a $100.0 million revolving credit facility, a $225.0 million term
loan A, and a $200.0 million term loan B. The term loans will be fully drawn at
closing and borrowings under the revolving credit facility will be, subject to
applicable borrowing conditions, available for general corporate purposes,
including working capital, capital expenditures, and acquisitions. The New
Senior Credit Facility, the indenture related to the existing 7 5/8% notes and
the Notes will impose certain restrictions, including restrictions on the
Company's ability to incur indebtedness, pay dividends, make investments, grant
liens, sell our assets and engage in certain other activities. In addition, the
New Senior Credit Facility will require us to maintain certain financial ratios.
Debt under the New Senior Credit Facility and the existing 7 5/8% notes will be
secured by substantially all of the Company's assets, including the Company's
real and personal property, inventory, accounts receivable and other
intangibles. Georgia Gulf anticipates using the net proceeds to fund the
Acquisition, refinance certain of its existing indebtedness, and to pay related
fees and expenses. Available proceeds will also be used to purchase assets
leased pursuant a cogeneration facility lease.

GEORGIA GULF CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 21. SUBSEQUENT EVENTS (UNAUDITED) (CONTINUED)

PRO FORMA INFORMATION

The unaudited pro forma combined information below presents the combined
results of operations as if the Acquisition, the New Senior Credit Facility, the
Offering and the purchase of the co-generation facility under the terms of our
operating lease had occurred on January 1, 1998 and balance sheet information as
if the Acquisition, the New Senior Credit Facility and the Offering had occurred
as of September 30, 1999. The unaudited pro forma combined information, based
upon the historical consolidated financial statements of the Company and the
vinyls business of VISTA, assumes an acquisition cost of $270 million, resulting
in approximately $19 million in negative goodwill being allocated to property,
plant and equipment.

The unaudited pro forma combined information is not necessarily indicative
of the results of operations of the combined company had the Acquisition
occurred on January 1, 1998 or the financial position had the Acquisition
occurred on September 30, 1999, nor is it necessarily indicative of future
results or financial position.

The following pro forma data is unaudited and is in thousands, except per
share data:

YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -----------------

Statement of Income Data:
Net sales..................................... $1,166,960 $868,445
Income from continuing operations............. 10,569 10,998
Earnings per share:
Continuing operations....................... 0.34 0.36

SEPTEMBER 30,
1999
-------------

Balance Sheet Data:
Total assets................................. $1,079,370
Borrowings................................... 796,269
Stockholders' equity......................... 34,261

GEORGIA GULF CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)

ASSETS
Cash and cash equivalents................................... $ 3,213 $ 1,244
Receivables................................................. 63,657 60,964
Insurance receivable........................................ 419 9,030
Inventories................................................. 67,755 69,339
Prepaid expenses............................................ 2,785 2,227
Deferred income taxes....................................... 6,492 6,492
----------- -----------
Total current assets...................................... 144,321 149,296
----------- -----------
Property, plant and equipment, at cost...................... 666,261 656,527
Less accumulated depreciation............................. (300,337) (268,334)
----------- -----------
Property, plant and equipment, net...................... 365,924 388,193
----------- -----------
Goodwill.................................................... 83,295 85,154
----------- -----------
Other assets................................................ 33,133 29,626
----------- -----------
Net assets of discontinued operations....................... 3,532 13,319
----------- -----------
Total assets................................................ $ 630,205 $ 665,588
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable............................................ $ 78,963 65,270
Interest payable............................................ 4,316 2,272
Accrued taxes, other than income............................ 8,896 2,355
Accrued compensation........................................ 4,962 6,814
Other accrued liabilities................................... 11,421 10,856
----------- -----------
Total current liabilities................................. 108,558 87,567
----------- -----------
Long-term debt.............................................. 396,525 459,475
----------- -----------
Deferred income taxes....................................... 90,861 89,665
----------- -----------
Stockholders' equity
Common stock--$0.01 par value............................. 309 309
Additional paid-in capital................................ 602 --
Retained earnings......................................... 33,350 28,572
----------- -----------
Total stockholders' equity.............................. 34,261 28,881
----------- -----------
Total liabilities and stockholders' equity.................. $ 630,205 $ 665,588
=========== ===========
Common shares outstanding................................... 30,944,574 30,883,754
=========== ===========

See notes to condensed consolidated financial statements.

GEORGIA GULF CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT SHARE DATA)

(UNAUDITED)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------

Net sales................................. $ 213,277 $ 208,517 $ 573,253 $ 638,713
----------- ----------- ----------- -----------
Operating costs and expenses
Cost of sales........................... 175,302 161,883 487,122 503,698
Selling and administrative.............. 9,288 11,964 29,206 33,059
----------- ----------- ----------- -----------
Total operating costs and expenses.... 184,590 173,847 516,328 536,757
----------- ----------- ----------- -----------
Operating income.......................... 28,687 34,670 56,925 101,956
Other expense
Loss on interest rate hedge agreement... -- 9,500 -- 9,500
Interest, net........................... 7,037 8,053 21,719 22,882
----------- ----------- ----------- -----------
Income from continuing operations before
income taxes............................ 21,650 17,117 35,206 69,574
Provision for income taxes................ 7,903 6,278 12,850 25,965
----------- ----------- ----------- -----------
Income from continuing operations......... $ 13,747 $ 10,839 $ 22,356 $ 43,609
----------- ----------- ----------- -----------
Discontinued Operations
(Loss) earnings from discontinued
operations, net of tax................ $ (520) $ (664) $ (2,525) $ 28
Loss on disposal of discontinued
operations, net of tax................ (7,631) -- (7,631) --
----------- ----------- ----------- -----------
Net income................................ $ 5,596 $ 10,175 $ 12,200 $ 43,637
=========== =========== =========== ===========
Earnings (loss) per share:
Basic
Continuing operations................. $ 0.44 $ 0.35 $ 0.72 $ 1.38
Discontinued operations............... (0.26) (0.02) (0.33) --
----------- ----------- ----------- -----------
$ 0.18 $ 0.33 $ 0.39 $ 1.38
=========== =========== =========== ===========
Diluted
Continuing operations................. $ 0.44 $ 0.35 $ 0.72 $ 1.36
Discontinued operations............... (0.26) (0.02) (0.33) --
----------- ----------- ----------- -----------
$ 0.18 $ 0.33 0.39 $ 1.36
=========== =========== =========== ===========
Weighted average common shares
Basic................................... 30,936,764 31,047,468 30,919,368 31,691,501
Diluted................................. 31,068,452 31,287,379 31,004,457 32,044,014

See notes to condensed consolidated financial statements.

GEORGIA GULF CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1999 1998
--------- ---------

Cash flows from operating activities:
Net income................................................ $ 12,200 $ 43,637

Adjustments to reconcile net income to net cash provided
by operating activities, net of acquired amounts:

Depreciation and amortization......................... 34,392 32,594

Provision for deferred income taxes................... 1,196 10,916

Loss on disposal of discontinued operations, net...... 7,631 --

Loss (earnings) on discontinued operations, net....... 2,525 (28)

Change in operating assets, liabilities and other..... 24,053 22,756
--------- ---------
Net cash provided by continuing operations.................. 81,997 109,875
Net cash (used in) provided by discontinued operations...... (369) 2,934
--------- ---------
Net cash provided by operating activities................... 81,628 112,809
--------- ---------
Cash flows from financing activities:

Long-term debt proceeds................................... 115,000 180,300
Long-term debt payments................................... (177,950) (110,000)
Proceeds from issuance of common stock.................... 471 1,377
Purchase and retirement of common stock................... -- (55,002)
Dividends paid............................................ (7,422) (7,561)
--------- ---------
Net cash (used in) provided by financing activities......... (69,901) 9,114
--------- ---------
Cash flows from investing activities:

Capital expenditures...................................... (9,758) (20,148)
Acquisition, net of cash acquired......................... -- (99,902)
--------- ---------
Net cash used in investing activities....................... (9,758) (120,050)
--------- ---------
Net change in cash and cash equivalents..................... 1,969 1,873
Cash and cash equivalents at beginning of period............ 1,244 1,621
--------- ---------
Cash and cash equivalents at end of period.................. $ 3,213 $ 3,494
========= =========

See notes to condensed consolidated financial statements.

GEORGIA GULF CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included in the annual
report for the year ended December 31, 1998 for Georgia Gulf Corporation and its
subsidiaries (the "Company" or "Georgia Gulf").

Operating results for Georgia Gulf for the three- and nine-month periods
ended September 30, 1999, are not necessarily indicative of the results that may
be expected for the year ending December 31, 1999.

NOTE 2: NEW ACCOUNTING PRONOUNCEMENT

During June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement 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 and
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 derivative gains and losses to offset related results
on the hedged item in the income statement, and requires that a company must
formally document, designate and assess the effectiveness of transactions that
receive hedge accounting. In June 1999, the FASB issued SFAS No. 137 which
deferred the effective date of SFAS No. 133 for fiscal quarters of all fiscal
years beginning after June 15, 2000, although earlier adoption is permitted.
SFAS No. 133 cannot be applied retroactively. Management has not yet quantified
the impacts of adopting SFAS No. 133 on the Company's financial statements.

NOTE 3: DISCONTINUED OPERATIONS

On September 2, 1999, the Company announced its decision to exit the
methanol business at the end of 1999. In connection with the discontinuance of
the methanol business, Georgia Gulf incurred a one-time charge of $7.6 million
(net of taxes) related to the write-off of the methanol plant assets, net of
expected proceeds, and an accrual for estimated losses during the phase-out
period. Georgia Gulf will fulfill customer contracts with purchased methanol
until December 31, 1999. The methanol plant remains idle and management intends
to dismantle the facility at some time in the future. A number of methanol sales
contracts have been assigned and Georgia Gulf's customer list has been sold. Net
proceeds from the sale of the methanol railcars, customer list and other
discontinued plant assets are estimated at $2.9 million. The disposition of the
methanol operations represents the disposal of a business segment under APB
Opinion No. 30. Accordingly, results of these operations have been classified as
discontinued and prior periods have been restated, including the reallocation of
fixed overhead charges to other business segments. For business segment
reporting purposes, the methanol business results were previously classified as
the segment "Gas Chemicals".

GEORGIA GULF CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3: DISCONTINUED OPERATIONS (CONTINUED)

Net sales and income from discontinued operations are as follows (in
thousands):

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------

Net sales.............................. $ 9,710 $11,948 $ 26,181 $40,012
======== ======= ======== =======
Pretax (loss) income from discontinued
operations........................... $ (819) $(1,048) $ (3,976) $ 45
Loss on disposal of business segment... (12,017) -- (12,017) --
Income tax benefit (expense)........... 4,685 384 5,837 (17)
-------- ------- -------- -------
Net (loss) income from discontinued
operations........................... $ (8,151) $ (664) $(10,156) $ 28
======== ======= ======== =======

Net assets of discontinued operations were as follows (in thousands):

SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------

Current assets...................................... $ 9,023 $ 4,536
Property, plant, and equipment, net................. -- 12,956
Current liabilities................................. (2,576) (1,189)
Long term liabilities............................... (2,915) (2,984)
------- -------
Net assets of discontinued operations............... $ 3,532 $13,319
======= =======

NOTE 4: INVENTORIES

The major classes of inventories were as follows (in thousands):

SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------

Raw materials and supplies.......................... $37,074 $26,462
Finished goods...................................... 30,681 42,877
------- -------
$67,755 $69,339
======= =======

NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS

Georgia Gulf has two interest rate swap agreements for a total notional
amount of $100,000,000 maturing in June 2002 to fix the interest rate on a term
loan. Also, the Company has an interest rate swap agreement for a notional
amount of $100,000,000 as a cash flow hedge for a cogeneration facility
operating lease agreement. This interest rate swap agreement will mature
August 2002.

GEORGIA GULF CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

longer-term bonds. As a result, the Company's plans to issue long-term bonds
were postponed indefinitely and the interest rate lock agreements were
terminated, resulting in a pre-tax loss of $9,500,000 in the third quarter of
1998.

Georgia Gulf does not use derivatives for trading purposes. Interest rate
swap agreements, a form of derivative, are used by the Company to manage
interest costs on certain portions of the Company's long-term debt. These
financial statements do not reflect temporary market gains and losses on
derivative financial instruments. Amounts paid or received on the interest rate
swap agreements are recorded to interest expense as incurred. As of
September 30, 1999, and December 31, 1998, interest rate swap agreements were
the only form of derivative financial instruments outstanding. The fair value
position of these swap agreements as of September 30, 1999 and December 31, 1998
was a receivable of $410,000 and a payable of $6,412,000, respectively.

NOTE 6: EARNINGS PER SHARE

The numerator in basic and diluted earnings per share computations is
reported net income and income from continuing and discontinued operations.

The following table reconciles the denominator for the basic and diluted
earnings per share computations shown on the condensed consolidated statements
of income (in thousands):

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------

Weighted average common shares--basic....... 30,936 31,047 30,919 31,692
Plus incremental shares from assumed
conversions:
Options................................... 99 165 61 242
Employee stock purchase plan rights....... 33 75 24 110
------ ------ ------ ------
Weighted average common shares--diluted..... 31,068 31,287 31,004 32,044
====== ====== ====== ======

NOTE 7: SEGMENT INFORMATION

Earnings of industry segments exclude interest income and expense,
unallocated corporate expenses and general plant services, provision for income
taxes, and income and expense items

GEORGIA GULF CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7: SEGMENT INFORMATION (CONTINUED)

reflected as "other income (expense)" on the Company's consolidated statements
of income. Intersegment sales and transfers are insignificant.

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------

Segment net sales:
Chlorovinyls...................... $155,121 $130,636 $408,391 $390,936
Aromatics......................... 58,156 77,881 164,862 247,777
-------- -------- -------- --------
Net sales........................... $213,277 $208,517 $573,253 $638,713
======== ======== ======== ========
Segment operating income:
Chlorovinyls...................... $ 28,414 $ 18,832 $ 52,796 $ 54,591
Aromatics......................... 3,682 19,842 12,899 59,278
Corporate and general plant
services........................ (3,409) (4,004) (8,770) (11,913)
-------- -------- -------- --------
Total operating income.............. $ 28,687 $ 34,670 $ 56,925 $101,956
======== ======== ======== ========

NOTE 8: ACQUISITION OF NORTH AMERICAN PLASTICS, INC.

On May 11, 1998, the Company acquired all the issued and outstanding common
stock (the "Stock") of North American Plastics, Inc. ("North American
Plastics"), a privately-held manufacturer of flexible polyvinyl chloride ("PVC")
compounds with a production capacity of 190,000,000 pounds. North American
Plastics has two manufacturing locations in Mississippi, with revenues for 1997
of approximately $90,000,000. Its PVC compounds are used in wire and cable for
construction, automobiles and appliances, as well as various other consumer and
industrial products.

The Stock was acquired in exchange for net cash consideration of $99,902,000
plus the assumption of $500,000 in debt. The cash portion of the acquisition was
financed with proceeds from the Company's existing revolving credit facility.
The transaction was accounted for as a purchase and the consideration exchanged
exceeded the fair market value of the net tangible assets of North American
Plastics by approximately $86,725,000. This excess was allocated to goodwill and
is being amortized on a straight-line basis over a period of 35 years. The
results of operations of the acquired business have been included in Georgia
Gulf's condensed consolidated financial statements from the date of acquisition.
Pro forma results of operations have not been presented because the effect of
this acquisition was not significant.

NOTE 9: ACQUISITION OF VINYLS BUSINESS OF CONDEA VISTA

On August 30, 1999, the Company announced that it signed a definitive
agreement to acquire the assets of the vinyls business of CONDEA Vista Company
for approximately $270 million. The purchase includes substantially all of the
assets and the net working capital of the vinyls business as of the closing
date. The Company will finance the acquisition with a combination of new debt
and a refinancing of certain existing credit facilities and expects to complete
the transaction in the fourth quarter of 1999. The acquisition will be accounted
for by the purchase method of accounting for business combinations as of the
closing date.