<Page>
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-K
<Table>
(MARK ONE) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
X OF THE SECURITIES EXCHANGE ACT OF 1934
---
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
</Table>
COMMISSION FILE NUMBER 1-13404
-------------------
THE GENERAL CHEMICAL GROUP INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------
<Table>
DELAWARE 02-0423437
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
LIBERTY LANE 03842
HAMPTON, NEW HAMPSHIRE (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</Table>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 929-2606
-------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF EACH CLASS
-------------------
Common Stock, par value $.01 per share
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of March 1, 2002, was approximately $5,034,427.
The number of outstanding shares of the Registrant's Common Stock and Class
B Common Stock as of March 1, 2002 was 3,174,332 and 700,639, respectively.
DOCUMENTS INCORPORATED BY REFERENCE:
The Registrant's Proxy Statement for the Annual Meeting of Stockholders to
be held on May 8, 2002 is incorporated by reference into Part III.
________________________________________________________________________________
<Page>
PART I
ITEM 1. BUSINESS
GENERAL
The General Chemical Group Inc. (the 'Company' or 'General Chemical Group'
or 'GCG') is a leading producer of soda ash and calcium chloride in North
America. The Company's soda ash is used in the manufacture of glass,
sodium-based chemicals (such as baking soda), detergents, paper, textiles, food
and many other familiar consumer products. The Company's calcium chloride is
used primarily by highway and road maintenance organizations for dust control
and roadbed stabilization during the summer and for de-icing roads and sidewalks
during the winter.
The Company, whose predecessor companies date back to 1899, was organized in
1988 as a Delaware corporation. The Company's businesses were transferred in
1986 by AlliedSignal, Inc. to a predecessor of the Company, at which time new
operating management was installed. On May 15, 1996, the Company completed an
initial public offering of its Common Stock. The Company's common stock is
listed on the Over the Counter (OTC) Bulletin Board under the symbol 'GNMP'.
On April 30, 1999, General Chemical Group completed the separation of its
Manufacturing and Performance Products businesses from its soda ash and calcium
chloride businesses through a spinoff (the 'Spinoff'), which the Company
effected by distributing the stock of GenTek Inc. ('GenTek'), its wholly-owned
subsidiary, on a pro rata basis to its shareholders. As a result of the Spinoff,
GenTek became a separate, publicly-traded company.
The Company produces natural soda ash from trona ore, the raw material
precursor of soda ash, at its Green River, Wyoming facility, where it has access
to the largest and most economically recoverable trona ore deposits in the
world. The Company operates its Green River facility through General Chemical
(Soda Ash) Partners ('GCSAP'), a partnership with subsidiaries of ACI
International Limited and TOSOH Corporation. The Company owns a 51% equity
interest and is the managing partner of this partnership. ACI International
Limited is a subsidiary of Owens-Illinois, Inc., one of the world's largest
consumers of soda ash. TOSOH Corporation is a leading chemical company and a
distributor of soda ash in Japan. The Company produces calcium chloride at its
facilities in Amherstburg, Ontario, Canada and Manistee, Michigan.
Prior to 2000, the Company manufactured calcium chloride solely at its
production facility in Amherstburg, Ontario, Canada. However, to expand its
presence and product offerings in the calcium chloride market, the Company
acquired a calcium chloride production facility in Manistee, Michigan from Ambar
Chemical, Inc. in October 2000, and secured a brine feedstock source for its
facilities in Amherstburg and Manistee through December 31, 2002. The Company
has undertaken a program to develop brine well networks at its Amherstburg and
Manistee facilities to supplement or replace, if necessary, the third party
brine supply contract in the event the Company is unable to extend the contract
on satisfactory terms prior to January 1, 2003. In addition, the Company
recently entered into a joint venture with Tangshan Sanyou (Alkali) Group Ltd.
for the marketing and sale of calcium chloride in Asia, Europe, Africa and the
Middle East. The joint venture, General Chemical Tangshan Sanyou Company Ltd.,
plans to construct a 100,000 ton calcium chloride production facility in China.
The Company idled approximately 500,000 tons per year of synthetic soda ash
production capacity at its Amherstburg, Ontario, Canada facility in April 2001.
The Company continues producing calcium chloride in Amherstburg. The capacity
idled constituted approximately 15% of the Company's total soda ash production
capacity, and all of the Company's synthetic soda ash production capacity. The
Company idled this capacity because it required substantially more resources
-- principally energy and necessary capital improvements -- for the Company to
manufacture synthetic soda ash at Amherstburg than to manufacture natural soda
ash at its production facility in Green River, Wyoming. The Company shifted
production from its relatively high-cost synthetic soda ash facility in
Amherstburg to its lower-cost natural soda ash facility in Green River, thereby
eliminating cash operating losses incurred in operating the Amherstburg facility
and reduced its exposure to fluctuations in energy prices. The Company has the
flexibility to resume its Amherstburg soda ash operations if market conditions
dictate. Until such time, the Company continues to serve customers of its
Amherstburg soda ash facility from its
<Page>
facility in Green River and, where appropriate, through resale arrangements with
other soda ash producers.
THE SODA ASH AND CALCIUM CHLORIDE BUSINESSES
SODA ASH
Soda ash is used in the manufacture of glass, sodium-based chemicals,
detergents, paper and other consumer products. It is also used in water
treatment, pulp and paper and other industrial end-use applications.
Approximately one-half of global soda ash demand is attributable to glass
production. The glass production market is comprised of manufacturers of bottles
and other containers, commercial, residential and automobile windows, mirrors,
fiberglass, television tubes, lighting ware, tableware, glassware and laboratory
ware.
The following table sets forth estimated global end-market soda ash
consumption in 2001, by volume (1):
<Table>
Glass....................................................... 54%
Chemicals................................................... 21%
Detergents.................................................. 11%
Water treatment and other................................... 14%
</Table>
- ---------
(1) Developed from industry sources.
Management estimates the total annual world market for soda ash to be
approximately 39 million tons. Management estimates that the Company accounted
for approximately 6% of worldwide production in 2001. All of the soda ash
produced in the United States is natural soda ash, while overseas manufacturers
produce primarily synthetic soda ash. Production of natural soda ash, in which
the Company specializes, requires significantly less energy and raw materials
than synthetic soda ash production, and as a result is a significantly less
costly process. This cost differential allows the Company and other United
States producers to competitively export significant volumes of natural soda ash
to international markets. Management estimates that United States producers
exported 4 million tons of soda ash in 2001. The United States producers export
soda ash primarily through American Natural Soda Ash Company ('ANSAC'), the
export cooperative of United States producers, which enhances the United States
producers' low cost position by leveraging the cooperative's global sales and
marketing operations and creating distribution economies of scale.
Exports. Almost all of the soda ash produced outside the United States is
synthetic soda ash, which involves significantly more energy, labor and raw
materials than the natural refining process used in the United States and, as a
result, its process is significantly more costly. The production cost
differential between natural and synthetic soda ash is generally sufficient to
offset the costs of transporting U.S. produced soda ash into export markets,
allowing the U.S. producers of natural soda ash to compete in most geographic
regions with local sources of synthetically produced soda ash.
The Company, along with the other five U.S. producers of natural soda ash,
is a member of ANSAC, a soda ash export cooperative organized in 1984 under an
exemption from U.S. antitrust laws provided under the Webb-Pommerene Act.
Through this cooperative, all six U.S. producers export soda ash to all parts of
the world except Canada and the members of the European Union, where U.S.
producers export soda ash directly. The primary export markets served by ANSAC
are Asia and Latin America and, to a lesser extent, the Middle East, Africa and
Eastern Europe. Each individual member's allocation of ANSAC's volume is based
on the member's total nameplate capacity, with any member's expansion phased-in
over a multi-year period for allocation purposes. ANSAC is the exclusive
distributor of the soda ash of its members; however, subject to certain
limitations, members can distribute soda ash directly to their international
affiliates for their own consumption. One of the U.S. producers, IMC Global, has
announced its intention to withdraw from ANSAC effective January 1, 2004.
Certain countries have from time to time limited or have considered limiting or
prohibiting sales of products through export cooperatives such as ANSAC on
grounds that they are anticompetitive, though the Company is not aware of any
activity in this regard that would be material to its business.
2
<Page>
Soda Ash Pricing and Capacity Utilization. The Company's principal product
is soda ash, and the market price of soda ash affects the profitability of the
Company more than any other factor. The market price of soda ash fluctuates and
in recent years has been negatively affected by factors beyond the Company's
control, such as increases in energy and transportation costs, fluctuations in
the global supply of soda ash, decreases in global demand for the consumer
products that require soda ash for their manufacture and the availability and
price of products that can be substituted for soda ash.
Average United States soda ash prices have fallen from $83 per ton in 1996
to $66 per ton in 2000 and 2001, primarily due to reduced demand and increases
in production capacity, including capacity expansions by existing producers from
late 1996 to late 2000 of approximately 2.4 million tons, and the entry of
American Soda LLC ('American Soda') into the market in 2000.
The following chart indicates the average industry price of U.S. soda ash
per ton and global capacity utilized during the period from 1991 to 2001.
<Table>
<Caption>
AVERAGE PRICE U.S. CAPACITY
YEAR PER TON(1) UTILIZATION(2)
- ---- ---------- --------------
1991................................................ 84 91
1992................................................ 81 90
1993................................................ 74 88
1994................................................ 70 91
1995................................................ 74 90
1996................................................ 83 89
1997................................................ 77 91
1998................................................ 75 87
1999................................................ 69 87
2000................................................ 66 88
2001................................................ 66(3) 90(3)
</Table>
- ---------
(1) Based on data from the U.S. Geological Survey (not adjusted for inflation),
FOB production facility.
(2) Based on 95 percent of nameplate capacity as reported by industry sources.
(3) Company estimate.
Soda Ash Capacity Expansions. From 1982 until 1999, no new natural soda ash
plants were built in North America. In the fourth quarter of 2000, the American
Soda plant, which solution mines nahcolite reserves in Rifle, Colorado, began
operation. American Soda's management has estimated that the annual capacity of
their facility will be 1,000,000 tons, although in 2001 the facility produced
approximately 300,000 tons. Since 1982, other than the American Soda facility,
capacity expansion in the United States has taken place through expansion of
existing facilities and improved operating efficiencies with such new natural
soda ash capacity generally being offset by the closure of older, higher-cost
synthetic soda ash plants outside the United States. Since 1982, announced
synthetic soda ash plant closures have included IMC Global's 300,000 ton
facility in Germany, Asahi Glass' 400,000 ton facility in Japan, SE Soda's
200,000 ton facility in Taiwan, and the idling of the Company's 500,000 ton
facility in Amherstburg, Ontario, Canada.
In late 1998 OCI Wyoming L.P. ('OCI') completed an 800,000 ton expansion of
its Green River facility. However, after completion of the expansion, OCI
mothballed 900,000 tons of previously constructed capacity at the facility due
to then current soda ash market conditions. During the fourth quarter of 1999,
FMC Corporation ('FMC') announced it was reducing capacity at its Granger, Green
River facility by 650,000 tons, despite the fact that it had completed a 700,000
ton expansion in 1999. In late 2000, Solvay Minerals completed a 400,000 ton
expansion of its Green River facility. During the second quarter of 2001, FMC
announced it was idling the remaining capacity of 650,000 tons at its Granger,
Green River facility.
CALCIUM CHLORIDE
Management estimates that annual production of calcium chloride in North
America is approximately 1,200,000 tons. The primary uses for the Company's
calcium chloride -- road maintenance
3
<Page>
and ice removal -- are seasonal and weather dependent. During the summer, the
Company's calcium chloride is used in liquid form on unpaved roads for dust
control and roadbed stabilization. During the winter, the Company's calcium
chloride is used in flake, pellet and liquid form for ice removal. The Company
primarily markets its calcium chloride to highway and road maintenance
organizations, as well as other industrial and governmental users. The Company
also markets a range of calcium chloride-based products for sidewalk and
driveway de-icing applications through retail home improvement centers.
COMPETITION
SODA ASH
The worldwide soda ash industry is comprised of a number of domestic and
international producers, some of which produce large volumes of soda ash in
multiple geographic regions. Solvay S.A., with natural soda ash operations in
the U.S. through its Solvay Minerals subsidiary, and multiple synthetic soda ash
production facilities in Western and Eastern Europe, is the world's single
largest producer of soda ash, with total estimated capacity of approximately 9.0
million tons. FMC's 1999 acquisition of Tg Soda Ash, Inc. increased FMC's
combined total capacity to more than 4.8 million tons, of which 1.3 million tons
are currently mothballed.
Given the global nature of the soda ash industry and major soda ash
consumers, the Company competes with both international and North American soda
ash producers. The international soda ash producers include Brunner Mond plc,
Penrice Soda Ash Products Pty Ltd., Solvay S.A. and various Eastern European and
Asian producers.
Soda Ash capacity outside of North America in 2001 was as follows:
<Table>
<Caption>
CAPACITY IN
REGION THOUSANDS OF TONS(1)
------ --------------------
Eastern Europe................................... 7,300
Western Europe................................... 7,500
China............................................ 8,600
Other Asian Countries............................ 5,300
Rest of World.................................... 1,200
------
Total capacity outside of North America...... 29,900
------
------
</Table>
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(1) Estimated annual nameplate capacity; derived from industry sources.
North American soda ash capacity in 2001 was as follows:
<Table>
<Caption>
CAPACITY
OWNER/MANAGING PARTNER LOCATION IN THOUSANDS OF TONS(1)
- ---------------------- -------- -----------------------
General Chemical Group............................... Wyoming 2,800(2)
FMC Corporation...................................... Wyoming 3,550(3)
Solvay Minerals...................................... Wyoming 3,100
OCI Wyoming L.P. .................................... Wyoming 2,350(4)
IMC Global (5)....................................... California 1,500
American Soda LLC (6)................................ Colorado 1,000
------
Total North American Capacity.................... 14,300
------
------
</Table>
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(1) Estimated annual nameplate capacity; derived from industry sources.
(2) Excludes 500,000 tons of mothballed capacity in Amherstburg, Ontario,
Canada.
(3) Excludes 1,300,000 tons of mothballed capacity.
(4) Excludes 900,000 tons of mothballed capacity.
(5) Currently held by IMC Global through its wholly-owned subsidiary, North
American Chemical Company.
(6) In its first year of operation (2001), American Soda produced approximately
300,000 tons.
4
<Page>
The soda ash industry also faces competitive pressures from the increased
use of glass substitutes and recycled glass in the container industry.
Competition from increased use of glass substitutes, such as plastic, and
recycled glass in the container industry has had a negative effect on the demand
for soda ash. Demand for soda ash in the container industry has declined from
approximately 2,300,000 tons in 1987 to approximately 1,820,000 tons in 2001.
Management believes that the use of plastic containers will continue to
negatively impact the growth in domestic demand for soda ash.
CALCIUM CHLORIDE
The Company is the largest producer of calcium chloride in Canada. The
Company's major competitors are The Dow Chemical Company ('Dow Chemical'), TETRA
Technologies, Inc. ('TETRA'), and various local producers in Canada and the
United States. In the United States, the Company is the third largest
distributor of calcium chloride behind Dow Chemical and TETRA, and in Canada the
Company is the largest distributor of calcium chloride. With respect to
capacity, the Company's Amherstburg and Manistee facilities have a combined
700,000 tons of capacity and it is estimated that Dow Chemical also has 700,000
tons of capacity. The next largest U.S. producer is TETRA, which operates four
plants with estimated total capacity of 350,000 tons.
In certain markets, calcium chloride competes with a number of substitute
products. For example, in the highway ice control market, calcium chloride
competes with alternative de-icers such as rock salt and magnesium chloride. As
such, the Company also competes with the producers of these substitute products.
RESERVES AND CONTROL OF RESOURCES
The Company mines trona ore under leases with the United States government,
the State of Wyoming and the Anadarko Petroleum Corporation. The Company's trona
reserves and mines are located in the Green River, Wyoming area. In the Green
River basin, the Green River formation was deposited in a lake that began in the
early Eocene geologic period (approximately 35 million years ago) as a large
body of fresh water, shrank in size and became saline, expanded and then became
fresh water again. In general, the sediments deposited during the saline phase
of this lake, which included the trona deposits, are called the Wilkins Peak
Member, and the overlying and underlying fresh water deposits are called the
Laney Shale Member and Tipton Shale Member, respectively.
The Company's estimated proven reserves within bed No. 17, which it is
currently mining, consist of approximately 165 million tons of extractable ore.
At the 2001 operating rate of 2.3 million tons of soda ash per year (4.4 million
tons of trona ore), there is approximately a 38-year supply within bed No. 17.
For the three years ended December 31, 2001, annual production of trona ore
averaged approximately 4.3 million tons. In addition, the Company's estimated
recoverable reserves contain three other major mineable trona beds containing
approximately 437 million tons of extractable ore. These beds, which may require
significant capital to access, will provide more than 102 years of added
reserves based on current operating rates.
The Company's Amherstburg, Ontario, Canada and Manistee, Michigan calcium
chloride operations obtain their brine requirements under a supply contract with
a third party that expires on December 31, 2002. The Company has undertaken a
program to develop brine well networks at its Amherstburg and Manistee
facilities to supplement or replace, if necessary, the third party brine supply
contract in the event the Company is unable to extend the contract on
satisfactory terms prior to January 1, 2003. Management believes that, either
through an extension of its existing brine supply contract, entry into brine
supply agreements with other parties, or through use of its own brine wells
developed in 2002, it will have sufficient brine available to operate its
calcium chloride business. However, the Company cannot give any assurance that
if its access to its brine source is interrupted it will be able to secure
alternative sources in a timely manner and on satisfactory terms, if at all. The
Company's failure to do so would hinder its ability to manufacture calcium
chloride at its Amherstburg and Manistee facilities and would have a material
adverse effect on its results of operations.
5
<Page>
GENERAL CHEMICAL (SODA ASH) PARTNERS
Since 1986, the Green River plant has been owned by GCSAP, a partnership of
which the Company is the managing partner. The Company owns a 51 percent equity
interest and ACI International Limited and TOSOH Corporation, through
wholly-owned subsidiaries, respectively, own 25 percent and 24 percent of the
partnership's equity interests. ACI International Limited, a major world
producer of container glass and a customer of GCSAP, is a wholly-owned
subsidiary of Owens-Illinois Inc., a worldwide producer of packaging materials.
Management believes that Owens-Illinois and ACI International as a combined
entity represents one of the largest single purchasers of soda ash with annual
domestic and international requirements of approximately 2 million tons. TOSOH
Corporation is a leading chemical company and distributor of soda ash in the
Japanese market whose operations previously included a 300,000 ton synthetic
soda ash facility in Nanyo, Japan. In 1997, TOSOH Corporation closed its
synthetic soda ash facility and began purchasing soda ash through ANSAC.
The Company has been the managing partner of GCSAP since 1986, when the
partnership was formed. As managing partner, the Company has had and will
continue to have overall responsibility for management of the partnership,
including with respect to all operational, sales, marketing and financial
matters. However, certain significant actions of the partnership must be
approved by a majority, or in certain instances, all of the partners. The
partnership shall terminate on December 31, 2011, unless extended for an
additional five years or unless the partners decide to terminate it at any time
prior to such date.
The partnership agreement requires the partnership to make quarterly cash
distributions to each of the three partners. The partnership agreement also
prohibits the partners from transferring their equity interests or withdrawing
from the partnership without the consent of the other partners. The obligations
of each partner are guaranteed by its parent. Pursuant to a guaranty agreement,
each parent company has agreed to certain restrictions on its ability to sell
the stock of its partner subsidiary. If the parent company of any partner
proposes to transfer ownership of its partner subsidiary, the nontransferring
parent companies may either: (1) acquire the transferred partner, or its
partnership interest, pursuant to a right of first refusal; or (2) require the
transferring parent company, or the proposed purchaser, to acquire the
partnership interest held by their own partner subsidiaries.
If one or both of the Company's partners in GCSAP, Owens-Illinois, or TOSOH
Corporation, were to seek to transfer its interest in GCSAP and the Company did
not or could not exercise its right of first refusal, one or more new partners
could be admitted to the partnership. Any such new partner may have business or
financial objectives for GCSAP that are different from those of the Company.
PARTNERSHIP WITH CHURCH & DWIGHT
GCSAP and Church & Dwight are partners in a partnership that owns trona
reserves. Church & Dwight is the leading United States and worldwide producer of
sodium bicarbonate, commonly known as baking soda, sold under the Arm &
Hammer'r' brand. The trona is mined and processed by GCSAP under a tolling
agreement and all of the soda ash produced is purchased by Church & Dwight under
a sales contract.
SEASONALITY AND BACKLOGS
Sales of soda ash are generally not seasonal, except for sales to the glass
container industry, which increase significantly in the summer due to stronger
beverage demand. Sales of calcium chloride are concentrated in late spring and
summer for dust control and late fall and winter for de-icing. As a result, the
Company's sales are generally lowest in the first quarter and highest in the
second quarter.
Due to the nature of our business, there are no significant backlogs.
ENVIRONMENTAL MATTERS
The Company's mining and production operations, which have been conducted at
its Green River and Amherstburg sites for many years, are subject to numerous
laws and regulations relating to the
6
<Page>
protection of human health and the environment in the U.S. and Canada. The
Company has an established program to ensure that its facilities comply with
environmental laws and regulations. However, as a result of its operations, the
Company is involved from time to time in administrative and judicial proceedings
and inquiries relating to environmental matters. In addition, modifications or
changes in enforcement of existing laws and regulations or the adoption of new
laws and regulations in the future, particularly with respect to environmental
and safety standards, or the discovery of additional or unknown environmental
contamination, could require expenditures which might be material to the
Company's results of operations or financial condition. For further discussion
of the Company's efforts to comply with the environmental laws and regulations
to which its operations are subject, as well as a discussion of potential
liabilities known to the Company under such laws and regulations, see 'Item
7 -- Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Environmental Matters'.
The Company, as the former parent of GenTek, may under certain circumstances
be found liable for obligations of GenTek related to the use or transport of
hazardous substances or environmental contamination at facilities of GenTek for
periods prior to the Spinoff. Although GenTek has agreed to indemnify and hold
the Company harmless with respect to all such liabilities and to bear all of the
Company's expenses for defending any claims related to these matters, the
Company's results of operations or financial condition could be materially
adversely affected in the event GenTek is unable or unwilling to perform its
indemnification obligations.
On March 13, 2000, the Company's Canadian subsidiary received a letter from
Environment Canada ('EC'). The letter informed the Company that it faces an
alleged violation of the Canadian Fisheries Act, R.S.C., as amended, with
respect to effluent discharges at its Amherstburg, Ontario facility. According
to EC, the Company's chloride level of its effluent discharged to the Detroit
River exceeded permitted levels. The idling of the Amherstburg synthetic soda
ash production facility in April 2001 has improved the quality of the effluent
such that it complies with the Canadian Fisheries Act requirements. Because of
the foregoing, the Company does not believe that any additional expenses and/or
capital expenditures will be incurred in connection with this matter which would
be material to the Company's results of operations and/or financial condition.
EMPLOYEES/LABOR RELATIONS
As of December 31, 2001, the Company had 806 employees, 260 of whom were
full-time salaried employees, 500 were full-time hourly employees and 46 were
hourly employees working in nonunion facilities.
Three union contracts, covering 500 employees at the Green River, Wyoming
and Amherstburg, Ontario facilities, have durations of three years and will be
up for renewal during 2002. While the Company believes and expects that these
negotiations will be resolved amicably and without any work stoppage, the
Company cannot give any assurance that its labor contracts will be renewed in a
timely manner and on satisfactory terms, nor that a work stoppage might not
occur. Since 1986, however, the Company has experienced one labor disruption as
a result of a failure of agreement to be reached on a new labor agreement.
During this disruption, management operated the plant and supplied customers
without interruption until the labor disruption was settled and a new contract
agreed upon. The Company is preparing contingency plans for operating these
facilities, as it did during the prior labor disruption, in the event of a
similar disruption in 2002.
Set forth below is information with respect to each of the Company's
executive officers and/or key employees.
John M. Kehoe, Jr., 68, is the President and Chief Executive Officer and a
Director of the Company. Since June 1999, Mr. Kehoe has served as the Chairman
of Wheelabrator Technologies Inc., a provider of waste management services that
is part of Waste Management. Mr. Kehoe was the President and Chief Executive
Officer of Wheelabrator Technologies, Inc. from January 1993 to June 1999.
DeLyle W. Bloomquist, 43, is Vice President and Chief Operating Officer of
the Company. Mr. Bloomquist was from 1996 until the Spinoff the Vice President
and General Manager, Industrial Chemicals of General Chemical Corporation.
7
<Page>
David S. Graziosi, 36, is Vice President and Chief Financial Officer of the
Company. Mr. Graziosi was the Director of Finance for GenTek, Inc. from August
1999 to February 2000. Mr. Graziosi held several financial management positions
in Sun Chemical Group B.V. from August 1996 to August 1999.
John D. Sanford, 48, is Executive Vice President of the Company. Since April
2000, Mr. Sanford has served as Vice President and Chief Financial Officer of
ProcureNet, Inc., a provider of procurement and supply chain management services
to United States federal government agencies. Between November 1997 and May
1999, he served as Executive Vice President and Chief Financial Officer of CDI
Corporation, a leading provider of temporary and permanent staffing services.
Prior to November 1997, Mr. Sanford was Senior Vice President and Chief
Financial Officer of Waste Management Inc.
ITEM 2. PROPERTIES
The Company's headquarters is located in Hampton, New Hampshire. The
locations and uses of major properties of the Company are as follows:
<Table>
<Caption>
LOCATION USE
-------- ---
United States Green River, Wyoming Trona Mine and
Manufacturing Facility
Manistee, Michigan Manufacturing Facility
* Hampton, New Hampshire Headquarters
* Parsippany, New Jersey Offices
Canada Amherstburg, Ontario Manufacturing Facility
Brooks, Ontario Calcium Chloride Brine
Fields
Drumheller, Ontario Calcium Chloride Brine
Fields
* Mississauga, Ontario Offices
Philippines * Manila, Philippines Warehouse and Offices
</Table>
- ---------
* Leased
ITEM 3. LEGAL PROCEEDINGS
The Company from time to time becomes involved in claims, litigation,
administrative proceedings and investigations relative to various matters.
Although the amount of any liability that could arise with respect to these
actions cannot be accurately predicted, the opinion of management based upon
currently-available information is that any such liability not covered by
insurance will have no material adverse effect on the Company's results of
operations or financial condition. See also 'Item 7 -- Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Environmental
Matters'.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No items were submitted to a vote of security holders of the Company,
through the solicitation of proxies or otherwise, during the fourth quarter of
fiscal 2001.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's common stock is traded on the Over the Counter (OTC) Bulletin
Board under the symbol 'GNMP'. The Company's common stock was traded on the New
York Stock Exchange ('NYSE') until July 18, 2001, at which time the NYSE
suspended trading of the company's common stock. Effective with the open of the
market on July 19, 2001, the Company's common stock began trading over the
counter. In addition, the Company effected a one-for-ten reverse split of its
common
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stock, effective as of the close of business on July 18, 2001. The following
table shows the high and low recorded trading prices of the Company's common
stock, as reported on the NYSE composite tape and over the counter market for
each of the quarterly periods listed (for pre-July 19, 2001 periods, adjusted to
give effect to the one-for-ten reverse split):
<Table>
<Caption>
YEAR ENDED DECEMBER 31, 2000 HIGH LOW
- ---------------------------- ---- ---
First Quarter....................................... $25.00 $20.00
Second Quarter...................................... 20.00 6.30
Third Quarter....................................... 15.00 4.70
Fourth Quarter...................................... 10.00 5.60
YEAR ENDED DECEMBER 31, 2001
First Quarter....................................... $11.25 $ 7.50
Second Quarter...................................... 8.80 4.00
Third Quarter....................................... 3.75 2.00
Fourth Quarter...................................... 4.50 2.40
</Table>
At March 1, 2002, there were 152 stockholders of record of the Company's common
stock and 4 stockholders of record of the Company's Class B common stock.
DIVIDENDS
Since the Spinoff, the Company has not paid a cash dividend and does not
expect that cash dividends will be paid to holders of its Common Stock in the
foreseeable future. In addition, certain restrictions in the Company's debt
instruments limit the ability of the Company to pay dividends.
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data of the Company have been
derived from and should be read in conjunction with the Company's Consolidated
Financial Statements.
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net revenues..................... $330,373 $303,624 $312,617 $296,522 $286,056
Operating profit (loss).......... 68,281 41,049(1) 30,607(2) (46,352)(3) 11,442(4)
Minority interest................ 24,253 16,666 12,787 11,180 6,979
Income (loss) before interest
expense and income taxes....... 44,587 24,342(1) 19,159(2) (48,905)(3) 4,361(4)
Net income (loss)................ 22,264 9,424(1) 4,985(2) (48,529)(3) (11,527)(4)
PER COMMON SHARE DATA:
Net income (loss) basic.......... $ 10.40 $ 4.48(1) $ 2.38(2) $ (23.05)(3) $ (3.70)(4)
Net income (loss) diluted........ 9.90 4.31(1) 2.32(2) (23.05)(3) (3.70)(4)
OTHER DATA:
Capital expenditures............. $ 30,468 $ 18,498 $ 24,061 $ 20,836 $ 8,436
Depreciation and amortization.... 16,798 16,999 17,801 19,148 17,084
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents........ $ 1,352 $ 1,127 $ 26,630 $ 20,815 $ 16,045
Total assets..................... 262,175 248,714 293,208 251,000 220,191
Long-term debt................... -- -- 150,919 149,314 146,487
Total equity (deficit)........... 85,505 75,292 (46,893) (96,557) (95,452)
</Table>
- ---------
(1) Includes incremental accruals of $2.3 million ($1.4 million after tax or
$.64 per diluted share) principally related to cost of sales ($.9 million)
for the reclamation of brine wells and selling, general and administrative
expense ($1.4 million) primarily due to product delivery litigation.
(2) Includes a one-time charge of $1.9 million ($1.2 million after tax or $.56
per diluted share) related to the Spinoff.
(3) Includes a one-time gain on the sale of assets of $7.7 million ($6.3 million
after tax or $2.99 per diluted share) and a restructuring charge of $59.8
million ($46.5 million after tax or $22.09 per diluted share) related to the
idling of the synthetic soda ash production capacity in Amherstburg,
Ontario.
(4) Includes a restructuring charge of $1.7 million ($1.7 million after tax or
$.55 per diluted share) related to revised actuarial estimates of employee
termination benefits from the idling of the Amherstburg facility.
9
<Page>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company is a leading global producer of soda ash and North American
producer of calcium chloride. The Company produces natural soda ash at its
facility in Green River, Wyoming, and calcium chloride at its facilities in
Amherstburg, Ontario and Manistee, Michigan. The Company's soda ash is used in
the manufacture of glass, sodium-based chemicals (such as baking soda),
detergents, paper, textiles, food and many other familiar consumer products. The
Company's calcium chloride is used primarily by highway and road maintenance
organizations for dust control and roadbed stabilization during the summer and
for de-icing roads and sidewalks during the winter.
The Company's Green River facility, including the facilities and leases for
mining trona ore, is owned and operated through General Chemical (Soda Ash)
Partners, a partnership in which GCG owns a 51 percent partnership interest and
of which GCG is the managing partner. See 'Item 1 -- Business -- General
Chemical (Soda Ash) Partners'.
The Company's principal product is soda ash, and the profitability of its
operations is affected by the market price of soda ash more than any other
factor. For a discussion of factors affecting the prices of and demand for soda
ash, see 'Item 1 -- Business.' Average United States soda ash prices have fallen
from $83 per ton in 1996 to $66 per ton in 2000 and 2001, due to reduced demand
and increases in production capacity. Average U.S. soda ash prices were $69 in
1999, and $66 in 2000 and 2001. Price decreases, along with unusually
high-energy prices and concomitantly high transportation costs, have negatively
impacted the Company's profitability in recent years.
The Company idled approximately 500,000 tons per year of synthetic soda ash
production capacity at its Amherstburg, Ontario, Canada facility in April 2001.
The capacity idled constituted approximately 15% of the Company's total soda ash
production capacity, and all of its synthetic soda ash production capacity. The
Company continues producing calcium chloride at Amherstburg. The Company
recorded a pre-tax charge of approximately $59.8 million in the fourth quarter
of 2000 in connection with the idling of its Amherstburg synthetic soda ash
capacity. This charge included a $43.5 million noncash write-down of the value
of the idled plant assets, as well as severance and other cash charges of
approximately $16.3 million. In the second quarter of 2001, the Company recorded
an additional restructuring charge of $1.7 million for revised actuarial
estimates of employee termination benefits.
Because the Company did not operate as a separate, stand-alone entity until
April 30, 1999 (the date of the Spinoff of GenTek), the Company might have
recorded different results had it operated independently of the Manufacturing
and Performance Products businesses operated by GenTek. Therefore, the financial
information for periods prior to the Spinoff date are not necessarily indicative
of the results of operations or financial position that would have resulted if
the Company had been a separate, stand-alone entity during all of the periods
shown, or of the Company's future performance as a separate, stand-alone entity.
The Financial Statements of the Company for periods prior to April 30, 1999
include an allocation of certain assets, liabilities and expenses from GenTek.
In the opinion of management, expenses have been allocated to the Company's
businesses on a reasonable and consistent basis using management's estimate of
services provided to the Company. However, such allocations are not necessarily
indicative of the level of expenses which might have been incurred had the
Company been operated as a separate, stand-alone entity during the periods
presented or incurred after the Spinoff. For further information on the basis of
presentation of the historical financial data of the Company, see 'Item
8 -- Financial Statements and Supplementary Data -- Note 1 -- Basis of
Presentation and Note 2 -- Summary of Significant Accounting Policies'.
This discussion should be read in conjunction with the Company's
Consolidated Financial Statements and the respective notes thereto included in
Item 8.
10
<Page>
RESULTS OF OPERATIONS
The following table sets forth statement of operations data for each of the
three years ended December 31, 1999, 2000 and 2001 and the corresponding
percentage of the net revenues for the relevant periods presented.
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1999 2000 2001
-------------- -------------- --------------
(DOLLARS IN MILLIONS)
Net revenues................................. $312.6 100% $296.5 100% $286.1 100%
Gross profit................................. 49.7 16 30.4 10 30.1 11
Selling, general and administrative
expense.................................... 19.0(1) 6 17.0 6 16.9 6
Restructuring charge......................... -- -- 59.8 20 1.7 1
Operating profit (loss)...................... 30.6(1) 10 (46.4)(2) 16 11.4(3) 4
Interest expense............................. 13.7 4 15.9 5 15.6 6
Minority interest............................ 12.8 4 11.2 4 7.0 2
Net income (loss)............................ 5.0(1) 2 (48.5)(2) 16 (11.5)(3) 4
</Table>
- ---------
(1) Includes a one-time charge of $1.9 million ($1.2 million after tax)
principally related to the Spinoff.
(2) Includes a one-time gain on the sale of assets of $7.7 million ($6.3 million
after tax), and restructuring charge of $59.8 million ($46.5 million after
tax).
(3) Includes a restructuring charge of $1.7 million ($1.7 million after tax).
2001 AS COMPARED WITH 2000
Net revenues for 2001 were $286.1 million, which was $10.4 million, or 3.5
percent below the prior year level. Net revenues were negatively affected by
lower soda ash volumes due to the April 2001 idling of the Company's synthetic
soda ash production capacity in Amherstburg, Ontario, Canada, as well as lower
calcium chloride volumes due to reduced export demand partially offset by higher
calcium chloride prices.
Gross profit for 2001 was $30.1 million compared with $30.4 million in 2000.
Gross profit as a percentage of net revenues for 2001 increased to 10.5 percent
from 10.3 percent for 2000. This increase in gross profit as a percentage of net
revenues was primarily due to higher calcium chloride prices and lower operating
costs resulting from the April 2001 idling of the Company's Amherstburg soda ash
facility partially offset by higher energy costs at General Chemical (Soda Ash)
Partners as well as costs incurred to start up operations at our Manistee,
Michigan calcium chloride facility.
Selling, general and administrative expense as a percentage of net revenues
for 2001 was 5.9 percent as compared to 5.7 percent in 2000.
Restructuring charge of $1.7 million in 2001 was due to revised actuarial
estimates of employee termination benefits for the April 2001 idling of the
Company's synthetic soda ash production capacity in Amherstburg, Ontario,
Canada.
Interest expense for 2001 was $15.6 million, which was $0.3 million lower
than the comparable prior period level primarily due to lower borrowing rates
partially offset by costs to amend the Company's credit facility.
Minority interest for 2001 was $7.0 million, versus $11.2 million for 2000.
The decrease reflects lower earnings at General Chemical (Soda Ash) Partners
primarily due to higher energy costs.
Net loss was $11.5 million for 2001, versus net loss of $48.5 million for
2000, for the foregoing reasons.
2000 AS COMPARED WITH 1999
Net revenues for 2000 were $296.5 million, which was $16.1 million, or 5.2
percent below the prior year level. Net revenues were negatively affected by
lower soda ash prices as well as lower calcium chloride volumes due to warm
winter weather and wet spring and summer weather.
11
<Page>
Gross profit for 2000 was $30.4 million compared with $49.7 million in 1999.
Gross profit as a percentage of net revenues for 2000 decreased to 10.3 percent
from 15.9 percent for 1999. These decreases were primarily due to the
above-mentioned decrease in net revenues as well as higher energy costs.
Selling, general and administrative expense as a percentage of net revenues
for 2000 was 5.7 percent as compared to 6.1 percent in 1999.
Restructuring charge of $59.8 million in 2000 was due to the idling of
synthetic soda ash production capacity in Amherstburg, Ontario, Canada.
Interest expense for 2000 was $15.9 million, which was $2.2 million higher
than the comparable prior period levels as a result of the issuance of the 10
5/8% Senior Subordinated Notes in April 1999 and borrowings under the credit
facility.
Minority interest for 2000 was $11.2 million, versus $12.8 million for 1999.
The decrease reflects lower earnings at General Chemical (Soda Ash) Partners due
to lower soda ash pricing as well as higher energy costs.
Net loss was $48.5 million for 2000, versus net income of $5.0 million for
1999, for the foregoing reasons, net of available income tax benefits.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $16.0 million at December 31, 2001 compared
with $20.8 million at December 31, 2000. During 2001 the Company used cash flow
from operating activities of $6.2 million, used cash of $8.4 million for capital
expenditures and generated cash flow from financing activities of $9.9 million.
The Company had working capital of $51.4 million at December 31, 2001 as
compared with $48.9 million at December 31, 2000. The increase in working
capital principally reflects lower accrued liabilities, lower accounts payable
and higher inventories partially offset by lower receivables, deferred income
taxes, other current assets and cash balances.
The Company's liquidity needs arise primarily from working capital
requirements, capital expenditures and interest and principal payment
obligations. The Company satisfies its liquidity needs from cash flow from
operations and short-term borrowings under its credit facility. Accordingly, the
Company's ability to satisfy its capital requirements will be dependent upon
future financial performance, which in turn will be subject to general economic
conditions and to financial, business and other factors, including factors
beyond the Company's control. The Company believes that cash flow generated from
future operations will enable the Company to maintain planned operating, capital
expenditure, working capital, and debt service requirements for the foreseeable
future. Nevertheless, the Company has borrowed, and expects to borrow, from time
to time under its credit facility for working capital needs resulting from the
seasonality of its calcium chloride business and expects to borrow under its
credit facility to fund its contributions to its joint venture in China (which
involves, among other things, the construction of a 100,000 ton calcium chloride
production facility in China). The Company's ability to borrow under its credit
facility is subject to certain conditions including the Company's compliance
with its financial covenants. The Company expects to continue to meet these
financial covenants and other conditions to borrowing during 2002, although no
assurances can be given for 2003 or beyond.
On March 7, 2001, the Company and its bank lenders finalized several
amendments to the financial covenants and other terms of the Company's credit
facility. These amendments provide for more flexible financial covenants for
2001 and 2002 in exchange for more restrictive covenants regarding restricted
payments, investments, incurrence of indebtedness, capital expenditures, sales
of assets and related matters during these two years. Management expects the
Company to be compliant with these revised covenants in 2002.
On April 30, 1999, the Company completed the offering of $100 million 10
5/8% Senior Subordinated Notes, due 2009. Approximately $80 million of the net
proceeds were used to fund a distribution to GenTek prior to the Spinoff and the
balance for general corporate purposes. In addition,
12
<Page>
concurrent with the Spinoff, the Company entered into an $85 million credit
facility, due 2004, of which up to $60 million is available for borrowing by the
Company's Canadian subsidiary in U.S. Dollars or the Canadian dollar equivalent.
As part of the March 2001 amendment to the Company's credit facility, the
maximum amount that the Company may borrow under its credit facility during 2002
has been reduced to $70 million. At December 31, 2001, the Company's total
borrowings under the credit facility were $46.5 million.
The Company is significantly leveraged. At December 31, 2001, outstanding
indebtedness consisted of $100 million of notes and $46.5 million outstanding
under the credit facility. The Company's leverage and debt service requirements
(1) increase its vulnerability to economic downturns, (2) potentially limit the
Company's ability to respond to competitive pressures, and (3) may limit the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, strategic investments or general
corporate purposes. The Company's indenture and credit facility impose operating
and financial restrictions on the Company. These covenants affect, and in
certain cases, limit the Company's ability to incur additional indebtedness,
make capital expenditures, make investments and acquisitions and sell assets,
pay dividends and make other distributions to shareholders, and consolidate,
merge or sell all or substantially all assets.
On May 14, 2001, the Company issued 13,081,048 shares of Common Stock and
3,047,985 shares of Class B Common Stock in connection with the Company's rights
offering (corresponding to approximately 1,308,105 and 304,799 shares after the
reverse split on July 18, 2001). Pursuant to the rights offering, the holders of
record of the Company's Common Stock and Class B Common Stock as of April 16,
2001 received, at no cost, 0.77 rights to purchase one share of Common Stock or
Class B Common Stock, as appropriate, of the Company for each share of such
stock they held as of the record date. Each whole right entitled its holder to
purchase one share of Common Stock or Class B Common Stock, as appropriate, for
a subscription price of $0.62 per share. The net proceeds to the Company from
this issuance of Common Stock and Class B Common Stock of approximately $9.7
million was used to pay costs related to the idling of the Company's synthetic
soda ash production capacity in Amherstburg, Ontario, Canada and for general
corporate purposes.
The Company uses supplier contracts related to future natural gas
requirements. The objective is to limit the fluctuations in prices paid and the
potential volatility in earnings or cash flows from future price movements.
The Company is required to restore certain land to its pre-existing state
upon ceasing of operations or federal enforcement. In addition, these
liabilities have been collateralized through surety bonds with third party
insurers, although the Company will be required to reimburse the insurers upon
their payment of amounts due under the bonds for the restoration of land. The
Company has recorded liabilities for this restoration in the accompanying
financial statements.
The Company is party to a management agreement with Latona Associates Inc.
(which is controlled by a stockholder of the Company) under which the Company
receives corporate supervisory and administrative services and strategic
guidance for a quarterly fee. This management fee was $1.5 million, $1.6
million, and $1.6 million in 1999, 2000 and 2001, respectively.
The Company and GenTek entered into various transition support agreements
that provide mechanisms for an orderly transition after the Spinoff. For the
years ended December 31, 1999, 2000 and 2001, the Company paid GenTek $2.5
million, $1.7 million, and $1.4 million related to these transition support
agreements.
The Company supplies soda ash and calcium chloride to GenTek. For the years
ended December 31, 1999, 2000 and 2001, sales to GenTek amounted to $14.7
million, $4.4 million, and $4.0 million, respectively.
13
<Page>
Future minimum rental payments for operating leases (primarily for
transportation equipment, mining equipment, offices and warehouses) having
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 2001 are as follows:
<Table>
<Caption>
YEARS ENDING DECEMBER 31,
- -------------------------
2002.................................................. $12.9 million
2003.................................................. 10.1 million
2004.................................................. 9.2 million
2005.................................................. 5.6 million
2006.................................................. 7.5 million
Thereafter............................................ 15.2 million
</Table>
Future cash contributions to fund the statutory deficiency in the Company's
pension plans are as follows:
<Table>
<Caption>
YEARS ENDING DECEMBER 31,
- -------------------------
2002................................................... $5.1 million
2003................................................... 5.0 million
2004................................................... 6.3 million
2005................................................... 8.5 million
2006................................................... 7.5 million
Thereafter............................................. 6.5 million
</Table>
ENVIRONMENTAL MATTERS
The Company's mining and production operations, which have been conducted at
its Green River and Amherstburg sites for many years, are subject to numerous
laws and regulations relating to the protection of human health and the
environment in the U.S. and Canada. The Company has an established program to
ensure that its facilities comply with environmental laws and regulations.
However, as a result of its operations, the Company is involved from time to
time in administrative and judicial proceedings and inquiries relating to
environmental matters. In addition, modifications or changes in enforcement of
existing laws and regulations or the adoption of new laws and regulations in the
future, particularly with respect to environmental and safety standards, or the
discovery of additional or unknown environmental contamination could require
expenditures which might be material to the Company's results of operations or
financial condition.
On March 13, 2000, the Company's Canadian subsidiary received a letter from
Environment Canada ('EC'). The letter informed the Company that it faces an
alleged violation of the Canadian Fisheries Act, R.S.C., as amended, with
respect to effluent discharges at its Amherstburg, Ontario facility. According
to EC, the Company's chloride level of its effluent discharged to the Detroit
River exceeded permitted levels. The idling of the Amherstburg synthetic soda
ash production in April 2001 has improved the quality of the effluent such that
it complies with the Canadian Fisheries Act requirements. Because of the
foregoing, the Company does not believe that any additional expenses and/or
capital expenditures will be incurred in connection with this matter which would
be material to the Company's results of operations and/or financial condition.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of the Company's financial condition and results
of operations are based on the Company's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates its estimates and judgments, including those related to
product returns, bad debts, inventory obsolescence, income taxes, restructuring
costs, retirement and insurance costs, and contingencies and litigation. Those
estimates and assumptions are based on the Company's historical experience,
observance of trends in the industry, and various other factors that are
believed to
14
<Page>
be reasonable under the circumstances; the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from those
estimates under different assumptions or conditions.
The Company maintains an allowance for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
The Company provides for the allowance for doubtful accounts when it becomes
likely or known that the financial condition of a customer has deteriorated,
resulting in their inability to make payments. If those conditions change,
changes to the allowance for doubtful accounts may be necessary.
The Company writes down inventory for the estimated difference between the
cost of inventory and the estimated market value based upon assumptions about
future demand and market conditions. If actual future demand or market
conditions are less favorable than those projected by management, additional
inventory write-downs may be required.
The Company records accruals for environmental liabilities, based on current
interpretations of environmental laws and regulations when it is probable that a
liability has been incurred and the amount can be reasonably estimated. The
Company's estimates are based upon reports prepared by environmental specialists
and management's knowledge and experiences with these environmental matters. If
interpretations of applicable laws and regulations and cleanup methods or the
extent of our responsibility change from our current estimates, revisions to our
estimated environmental liability may be required.
The Company records a valuation allowance to reduce deferred tax assets to
an amount that is more likely than not to be realized. While the Company has
considered future taxable income and ongoing tax planning strategies in
assessing the need for a valuation allowance, the Company cannot ensure that
such future events will occur. In the event that the Company determines that the
Company will not be able to realize all or portion of our deferred tax assets,
an adjustment to reduce assets and increase deferred tax expense would be
recorded.
Although the Company considers these policies to require management's more
complex estimates and assumptions, you may refer to 'Item 8 -- Financial
Statements and Supplementary Data -- Note 2 -- Summary of Significant Accounting
Policies' for a description of the Company's accounting policies necessary for a
complete understanding of the Company's financial statements.
ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board ('FASB'), issued
Statement of Financial Accounting Standards ('SFAS') No. 141, Business
Combinations and No. 142, Goodwill and Other Intangible Assets. Statement
No. 141 requires that all business combinations initiated after June 30, 2001,
be accounted for using the purchase method of accounting. In addition, it
further clarifies the criteria for recognition of intangible assets separately
from goodwill. The Company adopted this statement effective July 1, 2001.
Statement No. 142 establishes new standards for goodwill acquired in a business
combination and eliminates the amortization of goodwill over its estimated
useful life. Rather, goodwill will now be tested for impairment annually, or
more frequently if circumstances indicate potential impairment, by applying a
fair value based test. The Company will adopt this statement effective January
1, 2002 and based on current circumstances, does not believe that the adoption
of this standard will have a material impact on its financial position or
results of operations.
In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 requires that the
fair value of a liability for an asset retirement obligation be recognized in
the period in which it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as part of the
carrying amount of the long-lived asset. The Company adopted SFAS No. 143
effective January 1, 2001. The adoption had no significant impact on the
Company's results of operations, financial position or cash flows.
In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting
and reporting for the impairment of
15
<Page>
long-lived assets and for long-lived assets to be disposed of. SFAS No. 144
supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 144 retains the
fundamental provisions of SFAS No. 121 for (a) recognition and measurement of
the impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale. The Company will adopt this
statement effective January 1, 2002 and based on current circumstances, does not
believe that the adoption of this standard will have a material impact on its
financial position or results of operations.
FORWARD-LOOKING STATEMENTS
This Annual Report includes forward-looking statements. All statements other
than statements of historical facts included in this Annual Report may
constitute forward-looking statements. The Company has based these
forward-looking statements on its current expectations and projections about
future events. Although it believes that the assumptions made in connection with
the forward-looking statements are reasonable, there can be no assurances that
its assumptions and expectations will prove to have been correct. These
forward-looking statements are subject to various risks, uncertainties and
assumptions including, among other things:
The Company's outstanding indebtedness and its leverage, and the
restrictions imposed by its indebtedness;
The Company's ability to obtain or develop sufficient calcium chloride
brine sources on satisfactory terms prior to the expiration of its current
brine supply agreement on December 31, 2002;
Fluctuations in the world market price for soda ash due to changes in
supply and demand;
Fluctuations in prices for calcium chloride in North America due to changes
in supply and demand;
Domestic and international economic conditions, including fluctuations in
U.S. Dollar exchange rates and interest rates and the economic impact of
the September 11, 2001 attack;
Increases in the Company's energy, transportation or labor costs;
The extent to which there is consolidation in the global soda ash industry,
and the Company undertakes new acquisitions or enters into strategic joint
ventures or partnerships;
Future modifications to existing laws and regulations affecting the
environment, health and safety; and
Discovery of unknown contingent liabilities, including environmental
contamination at its facilities.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions, the
forward-looking events discussed in this Annual Report might not occur.
ITEM 7a. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the loss that may impact the consolidated financial
position, results of operations or cash flows of the Company. The Company is
exposed to market risk in the areas of interest and foreign exchange rates.
The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's debt obligations. The Company has no cash flow
exposure due to rate changes on its $100 million in 10 5/8% Senior Subordinated
Notes, as the interest rates on these notes are fixed.
However, the Company does have cash flow exposure on its committed and
uncommitted bank line of credit as interest is based on a floating rate. At
December 31, 2001 the Company had $46.5 million in borrowings under the credit
facility that had variable pricing. Accordingly, as of fiscal 2001, a 1% change
in the floating rate will result in interest expense fluctuating approximately
$0.5 million. As of fiscal
16
<Page>
2000, the Company also had $49.3 million in borrowings under the credit facility
that had a floating interest rate. Accordingly, as of fiscal 2000 a 1% change in
the floating rate would have resulted in interest expense fluctuating
approximately $0.5 million.
The Company is also exposed to foreign exchange risk primarily to the extent
of adverse fluctuation in the Canadian dollar.
The Company does not expect to enter into financial instruments for trading
purposes. The Company anticipates periodically entering into interest rate swap
agreements to effectively convert all or a portion of floating-rate debt to
fixed-rate debt in order to reduce exposure to movements in interest rates. Such
agreements would involve the exchange of fixed and floating interest rate
payments over the life of the agreement without the exchange of the underlying
principal amounts. The Company also anticipates periodically entering into
currency agreements to partially reduce exposure to movements in currency
exchange rates. Swap and currency agreements will only be entered into with
creditworthy parties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
17
<Page>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
THE GENERAL CHEMICAL GROUP INC.:
We have audited the accompanying consolidated balance sheets of The General
Chemical Group Inc. and subsidiaries (the 'Company') as of December 31, 2000 and
2001, and the related consolidated statements of operations, changes in equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 2001. Our audits also included the financial statement schedule
listed in the Index at Item 14. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of The General Chemical Group Inc.
and subsidiaries as of December 31, 2000 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
February 4, 2002
18
<Page>
THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
------------------------
1999 2000 2001
---- ---- ----
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
Net revenues................................................ $312,617 $296,522 $286,056
Cost of revenues............................................ 262,963 266,080 255,991
Selling, general and administrative expense................. 19,047 16,992 16,902
Restructuring charge........................................ -- 59,802 1,721
-------- -------- --------
Operating profit (loss)..................................... 30,607 (46,352) 11,442
Interest expense............................................ 13,741 15,921 15,590
Gain on sale of assets...................................... -- 7,671 --
Interest income............................................. 1,397 1,302 960
Foreign currency transaction (gains) losses................. (109) 24 931
Other expense, net.......................................... 167 322 131
-------- -------- --------
Income (loss) before minority interest and income taxes..... 18,205 (53,646) (4,250)
Minority interest........................................... 12,787 11,180 6,979
-------- -------- --------
Income (loss) before income taxes........................... 5,418 (64,826) (11,229)
Income tax provision (benefit).............................. 433 (16,297) 298
-------- -------- --------
Net income (loss)....................................... $ 4,985 $(48,529) $(11,527)
-------- -------- --------
-------- -------- --------
Earnings (loss) per common share:
Basic................................................... $ 2.38 $ (23.05) $ (3.70)
-------- -------- --------
-------- -------- --------
Diluted................................................. $ 2.32 $ (23.05) $ (3.70)
-------- -------- --------
-------- -------- --------
</Table>
See the accompanying notes to consolidated financial statements.
19
<Page>
THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
DECEMBER 31,
---------------------
2000 2001
---- ----
(IN THOUSANDS, EXCEPT
SHARE DATA)
ASSETS
Current assets:
Cash and cash equivalents............................... $ 20,815 $ 16,045
Receivables, net........................................ 58,872 48,616
Inventories............................................. 21,707 25,813
Deferred income taxes................................... 8,455 6,934
Other current assets.................................... 13,792 5,485
--------- --------
Total current assets................................ 123,641 102,893
Property, plant and equipment, net.......................... 108,883 100,365
Other assets................................................ 18,476 16,933
--------- --------
Total assets........................................ $ 251,000 $220,191
--------- --------
--------- --------
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable........................................ $ 32,097 $ 21,177
Accrued liabilities..................................... 42,595 30,355
--------- --------
Total current liabilities........................... 74,692 51,532
Long-term debt.............................................. 149,314 146,487
Other liabilities........................................... 82,105 78,641
--------- --------
Total liabilities................................... 306,111 276,660
--------- --------
Minority interest........................................... 41,446 38,983
Equity (deficit):
Preferred Stock, $.01 par value; authorized 1,000,000
shares; none issued or outstanding.................... -- --
Common Stock, $.01 par value; authorized 10,000,000
shares; issued and outstanding: 1,865,051 and
3,348,910 shares at December 31, 2000 and 2001,
respectively.......................................... 19 33
Class B Common Stock, $.01 par value; authorized
4,000,000 shares; issued and outstanding: 395,842 and
700,639 shares at December 31, 2000 and 2001,
respectively.......................................... 4 7
Capital (deficit)....................................... (104,586) (94,748)
Accumulated other comprehensive loss.................... (4,205) (1,428)
Retained earnings....................................... 45,463 33,936
Treasury stock, at cost: 171,999 and 174,189 shares at
December 31, 2000 and 2001, respectively................ (33,252) (33,252)
--------- --------
Total equity (deficit).............................. (96,557) (95,452)
--------- --------
Total liabilities and equity (deficit).............. $ 251,000 $220,191
--------- --------
--------- --------
</Table>
See the accompanying notes to consolidated financial statements.
20
<Page>
THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 2000 2001
---- ---- ----
(IN THOUSANDS)
Cash flows from operating activities:
Net income (loss)....................................... $ 4,985 $ (48,529) $(11,527)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization....................... 17,801 19,148 17,084
Deferred income tax................................. (874) (8,163) 2,446
Net loss on disposition of long-term assets......... 393 33,795 289
Decrease (increase) in receivables.................. 631 (902) 10,256
Decrease (increase) in inventories.................. 217 3,584 (4,106)
Increase (decrease) in accounts payable............. 3,327 4,472 (10,920)
Increase (decrease) in accrued liabilities.......... 5,172 12,172 (12,240)
Decrease in income taxes payable.................... (1,988) -- --
Increase (decrease) in other liabilities and assets,
net............................................... 3,680 (8,269) 4,992
Decrease in minority interest....................... (1,350) (633) (2,463)
--------- --------- --------
Net cash provided by (used in) operating
activities...................................... 31,994 6,675 (6,189)
--------- --------- --------
Cash flows from investing activities:
Capital expenditures.................................... (24,061) (20,836) (8,436)
Proceeds from sales or disposals of long-term assets.... -- 8,080 --
--------- --------- --------
Net cash used for investing activities............ (24,061) (12,756) (8,436)
--------- --------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt................ 144,776 -- --
Net transactions with GenTek Inc........................ (126,955) -- --
Proceeds from sales of stock............................ -- -- 9,655
Other financing activities.............................. (251) 266 200
--------- --------- --------
Net cash provided by financing activities......... 17,570 266 9,855
--------- --------- --------
Increase (decrease) in cash and cash equivalents............ 25,503 (5,815) (4,770)
Cash and cash equivalents at beginning of period............ 1,127 26,630 20,815
--------- --------- --------
Cash and cash equivalents at end of period.................. $ 26,630 $ 20,815 $ 16,045
--------- --------- --------
--------- --------- --------
Cash refunded for income taxes, net of payments......... $ 653 $ 1,460 $ 8,272
--------- --------- --------
--------- --------- --------
Cash paid for interest.................................. $ 8,158 $ 14,786 $ 14,668
--------- --------- --------
--------- --------- --------
</Table>
See the accompanying notes to consolidated financial statements.
21
<Page>
THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
FOR THE THREE YEARS ENDED DECEMBER 31, 2001
<Table>
<Caption>
ACCUMULATED
CLASS B OTHER
COMMON COMMON TREASURY CAPITAL COMPREHENSIVE RETAINED COMPREHENSIVE
STOCK STOCK STOCK DEFICIT LOSS EARNINGS TOTAL INCOME
----- ----- ----- ------- ---- -------- ----- ------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Balance at December 31, 1998.... $ 13 $ 10 $(32,795) $ 20,860 $(2,840) $ 90,044 $ 75,292
Net income.................. -- -- -- -- -- 4,985 4,985 $ 4,985
Foreign currency
translation............... -- -- -- -- 36 -- 36 36
--------
Comprehensive income........ -- -- -- -- -- -- -- $ 5,021
--------
--------
Dividends (Per Share
$.05)..................... -- -- -- -- -- (1,037) (1,037)
Conversion of Common Stock
to Class B Common Stock... 6 (6) -- -- -- -- --
Restricted Unit Plan grants,
cancellations, tax
benefits and other........ -- -- -- 200 -- -- 200
Transfer to GenTek Inc...... -- -- -- (125,918) -- -- (125,918)
Purchase of Treasury
stock..................... -- -- (451) -- -- -- (451)
---- ---- -------- --------- ------- -------- ---------
Balance at December 31, 1999.... 19 4 (33,246) (104,858) (2,804) 93,992 (46,893)
Net loss.................... -- -- -- -- -- (48,529) (48,529) $(48,529)
Foreign currency
translation............... -- -- -- -- (1,401) -- (1,401) (1,401)
--------
Comprehensive loss.......... -- -- -- -- -- -- -- $(49,930)
--------
--------
Restricted Unit Plan grants,
cancellations, tax
benefits and other........ -- -- -- 272 -- -- 272
Purchase of Treasury
stock..................... -- -- (6) -- -- -- (6)
---- ---- -------- --------- ------- -------- ---------
Balance at December 31, 2000.... 19 4 (33,252) (104,586) (4,205) 45,463 (96,557)
Net loss.................... -- -- -- -- -- (11,527) (11,527) $(11,527)
Foreign currency
translation............... -- -- -- -- 2,777 -- 2,777 2,777
--------
Comprehensive loss.......... -- -- -- -- -- -- -- $ (8,750)
--------
--------
Restricted Unit Plan grants,
cancellations, tax
benefits and other........ -- -- -- 200 -- -- 200
Rights Offering............. 14 3 -- 9,638 -- -- 9,655
---- ---- -------- --------- ------- -------- ---------
Balance at December 31, 2001.... $ 33 $ 7 $(33,252) $ (94,748) $(1,428) $ 33,936 $ (95,452)
---- ---- -------- --------- ------- -------- ---------
---- ---- -------- --------- ------- -------- ---------
</Table>
See the accompanying notes to consolidated financial statements.
22
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 1 -- BASIS OF PRESENTATION
The General Chemical Group Inc. ('GCG' or the 'Company') is a leading North
American supplier of soda ash and calcium chloride to a broad range of
industrial and municipal customers. The primary end markets for soda ash include
glass production, sodium-based chemicals, powdered detergents, water treatment
and other industrial end uses. Calcium chloride is mainly used for dust control
and roadbed stabilization during the summer and melting ice during the winter.
On April 30, 1999, GCG completed the separation of its Manufacturing and
Performance Products businesses from its soda ash and calcium chloride business
through a Spinoff (the 'Spinoff'), which the Company effected by distributing
the stock of GenTek Inc. ('GenTek'), its wholly-owned subsidiary, on a pro-rata
basis to its shareholders. As a result of the Spinoff, GenTek became a separate,
publicly-traded company. GCG owns and operates the soda ash and calcium chloride
business, and GenTek owns and operates the businesses comprising the
Manufacturing and Performance Products businesses.
The Spinoff was treated as a reverse spinoff for financial statement
purposes because a greater proportion of GCG's assets and operations are held by
GenTek after the Spinoff. Therefore, the Spinoff has been reflected, for
financial statement presentation, as if GCG is a new company consisting of the
soda ash and calcium chloride business. Included in selling, general and
administrative expense in the accompanying consolidated statement of operations
for the year ended December 31, 1999 are Spinoff-related expenses of $1,900.
The financial statements for 1999 include an allocation of certain assets,
liabilities and expenses, including allocations of general corporate overhead
expenses of $475. Net interest expense for the year ended December 31, 1999 was
allocated assuming the Company's allocated share of debt would have been
$150,000. In the opinion of management, expenses for the year ended December 31,
1999 have been allocated to the Company in a reasonable and consistent basis
using management's estimate of services provided to the Company. However, such
allocations are not necessarily indicative of the level of expenses which might
have been incurred had the Company been operating as a stand-alone entity during
the periods presented, or expected to be incurred after the Spinoff. The
accompanying financial statements reflect the net effect of transfers to or from
GenTek as a component of equity (deficit).
The Company effected a one-for-ten reverse split of its common stock,
effective as of the close of business on July, 18, 2001. The accompanying
financial statements reflect the one-for-ten reverse split for all periods
presented.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the results of
operations and financial position of the Company, including wholly-owned
subsidiaries and General Chemical (Soda Ash) Partners ('GCSAP') of which the
Company owns 51 percent. Minority interests relate solely to partnerships,
primarily GCSAP, in which the Company has a controlling interest. Intercompany
balances and transactions are eliminated in consolidation.
Taxes on income for the year ended December 31, 1999 are computed as if the
Company were a stand-alone company prior to the Spinoff. The provision for
income taxes for periods prior to the Spinoff were calculated as if the Company
had filed separate tax returns under its existing structure. Included in other
current assets at December 31, 2000 and 2001 are taxes receivable of $10,221 and
$3,644, respectively.
23
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
At each period end the Company assesses the recoverability of its deferred
tax assets by reviewing a number of factors including operating trends, future
projections and taxable income to determine whether a valuation allowance is
required to reduce such deferred tax assets to an amount that is more likely
than not to be realized. At December 31, 2001 the Company has reviewed its
deferred tax assets and believes that the valuation allowance reduces such
assets to an amount that is more likely than not to be realized.
Inventories are valued at the lower of cost or market, using the last-in,
first-out ('LIFO') method for most domestic production inventories and the
first-in, first-out ('FIFO') or average-cost method for all other inventories.
Production inventory costs include material, labor and factory overhead.
Certain property, plant and equipment are carried at cost and are
depreciated using the straight-line method, using estimated lives which range
from 2 to 30 years. Mines and machinery and equipment of GCSAP are depreciated
using the units-of-production method. Approximately 84 percent of machinery and
equipment and 100 percent of mines and quarries are depreciated using the
units-of-production method.
The Company evaluates the recoverability of long-lived assets not held for
sale by measuring the carrying value of these assets against the estimated
future cash flows associated with them. At the time such evaluations indicate
that the future cash flows are not sufficient to recover the carrying value of
such assets, the assets are adjusted to their fair values.
Deferred financing costs associated with various debt issues are being
amortized over the terms of the related debt using the effective interest
method.
The Company provides for the expected costs to be incurred for the eventual
reclamation of mining properties pursuant to local law. At December 31, 2000 and
2001, the Company had accruals of $26,772 and $26,396, respectively, for land
reclamation. These amounts are included in other liabilities on the balance
sheet.
The Company recognized deferred tax assets and liabilities based on
differences between financial statement and tax basis of assets and liabilities
using presently enacted tax rates.
The Company does not hold or issue financial instruments for trading
purposes.
All highly liquid instruments purchased with a maturity of three months or
less are considered to be cash equivalents.
The Company recognizes revenue upon shipment of product with provisions
recorded for estimated returns. Included in net revenues and cost of sales are
related shipping and handling fees and costs.
In July 2001, the Financial Accounting Standards Board ('FASB'), issued
Statement of Financial Accounting Standards ('SFAS') No. 141, Business
Combinations and No. 142, Goodwill and Other Intangible Assets. Statement No.
141 requires that all business combinations initiated after June 30, 2001, be
accounted for using the purchase method of accounting. In addition, it further
clarifies the criteria for recognition of intangible assets separately from
goodwill. The Company adopted this statement effective July 1, 2001. Statement
No. 142 establishes new standards for goodwill acquired in a business
combination and eliminates the amortization of goodwill over its estimated
useful life. Rather, goodwill will now be tested for impairment annually, or
more frequently if circumstances indicate potential impairment, by applying a
fair value based test. The Company will adopt this statement effective January
1, 2002. Management does not believe that the adoption of this standard will
have a material impact on the Company's financial position or results of
operations.
In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 requires that the
fair value of a liability for an asset retirement obligation be recognized in
the period in which it
24
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
is incurred if a reasonable estimate of fair value can be made. The associated
asset retirement costs are capitalized as part of the carrying amount of the
long-lived asset. The Company adopted SFAS No. 143 effective January 1, 2001.
The adoption had no significant impact on the company's results of operations,
financial position or cash flows.
In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. SFAS No. 144 addresses financial accounting
and reporting for the impairment of long-lived assets and for long-lived assets
to be disposed of. SFAS No. 144 supersedes FASB Statement No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of. SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for (a)
recognition and measurement of the impairment of long-lived assets to be held
and used and (b) measurement of long-lived assets to be disposed of by sale. The
Company will adopt this statement effective January 1, 2002. Management does not
believe that the adoption of this statement will have a material impact on the
Company's financial position or results of operations.
Certain prior-period amounts have been reclassified to conform with the
current presentation.
NOTE 3 -- CAPITAL STOCK
The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, par value $.01 per share, of which 1,693,052 and 3,174,721 were
outstanding at December 31, 2000 and 2001, respectively, and 4,000,000 shares of
Class B Common Stock, par value $.01 per share, which has ten votes per share,
is subject to significant restrictions on transfer and is convertible at any
time into Common Stock on a share-for-share basis, of which 395,842 and 700,639
were outstanding at December 31, 2000 and 2001. The Common Stock and Class B
Common Stock are substantially identical, except for the disparity in voting
power, restriction on transfer and conversion provisions.
The Company's Preferred Stock, par value $.01 per share, consists of
1,000,000 authorized shares, none of which was outstanding at December 31, 2000
and 2001.
During the second quarter of 1999, a stockholder converted 580,000 shares of
Class B Common Stock into an identical number of shares of Common Stock.
NOTE 4 -- EARNINGS (LOSS) PER COMMON SHARE
The computation of basic earnings (loss) per common share is based on the
weighted average number of common shares and contingently issuable shares
outstanding during the period. The computation of diluted earnings (loss) per
common share assumes the foregoing and, in addition, the exercise of all stock
options and restricted units, using the treasury stock method.
The components of the denominator for basic earnings (loss) per common share
and diluted earnings (loss) per common share are reconciled as follows:
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
---------------------------------
1999 2000 2001
---- ---- ----
Basic earnings (loss) per common share:
Weighted average common shares outstanding.............. 2,093,471 2,105,499 3,118,533
--------- --------- ---------
--------- --------- ---------
Diluted earnings (loss) per common share:
Weighted average common shares outstanding.............. 2,093,471 2,105,499 3,118,533
Options and Restricted Units............................ 52,861 -- --
--------- --------- ---------
Denominator for diluted earnings (loss) per common share.... 2,146,332 2,105,499 3,118,533
--------- --------- ---------
--------- --------- ---------
</Table>
Options to purchase 193,880, 231,770 and 215,396 of common stock at December
31, 1999, 2000 and 2001, respectively, were excluded from the computation of
diluted earnings (loss) per common share
25
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
because the option exercise price was greater than the average market price of
the common shares. The options, which expire during 2008, 2009, and 2010 were
still outstanding at December 31, 2001. At December 31, 2000 and 2001, 46,680
and 28,469 options and restricted units, respectively, were not included in the
calculation of diluted earnings (loss) per common share because their inclusion
would have resulted in an antidilutive effect.
NOTE 5 -- INCOME TAXES
Income (loss) before income taxes is as follows:
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
----------------------------
1999 2000 2001
---- ---- ----
United States........................................... $1,952 $ (4,317) $ (5,935)
Foreign................................................. 3,466 (60,509) (5,294)
------ -------- --------
Total........................................... $5,418 $(64,826) $(11,229)
------ -------- --------
------ -------- --------
</Table>
The components of the income tax provision (benefit) are as follows:
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
---------------------------
1999 2000 2001
---- ---- ----
United States:
Current.............................................. $1,527 $ 3,824 $(1,190)
Deferred............................................. (2,352) (5,189) 1,290
Foreign:
Current.............................................. (832) (12,159) (882)
Deferred............................................. 2,153 (2,671) 1,080
State:
Current.............................................. 612 201 (76)
Deferred............................................. (675) (303) 76
------ -------- -------
Total............................................ $ 433 $(16,297) $ 298
------ -------- -------
------ -------- -------
</Table>
A summary of the components of deferred tax assets and liabilities is as
follows:
<Table>
<Caption>
DECEMBER 31,
-----------------
2000 2001
---- ----
Postretirement benefits..................................... $12,330 $12,487
Nondeductible accruals...................................... 18,324 12,498
Foreign operations.......................................... 5,231 1,148
Other....................................................... -- 110
------- -------
Deferred tax assets..................................... 35,885 26,243
------- -------
Property, plant and equipment............................... 767 2,200
Pensions.................................................... 5,273 6,024
Inventory................................................... 278 693
Other....................................................... 69 --
------- -------
Deferred tax liabilities................................ 6,387 8,917
------- -------
Valuation allowance......................................... 21,712 11,986
------- -------
Net deferred tax assets............................. $ 7,786 $ 5,340
------- -------
------- -------
</Table>
The Company had deferred tax assets related to foreign tax credits of $5,231
and $1,148 at December 31, 2000 and 2001, respectively, against which a full
valuation allowance has been recorded.
26
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The Company reversed $3,573, $2,619 and $4,085 of previously recorded valuation
allowances during 1999, 2000 and 2001, respectively, primarily related to
foreign tax credits that had expired. In 2000, the Company recorded additional
valuation allowances of $16,481, primarily related to the idling of the
synthetic soda ash production capacity in Amherstburg, Ontario, Canada.
The difference between the Company's effective income tax rate and the
United States statutory rate is reconciled below:
<Table>
<Caption>
YEARS ENDED DECEMBER 31,
---------------------------
1999 2000 2001
---- ---- ----
U.S. federal statutory rate................................. 35.0% 35.0% 35.0%
Valuation allowance......................................... -- -- (22.0)
State income taxes, net of federal benefit.................. (0.8) 0.1 0.7
Tax effect of foreign operations............................ 2.0 (10.4) (17.7)
Depletion................................................... (31.0) 0.6 2.0
Other....................................................... 2.8 (0.2) (0.7)
----- ----- -----
Total................................................... 8.0% 25.1% (2.7%)
----- ----- -----
----- ----- -----
</Table>
In connection with the Spinoff, the Company entered into a tax sharing
agreement with GenTek which requires GenTek to indemnify and hold harmless the
Company for consolidated tax liabilities attributable to periods prior to the
Spinoff date.
NOTE 6 -- PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company maintains several defined benefit pension plans covering
substantially all employees. A participating employee's annual postretirement
pension benefit is determined by the employee's credited service and, in most
plans, final average annual earnings with the Company. Vesting requirements are
five years in the U.S. and two years in Canada. The Company's funding policy is
to annually contribute the statutorily required minimum amount as actuarially
determined. The Company also maintains several plans providing postretirement
benefits covering substantially all hourly and certain salaried employees. The
Company funds these benefits on a pay-as-you-go basis. Pension assets of $12,750
and $11,944 at December 31, 2000 and 2001, respectively, are included in other
assets on the balance sheet. The long-term portion of accrued postretirement
benefit cost of $35,174 and $35,066 at December 31, 2000 and 2001, respectively,
is included in other liabilities on the balance sheet. The Company's share of
the consolidated net periodic benefit cost related to pension benefits, which
has been recorded in the accompanying statement of operations in 1999, 2000 and
2001, was $3,874, $6,605 and $1,889 respectively. The Company's share of
consolidated net periodic benefit cost related to other postretirement benefits,
which has been recorded in the accompanying statement of operations in 1999,
2000 and 2001, was $2,280, ($589) and $1,814, respectively. The disclosures for
GCG's Pension Plans and Other Postretirement Benefits reflect the Spinoff in
1999.
27
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<Table>
<Caption>
OTHER
PENSION BENEFITS POSTRETIREMENT
DECEMBER 31, BENEFITS DECEMBER 31,
--------------------------- ------------------------
1999 2000 2001 1999 2000 2001
UNITED STATES: ---- ---- ---- ---- ---- ----
Components of Net Periodic Benefit Cost:
Service Cost.......................... $ 2,599 $ 2,206 $ 2,013 $ 846 $ 756 $ 773
Interest Cost......................... 5,606 5,196 5,437 1,300 1,098 1,163
Expected Return on Plan Assets........ (6,010) (5,928) (6,618) -- -- --
Amortization of Net Prior Service
Cost................................ 813 784 825 (849) (840) (840)
(Gain)/Loss........................... 17 (255) (600) (239) (367) (210)
------- ------- ------- ------ ------ ------
Net Periodic Benefit Cost............. $ 3,025 $ 2,003 $ 1,057 $1,058 $ 647 $ 886
------- ------- ------- ------ ------ ------
------- ------- ------- ------ ------ ------
</Table>
<Table>
<Caption>
OTHER
POSTRETIREMENT
PENSION BENEFITS BENEFITS
DECEMBER 31, DECEMBER 31,
---------------------- ----------------------
2000 2001 2000 2001
---- ---- ---- ----
Change in Benefit Obligation:
Benefit Obligation at Prior Measurement
Date...................................... $ 70,323 $ 79,317 $ 14,951 $ 15,940
Service Cost................................ 2,206 2,013 756 773
Interest Cost............................... 5,196 5,437 1,098 1,163
Actuarial (Gain)/Loss....................... 4,232 (4,088) 143 2,224
Benefits Paid............................... (2,640) (2,917) (1,008) (830)
Plan Amendments............................. -- 463 -- --
-------- -------- -------- --------
Benefit Obligation at Measurement Date...... $ 79,317 $ 80,225 $ 15,940 $ 19,270
-------- -------- -------- --------
-------- -------- -------- --------
Change in Plan Assets:
Fair Value of Assets at Prior Measurement
Date...................................... $ 70,829 $ 76,452 $ -- $ --
Actual Return on Plan Assets................ 5,296 (9,981) -- --
Employer Contributions...................... 2,967 2,856 1,008 830
Benefits Paid............................... (2,640) (2,917) (1,008) (830)
-------- -------- -------- --------
Fair Value of Assets at Measurement Date.... $ 76,452 $ 66,410 $ -- $ --
-------- -------- -------- --------
-------- -------- -------- --------
Reconciliation of Funded Status:
Funded Status............................... $ (2,865) $(13,815) $(15,940) $(19,270)
Unrecognized Net Prior Service Cost......... 3,337 2,976 (3,696) (2,856)
(Gain) Loss................................. (11,094) 2,017 (3,786) (1,352)
-------- -------- -------- --------
Net Amount Recognized....................... $(10,622) $ (8,822) $(23,422) $(23,478)
-------- -------- -------- --------
-------- -------- -------- --------
</Table>
The assumptions used in accounting for the plans were as follows:
<Table>
<Caption>
1999 2000 2001
---- ---- ----
Discount rate............................................... 7 1/2% 7 1/2% 7 1/4%
Long-term rate of return on assets.......................... 9% 9% 9%
Average rate of increase in employee compensation........... 5% 5% 5%
</Table>
The assumption used in accounting for the medical plans in 2001 was an 11.0
percent health care cost trend rate. A one percent increase in the health care
trend rate would increase the accumulated postretirement benefit obligation by
$733 at year-end 2001 and the net periodic cost by $50 for the year. A one
percent decrease in the health care trend rate would decrease the accumulated
postretirement benefit obligation by $820 at year-end 2001 and the net periodic
cost by $57 for the year.
28
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The dates used to measure plan assets and liabilities were October 31, 2000
and 2001 for all plans. Pension plan assets are invested primarily in stocks,
bonds, short-term securities and cash equivalents.
<Table>
<Caption>
OTHER
PENSION BENEFITS POSTRETIREMENT BENEFITS
DECEMBER 31, DECEMBER 31,
--------------------------- -----------------------
1999 2000 2001 1999 2000 2001
CANADA: ---- ---- ---- ---- ---- ----
Components of Net Periodic Benefit Cost:
Service Cost........................... $ 1,481 $ 1,380 $ 1,135 $ 317 $ 298 $125
Interest Cost.......................... 3,728 3,944 4,590 905 975 803
Expected Return on Plan Assets......... (4,980) (5,368) (5,749) -- -- --
Curtailment Loss....................... -- 397 -- -- -- --
Settlement Loss (Gain)................. -- 4,071 778 -- (2,509) --
Amortization of Net Prior Service Cost..... 79 78 78 -- -- --
Loss................................... 541 100 -- -- --
------- ------- ------- ------ ------- ----
Net Periodic Benefit Cost.................. $ 849 $ 4,602 $ 832 $1,222 $(1,236) $928
------- ------- ------- ------ ------- ----
------- ------- ------- ------ ------- ----
</Table>
<Table>
<Caption>
OTHER
POSTRETIREMENT
PENSION BENEFITS BENEFITS
DECEMBER 31, DECEMBER 31,
-------------------- ------------------------
2000 2001 2000 2001
---- ---- ---- ----
Change in Benefit Obligation:
Benefit Obligation at Prior Measurement Date...... $52,859 $57,604 $ 12,906 $ 11,333
Service Cost...................................... 1,380 1,135 298 125
Interest Cost..................................... 3,944 4,590 975 803
Actuarial Loss (Gain)............................. -- 1,961 (42) 1,311
Foreign Currency Translation...................... (63) (2,408) (12) (475)
Benefits Paid..................................... (3,341) (3,842) (418) (601)
Settlement Loss (Gain)............................ 2,825 5,297 (2,374) --
------- ------- --------- ---------
Benefit Obligation at Measurement Date............ $57,604 $64,337 $ 11,333 $ 12,496
------- ------- --------- ---------
------- ------- --------- ---------
Change in Plan Assets:
Fair Value of Assets at Prior Measurement Date.... $60,964 $68,718 $ -- $ --
Actual Return on Plan Assets...................... 10,119 (3,221) -- --
Employer Contributions............................ 1,039 4,182 418 601
Foreign Currency Translation...................... (63) (2,860) -- --
Benefits Paid..................................... (3,341) (3,842) (418) (601)
------- ------- --------- ---------
Fair Value of Assets at Measurement Date.......... $68,718 $62,977 $ -- $ --
------- ------- --------- ---------
------- ------- --------- ---------
Reconciliation of Funded Status:
Funded Status..................................... $11,114 $(1,360) $ (11,333) $ (12,496)
Unrecognized Net Prior Service Cost............... 112 30 -- --
(Gain)/Loss....................................... 1,524 13,274 (419) 908
------- ------- --------- ---------
Net Amount Recognized............................. $12,750 $11,944 $ (11,752) $ (11,588)
------- ------- --------- ---------
------- ------- --------- ---------
</Table>
The assumptions used in accounting for the plans were as follows:
<Table>
<Caption>
1999 2000 2001
---- ---- ----
Discount rate............................................... 7 1/2% 7 1/2% 7 1/4%
Long-term rate of return on assets.......................... 9% 9% 9%
Average rate of increase in employee compensation........... 5 1/4% 5 1/4% 5 1/4%
</Table>
The assumption used in accounting for the medical plans was an 8.4 percent
health care cost trend rate (decreasing to 6 percent in 2003 and beyond). A one
percent increase in the health care trend rate
29
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
would increase the accumulated postretirement benefit obligation by $3,038 at
year-end 2001 and the net periodic cost by $228 for the year. A one percent
decrease in the health care trend rate would decrease the accumulated
postretirement benefit obligation by $2,407 at year-end 2001 and the net
periodic cost by $178 for the year.
The dates used to measure plan assets and liabilities were October 31, 2000
and 2001 for all plans. Plan assets are invested primarily in stocks, bonds,
short-term securities and cash equivalents.
NOTE 7 -- COMMITMENTS AND CONTINGENCIES
Future minimum rental payments for operating leases (primarily for
transportation equipment, mining equipment, offices and warehouses) having
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 2001 are as follows:
<Table>
<Caption>
YEARS ENDING DECEMBER 31,
-------------------------
2002................................................ $12,855
2003................................................ 10,132
2004................................................ 9,168
2005................................................ 5,621
2006................................................ 7,548
Thereafter.......................................... 15,203
</Table>
Rental expense for the years ended December 31, 1999, 2000 and 2001 was
$12,408, $11,096, and $10,034 respectively.
Parent Guaranty and Transfer Agreement. A restated parent guaranty and
transfer agreement between New Hampshire Oak, a wholly-owned subsidiary of GCG
and the parent of General Chemical Industrial Products Inc. ('GCIP'), and ACI
International Limited and TOSOH America, Inc. provides that in the event that
either New Hampshire Oak, ACI International Limited or TOSOH America, Inc. (such
entities being referred to as a 'transferring parent' or 'nontransferring
parent' as the context requires) proposes to sell or otherwise transfer or cause
to be sold or transferred the voting securities of GCIP, The Andover Group, Inc.
or TOSOH Wyoming, Inc. (the respective subsidiaries constituting the partners of
GCSAP) as the case may be, the nontransferring parents will have the following
options: (1) to purchase the transferring parent's subsidiary's interest in
GCSAP at fair market value; (2) to require the transferring parent to purchase
the nontransferring parents' subsidiaries' interests in GCSAP at fair market
value; (3) to buy the voting securities to be sold by the transferring parent on
the same terms and conditions and at the same price as the transferring parent
proposes to sell or otherwise transfer or cause to be sold or transferred such
voting securities; or (4) to cause the proposed transferee to purchase the
nontransferring parents' subsidiaries' interests in GCSAP for a price reflecting
the price to be paid by the proposed transferee for such voting securities. In
the event that New Hampshire Oak ceases to own at least 51 percent of GCIP while
GCIP is a partner, GCIP shall pay to The Andover Group, Inc. $2,833.
The Company is involved in certain claims, litigation, administrative
proceedings and investigations relative to environmental matters. Although the
amount of any ultimate liability which could arise with respect to these matters
cannot be accurately predicted, it is the opinion of management, based upon
currently available information and the accruals established, that any such
liability will have no material adverse effect on the Company's financial
condition, results of operations or cash flows.
On March 13, 2000, the Company's Canadian subsidiary received a letter from
Environment Canada ('EC'). The letter informed the Company that it faces an
alleged violation of the Canadian Fisheries Act, R.S.C., as amended, with
respect to effluent discharges at its Amherstburg, Ontario facility. According
to EC, the Company's chloride level of its effluent discharged to the Detroit
River exceeded permitted levels. The idling of the Amherstburg synthetic soda
ash production in April 2001
30
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
has improved the quality of the effluent such that it complies with the Canadian
Fisheries Act requirements. Because of the foregoing, the Company does not
believe that any additional expenses and/or capital expenditures will be
incurred in connection with this matter which would be material to the Company's
results of operations and/or financial condition.
NOTE 8 -- ADDITIONAL FINANCIAL INFORMATION
The following are summaries of selected balance sheet items:
RECEIVABLES
<Table>
<Caption>
DECEMBER 31,
---------------------
2000 2001
---- ----
Trade.................................................. $54,783 $44,014
Other.................................................. 6,624 6,598
Allowance for doubtful accounts........................ (2,535) (1,996)
------- -------
$58,872 $48,616
------- -------
------- -------
</Table>
INVENTORIES
<Table>
<Caption>
DECEMBER 31,
---------------------
2000 2001
---- ----
Raw materials.......................................... $ 3,165 $ 1,302
Work in process........................................ 1,665 3,448
Finished products...................................... 10,743 14,110
Supplies and containers................................ 6,134 6,953
------- -------
$21,707 $25,813
------- -------
------- -------
</Table>
Inventories valued at LIFO amounted to $2,573, and $4,508 at December 31,
2000 and 2001, respectively, which were below estimated replacement cost by
$2,042 and $2,212 respectively. The impact of LIFO liquidations in 2000 and 2001
was not significant.
PROPERTY, PLANT AND EQUIPMENT
<Table>
<Caption>
DECEMBER 31,
-------------------------
2000 2001
---- ----
Land and improvements............................... $ 24,185 $ 24,534
Buildings and leasehold improvements................ 16,482 16,650
Machinery and equipment............................. 210,089 217,641
Construction-in-progress............................ 3,590 1,431
Mines and quarries.................................. 16,751 16,647
--------- ---------
271,097 276,903
Less accumulated depreciation and amortization...... (162,214) (176,538)
--------- ---------
$ 108,883 $ 100,365
--------- ---------
--------- ---------
</Table>
ACCRUED LIABILITIES
<Table>
<Caption>
DECEMBER 31,
---------------------
2000 2001
---- ----
Restructuring reserve.................................. $16,111 $ 4,172
Wages, salaries and benefits........................... 9,061 9,011
Taxes, other than income taxes......................... 8,065 6,773
Other.................................................. 9,358 10,399
------- -------
$42,595 $30,355
------- -------
------- -------
</Table>
31
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 9 -- SALE OF ASSETS
In the third quarter of 2000, the Company sold a quarry at its Amherstburg,
Ontario, Canada location for $8,080, resulting in a pretax gain of $7,671.
NOTE 10 -- RESTRUCTURING CHARGE
In the fourth quarter of 2000, the Company recorded a pretax restructuring
charge, including related asset writedowns and workforce reductions, of $59.8
million or $28.41 per diluted common share. The restructuring involved the
idling of the Company's synthetic soda ash production capacity in Amherstburg,
Ontario, Canada which resulted in the writedown of long-lived assets and
workforce reductions of approximately 250 hourly and salaried employees. The
Company idled this capacity because it requires substantially more
resources -- principally costly natural gas and necessary capital
improvements -- for the Company to manufacture synthetic soda ash at Amherstburg
than to manufacture natural soda ash at its production facility in Green River,
Wyoming. The Company has shifted production from its relatively high-cost
synthetic soda ash facility in Amherstburg to its lower-cost natural soda ash
facility in Green River, thereby eliminating cash operating losses incurred in
operating the Amherstburg facility and reducing its exposure to fluctuations in
energy prices. It is expected that the restructuring actions will be
substantially completed by March 31, 2002.
In the second quarter of 2001, the Company provided for additional pretax
restructuring charges of $1.7 million or $0.68 per diluted common share for
revised actuarial estimates of employee termination benefits.
The cash and noncash elements of the restructuring charge approximate $16.3
million and $43.5 million, respectively. The components of the restructuring
charge were as follows:
<Table>
<Caption>
BALANCE AT
ORIGINAL UTILIZED DECEMBER 31,
ACCRUAL CASH NONCASH 2000
------- ---- ------- ----
Writedown of long-lived assets.................... $40,203 $ -- $40,203 $ --
Employee severance and termination benefits....... 8,598 -- -- 8,598
Site preparation costs............................ 4,641 -- -- 4,641
Other(1).......................................... 6,360 178 3,310 2,872
------- ------ ------- -------
$59,802 $ 178 $43,513 $16,111
------- ------ ------- -------
------- ------ ------- -------
<Caption>
BALANCE AT BALANCE AT
DECEMBER 31, UTILIZED DECEMBER 31,
2000 CASH NONCASH 2001
---- ---- ------- ----
Employee severance and termination benefits....... $ 8,598 $5,044 $ 2,470 $ 1,084
Site preparation costs............................ 4,641 2,858 -- 1,783
Other(1).......................................... 2,872 1,137 430 1,305
------- ------ ------- -------
$16,111 $9,039 $ 2,900 $ 4,172
------- ------ ------- -------
------- ------ ------- -------
</Table>
- ---------
(1) Primarily includes writedowns of inventories, contract termination fees and
environmental compliance.
NOTE 11 -- RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENT
The Company is party to a management agreement with Latona Associates Inc.
(which is controlled by a stockholder of the Company) under which the Company
receives corporate supervisory and administrative services and strategic
guidance for a quarterly fee. This management fee was $1,484, $1,595 and $1,621
in 1999, 2000 and 2001, respectively.
32
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
TRANSITION SUPPORT AGREEMENT
The Company and GenTek entered into various transition support agreements
that provide mechanisms for an orderly transition after the Spinoff. For the
years ended December 31, 1999, 2000 and 2001, the Company paid GenTek $2,474,
$1,692 and $1,355 related to these transition support agreements.
OTHER TRANSACTION
The Company supplies soda ash and calcium chloride to GenTek. For the years
ended December 31, 1999, 2000 and 2001, sales to GenTek amounted to $14,696,
$4,389 and $4,036, respectively.
NOTE 12 -- LONG-TERM DEBT
Long-term debt consists of the following:
<Table>
<Caption>
DECEMBER 31,
-------------------
MATURITIES 2000 2001
---------- ---- ----
$85 Million Revolving Credit Facility-floating
rate........................................... April 30, 2004 $ 49,314 $ 46,487
Senior Subordinated Notes -- 10 5/8%............. April 30, 2009 100,000 100,000
-------- --------
Total Debt....................................... 149,314 146,487
Less: Current Portion........................ -- --
-------- --------
Net Long-Term Debt............................... $149,314 $146,487
-------- --------
-------- --------
</Table>
On April 30, 1999, in connection with the Spinoff, the Company's subsidiary,
GCIP, and GCIP's Canadian subsidiary, General Chemical Canada Ltd., entered into
an $85,000 revolving credit facility ('Credit Facility') with certain lenders
party thereto; The Chase Manhattan Bank, as Administrative Agent, The Chase
Manhattan Bank of Canada, as Canadian Administrative Agent, The Bank of Nova
Scotia, as Syndication Agent, and The First National Bank of Chicago as
Documentation Agent. Of this amount, up to $60,000 is available for borrowing by
the Canadian subsidiary. In addition, on April 30, 1999, GCIP issued and sold
$100,000 aggregate principal amount of 10 5/8% Senior Subordinated Notes due
2009.
The Company applied the proceeds of its initial borrowing under the Credit
Facility and a portion of the proceeds of the offering of its Senior
Subordinated Notes to repay approximately $127 million of pre-Spinoff debt. On
November 9, 1999, GCIP completed an exchange offer pursuant to which all of
GCIP's unregistered 10 5/8% Senior Subordinated Notes due 2009 (issued on April
30, 1999) were exchanged for registered 10 5/8% Senior Subordinated Notes due
2009 that are identical to the terms of the unregistered notes. The Securities
and Exchange Commission declared effective GCIP's Registration Statement on Form
S-4 with respect to such registered notes on October 6, 1999.
The Senior Subordinated Notes are unsecured while the $85 million Credit
Facility is secured by 100 percent of the capital stock of GCIP, 100 percent of
the owned capital stock of, and guarantees from, the direct and indirect
domestic subsidiaries of the Company, and substantially all of the other assets
of the Company. In addition, the portion of the Credit Facility available to the
Company's Canadian subsidiary is secured by substantially all of the assets of
the Company's Canadian subsidiary. The Senior Subordinated Notes and the Credit
Facility contain certain covenants with respect to additional indebtedness,
preferred stock issued by subsidiaries, restricted payments, transactions with
affiliates, liens, dividends and other payment instructions affecting
subsidiaries, consolidations, mergers, the sale of assets and financial tests.
Prior to the Spinoff, the Company paid a regular quarterly cash dividend to
holders of its Common Stock. The Company has not paid dividends since the
Spinoff and does not expect to pay cash dividends in the foreseeable future.
33
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
On March 7, 2001, the Company and its bank lenders finalized amendments to
the financial covenants and other terms of the Company's credit facility
agreement. The amendments provide for more flexible financial covenants for 2001
and 2002 and more restrictive covenants regarding restricted payments,
investments, incurrence of indebtedness, capital expenditures, sale of assets
and related matters during these two years. Management expects the Company to be
compliant with these revised covenants in 2002. In addition, the maximum amount
that the Company may borrow under its Credit Facility during 2002 is $70
million.
On May 14, 2001, the Company issued 13,081,048 shares of Common Stock and
3,047,985 shares of Class B Common Stock in connection with the Company's rights
offering (corresponding to approximately 1,308,105 and 304,799 shares after the
reverse split on July 18, 2001). Pursuant to the rights offering, the holders of
record of the Company's Common Stock and Class B Common Stock as of April 16,
2001 received, at no cost, 0.77 rights to purchase one share of Common Stock or
Class B Common Stock, as appropriate, of the Company for each share of such
stock they held as of the record date. Each whole right entitled its holder to
purchase one share of Common Stock or Class B Common Stock, as appropriate, for
a subscription price of $0.62 per share. The proceeds to the Company from this
issuance of Common Stock and Class B Common Stock of approximately $9.7 million
was to pay costs related to the idling of the Company's synthetic soda ash
production capacity in Amherstburg, Ontario, Canada and for general corporate
purposes.
NOTE 13 -- STOCK OPTION PLAN AND RESTRICTED UNIT PLAN
The Company's 1996 Stock Option and Incentive Plan (the '1996 Plan')
provides for the issuance of up to 220,000 shares of Common Stock. The 1996 Plan
authorizes the granting of incentive and nonqualified stock options, stock
appreciation rights, restricted and unrestricted stock and performance share
awards to executives, directors and other key persons. Any incentive stock
options granted under the 1996 Plan must have an exercise price at least equal
to the market value of the shares on the day the option is granted and a maximum
term of 10 years.
The Company's 2000 Long-Term Incentive Plan (the '2000 Plan') provides for
the issuance of up to 200,000 shares of Common Stock. The 2000 Plan authorizes
the granting of incentive stock options and non-qualified stock options to
officers, employees, directors and other key persons. Any incentive stock
options granted under the 2000 Plan must have an exercise price at least equal
to the market value of the shares on the day the option is granted and a maximum
term of 10 years.
Information with respect to all stock options is summarized below:
<Table>
<Caption>
1999 2000 2001
------------------------ ------------------------ ------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------ -------------- ------ -------------- ------ --------------
Outstanding at beginning at
year....................... 167,950 $48.20 194,380 $45.65 236,270 $40.50
Options Granted.............. 32,000 33.23 46,200 18.51 15,000 2.40
Options Exercised............ -- -- -- -- -- --
Options Cancelled............ 5,570 63.16 4,310 37.40 20,874 35.82
------- ------- -------
Outstanding at end of year... 194,380 $45.65 236,270 $40.50 230,396 $38.44
------- ------- -------
------- ------- -------
</Table>
34
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The following table summarizes information about stock options outstanding
at December 31, 2001:
<Table>
<Caption>
OUTSTANDING EXERCISABLE
------------------------------------------- ------------------------
WEIGHTED AVERAGE
NUMBER REMAINING WEIGHTED NUMBER WEIGHTED
OF CONTRACTUAL AVERAGE OF AVERAGE
RANGE OF EXERCISE PRICES OPTIONS LIFE EXERCISE PRICE OPTIONS EXERCISE PRICE
------------------------ ------- ---- -------------- ------- --------------
$0.00 - $8.99................. 19,500 9.47 $ 2.93 16,350 $ 2.59
$9.00 - $23.99................ 34,100 8.16 20.05 10,380 20.11
$24.00 - $38.99............... 21,400 7.28 32.90 13,800 32.86
$39.00 - $53.99............... 120,896 4.67 44.00 57,896 43.96
$54.00 - $68.99............... 34,500 6.03 60.61 32,750 60.77
------- -------
230,396 131,176
------- -------
------- -------
</Table>
The Company applies APB Opinion No. 25 in accounting for the plans. Had
compensation cost been determined under SFAS No. 123, the Company's net income
for 1999 would have been reduced to $4,299 with basic earnings per common share
of $2.05 and diluted earnings per common share of $2.00. Net loss for 2000 would
have been increased to ($49,244) with basic and diluted loss per common share of
($23.38). Net loss for 2001 would have been increased to ($11,973) with basic
and diluted loss per common share of ($3.84). For purposes of this calculation,
the fair value of each option grant was estimated on the grant date using the
Black-Scholes option-pricing model with the following assumptions used for 1999,
2000 and 2001, respectively: dividend yield of 0.0 percent; expected volatility
of 49 percent, 107 percent and 104 percent, respectively; weighted average risk
free interest rate of 6.61 percent, 6.64 percent and 6.07 percent, respectively;
and, weighted average expected lives of six years. All options granted to date
under the stock option plans have an exercise price equal to the market price of
the Company's stock on the grant date. The weighted average fair value per stock
option granted was $28.09, $15.64 and $2.40 for 1999, 2000 and 2001.
The Company's Restricted Unit Plan provides for the issuance of 85,000
units, with each unit representing one share of Common Stock to be issued to the
participant upon the occurrence of certain conditions ('vesting') unless the
participant elects to defer receipt thereof. All awards are subject to a
five-year vesting schedule under which a portion of each participant's award
vests annually over a five-year period. Dividend equivalents on outstanding
units accrue to the benefit of the participants and are paid at the time
dividends are paid to Common Stock shareholders. These units were awarded during
the second quarter of 1996 in replacement of the rights earned by participants
beginning in 1989 under the Phantom Equity Plan and certain other prior equity
programs of the Company which were then terminated.
NOTE 14 -- FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments are as
follows:
<Table>
<Caption>
DECEMBER 31,
----------------------------------------
2000 2001
------------------ -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------ ----- ------ -----
Long-term debt............................... $149,314 $85,314 $146,487 $121,487
</Table>
The fair values of cash and cash equivalents, receivables and payables
approximate their carrying values due to the short-term nature of the
instruments.
The fair value of the Company's long-term debt was based on quoted market
prices for publicly traded notes and discounted cash flow analyses on its
nontraded debt.
35
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 15 -- GEOGRAPHIC INFORMATION
Information regarding geographic areas at December 31, and for each of the
years then ended is as follows:
<Table>
<Caption>
NET REVENUES OPERATING PROFIT (LOSS) LONG-LIVED ASSETS(4)
------------------------------ ---------------------------- ---------------------
1999 2000 2001 1999 2000 2001 2000 2001
---- ---- ---- ---- ---- ---- ---- ----
United States(1)..... $223,944 $223,880 $231,661 $23,891 $ 17,644 $11,757 $105,862 $ 96,734
Foreign(2)........... 118,392 107,315 103,127 6,716 (63,996) (315) 21,497 20,564
Elimination(3)....... (29,719) (34,673) (48,732) -- -- -- -- --
-------- -------- -------- ------- -------- ------- -------- --------
$312,617 $296,522 $286,056 $30,607 $(46,352) $11,442 $127,359 $117,298
-------- -------- -------- ------- -------- ------- -------- --------
-------- -------- -------- ------- -------- ------- -------- --------
</Table>
- ---------
(1) Includes export sales of $75,638, $70,020 and $72,748 for the years ended
December 31, 1999, 2000 and 2001, respectively.
(2) Principally Canada.
(3) Sales between geographic areas are recorded at prices comparable to market
prices charged to third-party customers and are eliminated in consolidation.
(4) Represents all noncurrent assets except deferred tax assets and financial
investments.
NOTE 16 -- SEGMENT INFORMATION
Industry segment information is summarized as follows:
<Table>
<Caption>
1999 2000 2001
---- ---- ----
Net revenues:
Soda Ash................................................ $256,822 $237,799 $227,582
Calcium Chloride........................................ 55,795 58,723 58,474
-------- -------- --------
Total Segment....................................... $312,617 $296,522 $286,056
-------- -------- --------
-------- -------- --------
Income (loss) before income taxes:
Soda Ash................................................ $ 8,275 $(59,700) $ 5,254
Calcium Chloride........................................ 12,546 6,189 1,067
-------- -------- --------
Total Segment....................................... 20,821 (53,511) 6,321
Eliminations and other corporate expenses........... (15,403) (11,315) (17,550)
-------- -------- --------
$ 5,418 $(64,826) $(11,229)
-------- -------- --------
-------- -------- --------
</Table>
Income (loss) before income taxes for the soda ash segment includes
additional restructuring charges of $1,721 recorded in the second quarter of
2001. Income (loss) before income taxes for the soda ash segment includes a
restructuring charge of $59,802 recorded in the fourth quarter of 2000. Income
(loss) before income taxes for elimination and other corporate expenses includes
a gain on sale of assets of $7,671 recorded in the third quarter of 2000.
<Table>
<Caption>
1999 2000 2001
---- ---- ----
Capital Expenditures:
Soda Ash................................................ $22,530 $14,360 $ 4,347
Calcium Chloride........................................ 1,383 6,102 3,648
Elimination and other corporate expenses................ 148 374 441
------- ------- -------
$24,061 $20,836 $ 8,436
------- ------- -------
------- ------- -------
Depreciation & Amortization:
Soda Ash................................................ $16,129 $17,006 $14,605
Calcium Chloride........................................ 906 948 1,169
Elimination and other corporate expenses................ 766 1,194 1,310
------- ------- -------
$17,801 $19,148 $17,084
------- ------- -------
------- ------- -------
</Table>
36
<Page>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
NOTE 17 -- UNAUDITED QUARTERLY INFORMATION
<Table>
<Caption>
2000
-------------------------------------------------
FIRST SECOND THIRD FOURTH YEAR
----- ------ ----- ------ ----
Net revenues................................. $65,909 $80,013 $74,302 $ 76,298 $296,522
Gross profit................................. 8,302 9,150 9,795 3,195 30,442
Net income (loss)............................ (1,245) 206 3,283 (50,773) (48,529)
Earnings (loss) per common share:
Basic.................................... (.59) .10 1.56 (24.00) (23.05)
Diluted.................................. (.59) .10 1.56 (24.00) (23.05)
</Table>
<Table>
<Caption>
2001
-------------------------------------------------
FIRST SECOND THIRD FOURTH YEAR
----- ------ ----- ------ ----
Net revenues................................. $65,326 $79,369 $73,201 $ 68,160 $286,056
Gross profit................................. 842 10,050 7,669 11,504 30,065
Net loss..................................... (8,147) (1,084) (1,969) (327) (11,527)
Loss per common share:
Basic.................................... (3.85) (.34) (.53) (.09) (3.70)
Diluted.................................. (3.85) (.34) (.53) (.09) (3.70)
</Table>
37
<Page>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors. For information relating to the Company's Directors, see the
information under the caption 'Nomination and Election of Directors' in the
Company's definitive 2001 Proxy Statement (the 'Proxy Statement'), which is
hereby incorporated by reference.
Executive Officers. For information relating to the Company's executive
officers, see the information under the caption 'Employees/Labor Relations' in
Part I of this report.
Compliance with Section 16(a) of the Exchange Act. For information relating
to the compliance of the directors and officers of the Company, as well as any
holder of ten percent or more of any registered class of the equity securities
of the Company, with Section 16(a) of the Exchange Act, see the information
under the caption 'Section 16(a) Beneficial Ownership Reporting Compliance' in
the Company's Proxy Statement, which is hereby incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation. For information relating to the compensation of the
Company's executives, see the information under the caption 'Compensation of
Directors and Executive Officers' in the Company's Proxy Statement, which is
hereby incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners. For information relating to
the beneficial ownership of more than five percent of the Company's Common Stock
and Class B Common Stock, see the information under the caption 'Security
Ownership of Certain Beneficial Owners and Management' in the Company's Proxy
Statement, which is hereby incorporated by reference.
Security Ownership of Management. For information relating to the beneficial
ownership of the Company's Common Stock and Class B Common Stock by management,
see the information under the caption 'Security Ownership of Certain Beneficial
Owners and Management' in the Company's Proxy Statement, which is hereby
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Transactions. For information relating to
certain relationships and related transactions of the Company, see the
information under the caption 'Certain Relationships and Transactions' in the
Company's Proxy Statement, which is hereby incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K.
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
---- -----------
*3.1--Amended and Restated Certificate of Incorporation of the Company
*3.2--Amended and Restated By-Laws of the Company
*4.1--Specimen Certificate for shares of Common Stock, $.01 par value,
of the Company
*10.1--Agreement dated as of March 15, 1996 between Paul M. Montrone
and the Company
'D'10.4--Restated Environmental Matters Agreement among Allied-Signal,
Henley, The Wheelabrator Group Inc., New Hampshire Oak, Inc., and
Fisher Scientific Group Inc., dated as of February 26, 1986, as
amended and restated as of July 28, 1989
</Table>
38
<Page>
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
--- -----------
'D'10.5 --Second Amended and Restated Partnership Agreement of
GCSAP dated June 30, 1992, among General Chemical, The
Andover Group, Inc., and TOSOH Wyoming, Inc.
'D'10.6 --Amended and Restated Parent Guaranty and Transfer
Agreement dated June 30, 1992, among New Hampshire Oak,
Inc., ACI International Limited and TOSOH America, Inc.
*10.7 --The General Chemical Group Inc. Deferred Compensation
Plan for Non-Employee Directors
*10.8 --The General Chemical Group Inc. Retirement Plan for
Non-Employee Directors
*10.9 --The General Chemical Group Inc. Restricted Unit Plan for
Non-Employee Directors
*10.10--The General Chemical Group Inc. 1996 Stock Option and
Incentive Plan
*10.11--The General Chemical Group Inc. Performance Plan
*10.12--The General Chemical Group Inc. Restricted Unit Plan
'DD'10.13--First Amendment to General Chemical Corporation Equity
Program, effective as of October 1, 1993.
*10.14--General Chemical Group Dividend Award Program, as amended
December 15, 1995, effective as of October 1, 1993
*10.15--General Chemical Corporation Supplemental Savings and
Retirement Plan
**10.16--Employee Benefits Agreement among The General Chemical
Group Inc. and GenTek Inc.
**10.17--Intellectual Property Agreement among General Chemical
Industrial Products Inc., General Chemical Corporation,
GenTek, Inc. and The General Chemical Group Inc.
**10.18--Credit Agreement, dated as of April 30, 1999, among
General Chemical Industrial Products Inc., and General
Chemical Canada Ltd. as Borrowers, the several Lenders
from time to time parties thereto, The Chase Manhattan
Bank, as Administrative Agent, The Chase Manhattan Bank of
Canada, as Canadian Administrative Agent, The Bank of Nova
Scotia, as Syndication Agent, and The First National Bank
of Chicago as Documentation Agent
10.19--First Amendment, dated as of March 7, 2001, to the Credit
Agreement referred to in Exhibit 10.18
**10.20--Guarantee and Collateral Agreement, dated as of
April 30, 1999, made by General Chemical Industrial
Products Inc., and certain of its subsidiaries in favor of
the Chase Manhattan Bank, as Collateral Agent.
Incorporated by reference to the relevant exhibit to the
GCG First Quarter 1999 10-Q.
**10.21--Amended and Restated Management Agreement between Latona
Associates Inc. and The General Chemical Group Inc.
Incorporated by reference to the relevant exhibit to The
General Chemical Group Inc.'s 10-Q for the three months
ended June 30, 1999 with the Securities and Exchange
Commission on August 16, 1999 (the 'GCG Second Quarter
10-Q').
**10.22--Tax Sharing Agreement between The General Chemical Group
Inc. and GenTek Inc.
**10.23--Sublease Agreement between General Chemical Industrial
Products Inc. and General Chemical Corporation.
**10.24--Transition Support Agreement between GenTek Inc. and
General Chemical Corporation.
11 --Statement regarding computation of per share earnings
**22 --Subsidiaries of the Company
</Table>
- ---------
* Incorporated by reference to the relevant exhibit to the Company's
Registration Statement on form S-1 filed with the Securities and Exchange
Commission (the 'SEC') on May 3, 1996, File No. 33-83766.
** Incorporated by reference to the relevant exhibit to the Registration
Statement on Form S-4 of General Chemical Industrial Products Inc. filed with
the SEC on September 30, 1999, File No. 333-81469.
(footnotes continued on next page)
39
<Page>
(footnotes continued from previous page)
'D' Incorporated by reference to the relevant exhibit to General Chemical
Corporation's Registration Statement filed with the SEC on August 11, 1993,
File No. 33-64824.
'DD' Incorporated by reference to the relevant exhibit to General Chemical
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 filed with the SEC.
FINANCIAL STATEMENTS
See Item 8, beginning on page 17.
FINANCIAL STATEMENT SCHEDULES
See Index to Financial Statement Schedules on page 42.
REPORTS ON FORM 8-K
None.
40
<Page>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in Hampton, State of New Hampshire
on the 29th day of March 2002.
THE GENERAL CHEMICAL GROUP INC.
By: /s/ DAVID S. GRAZIOSI
.................................
DAVID S. GRAZIOSI
VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
March 29, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<Table>
<Caption>
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ PAUL M. MONTRONE Chairman of the Board and Director March 29, 2002
..........................................
(PAUL M. MONTRONE)
/s/ JOHN M. KEHOE, JR. President, Chief Executive Officer March 29, 2002
......................................... (Principal Executive Officer) and
(JOHN M. KEHOE, JR.) Director
/s/ DAVID S. GRAZIOSI Vice President and Chief Financial March 29, 2002
......................................... Officer (Principal Financial and
(DAVID S. GRAZIOSI) Accounting Officer)
/s/ PAUL M. MEISTER Director March 29, 2002
.........................................
(PAUL M. MEISTER)
/s/ PHILIP E. BEEKMAN Director March 29, 2002
.........................................
(PHILIP E. BEEKMAN)
/s/ GERALD J. LEWIS Director March 29, 2002
.........................................
(GERALD J. LEWIS)
/s/ JOSEPH M. VOLPE Director March 29, 2002
.........................................
(JOSEPH M. VOLPE)
</Table>
41
<Page>
THE GENERAL CHEMICAL GROUP INC.
INDEX TO FINANCIAL STATEMENT SCHEDULES
<Table>
Schedule II -- Valuation and Qualifying Accounts........................ 43
</Table>
Schedules required by Article 12 of Regulation S-X, other than those listed
above, are omitted because of the absence of the conditions under which they are
required or because the required information is included in the consolidated
financial statements or notes thereto.
42
<Page>
SCHEDULE II
THE GENERAL CHEMICAL GROUP INC.
VALUATION AND QUALIFYING ACCOUNTS
<Table>
<Caption>
TRANSLATION
BALANCE AT ADDITIONS DEDUCTIONS ADJUSTMENT BALANCE AT
BEGINNING CHARGED TO FROM DURING END OF
OF PERIOD INCOME RESERVES PERIOD PERIOD
--------- ------ -------- ------ ------
(IN THOUSANDS)
Year ended December 31, 1999
Allowance for doubtful accounts... $2,658 $ -- $ -- $ 21 $2,679
Year ended December 31, 2000
Allowance for doubtful accounts... $2,679 $397 $(526) $(15) $2,535
Year ended December 31, 2001
Allowance for doubtful accounts... $2,535 $202 $(713) $(28) $1,996
</Table>
43
<Page>
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
*3.1 -- Amended and Restated Certificate of Incorporation of the Company.
*3.2 -- Amended and Restated By-Laws of the Company......................
*4.1 -- Specimen Certificate for shares of Common Stock, $.01 par value,
of the Company...................................................
*10.1 -- Agreement dated as of March 15, 1996 between Paul M. Montrone and
the Company......................................................
'D'10.4 -- Restated Environmental Matters Agreement among Allied-Signal,
Henley, The Wheelabrator Group Inc., New Hampshire Oak, Inc., and
Fisher Scientific Group Inc., dated as of February 26, 1986, as
amended and restated as of July 28, 1989.........................
'D'10.5 -- Second Amended and Restated Partnership Agreement of GCSAP dated
June 30, 1992, among General Chemical, The Andover Group, Inc.,
and TOSOH Wyoming, Inc. .........................................
'D'10.6 -- Amended and Restated Parent Guaranty and Transfer Agreement dated
June 30, 1992, among New Hampshire Oak, Inc., ACI International
Limited and TOSOH America, Inc. .................................
*10.7 -- The General Chemical Group Inc. Deferred Compensation Plan for
Non-Employee Directors...........................................
*10.8 -- The General Chemical Group Inc. Retirement Plan for Non-Employee
Directors........................................................
*10.9 -- The General Chemical Group Inc. Restricted Unit Plan for
Non-Employee Directors...........................................
*10.10 -- The General Chemical Group Inc. 1996 Stock Option and Incentive
Plan.............................................................
*10.11 -- The General Chemical Group Inc. Performance Plan.................
*10.12 -- The General Chemical Group Inc. Restricted Unit Plan.............
'DD'10.13 -- First Amendment to General Chemical Corporation Equity Program,
effective as of October 1,1993...................................
*10.14 -- General Chemical Group Dividend Award Program, as amended
December 15, 1995, effective as of October 1, 1993...............
*10.15 -- General Chemical Corporation Supplemental Savings and Retirement
Plan.............................................................
**10.16 -- Employee Benefits Agreement among The General Chemical Group
Inc., and GenTek Inc. ...........................................
**10.17 -- Intellectual Property Agreement among General Chemical Industrial
Products Inc., General Chemical Corporation, GenTek, Inc. and The
General Chemical Group Inc. .....................................
**10.18 -- Credit Agreement, dated as of April 30, 1999, among General
Chemical Industrial Products Inc., and General Chemical Canada
Ltd. as Borrowers, the several Lenders from time to time parties
thereto, The Chase Manhattan Bank, as Administrative Agent, The
Chase Manhattan Bank of Canada, as Canadian Administrative Agent,
The Bank of Nova Scotia, as Syndication Agent, and The First
National Bank of Chicago as Documentation Agent.................
10.19 -- First Amendment, dated as of March 7, 2001, to the Credit
Agreement referred to in Exhibit 10.18..........................
</Table>
44
<Page>
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
**10.20 -- Guarantee and Collateral Agreement, dated as of April 30,
1999, made by General Chemical Industrial Products Inc.,
and certain of its subsidiaries in favor of the Chase
Manhattan Bank, as Collateral Agent. Incorporated by
reference to the relevant exhibit to the GCG First Quarter
1999 10-Q.......................................................
**10.21 -- Amended and Restated Management Agreement between Latona
Associates Inc. and The General Chemical Group Inc.
Incorporated by reference to the relevant exhibit to The
General Chemical Group Inc.'s 10-Q for the three months
ended June 30, 1999 with the Securities and Exchange
Commission on August 16, 1999 (the 'GCG Second Quarter
10-Q')..........................................................
**10.22 -- Tax Sharing Agreement between The General Chemical Group
Inc. and GenTek Inc. ...........................................
**10.23 -- Sublease Agreement between General Chemical Industrial
Products Inc and General Chemical Corporation...................
**10.24 -- Transition Support Agreement between GenTek Inc. and
General Chemical Corporation....................................
**22 -- Subsidiaries of the Company.....................................
</Table>
- ---------
* Incorporated by reference to the relevant exhibit to the Company's
Registration Statement filed with the Securities and Exchange Commission
(the 'SEC') on May 3, 1996, File No. 33-83766.
** Incorporated by reference to the relevant exhibit to the Registration
Statement on Form S-4 of General Chemical Industrial Products Inc. filed
with the SEC on September 30, 1999, File No. 333-81469.
'D' Incorporated by reference to the relevant exhibit to General Chemical
Corporation's Registration Statement filed with the SEC on August 11, 1993,
File No. 33-64824.
'DD' Incorporated by reference to the relevant exhibit to General Chemical
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 filed with the SEC.
45
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as................................ 'D'
The double dagger symbol shall be expressed as......................... 'DD'