WESTLAKE CHEMICAL CORP (Form: S-1/A, Received: 07/02/2004 06:20:37)

As filed with the Securities and Exchange Commission on July 2, 2004

Registration No. 333-115790

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

Form S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Westlake Chemical Corporation

(Exact name of registrant as specified in its charter)


Delaware	2869	76-0346924
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

(713) 960-9111

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Stephen Wallace, Esq.

Vice President and General Counsel

Westlake Chemical Corporation

2801 Post Oak Boulevard, Suite 600

Houston, Texas 77056

(713) 960-9111

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

Copies to:


J. David Kirkland, Jr., Esq. Timothy S. Taylor, Esq. Baker Botts L.L.P. One Shell Plaza 910 Louisiana Street Houston, Texas 77002 (713) 229-1234		Peter M. Labonski, Esq. Latham & Watkins LLP 885 Third Avenue New York, New York 10022 (212) 906-1200

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE






		Proposed Maximum	Proposed Maximum
Title of Each Class of	Amount to Be	Offering Price Per	Aggregate Offering	Amount of
Securities to Be Registered	Registered(1)	Share(1)	Price(2)(3)	Registration Fee


Common stock, par value $0.01 per share	—	—	$230,000,000	$29,141(4)

(1) In accordance with Rule 457(o) under the Securities Act of 1933, as amended, the number of shares being registered and the proposed maximum offering price per share are not included in this table.

(2) Estimated solely for the purpose of calculating the registration fee.

(3) Includes common stock to be sold by the selling stockholder upon exercise of the underwriters’ over-allotment option.

(4) $29,141 was previously paid with the initial filing of this registration statement.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 2, 2004

(WESTLAKE LOGO)

Westlake Chemical Corporation

Common Stock

Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $ and $ per share. We have applied to list our common stock on the New York Stock Exchange under the symbol “WLK.”

The underwriters have an option to purchase a maximum of additional shares from the selling stockholder to cover over-allotments. We will not receive any of the proceeds from shares of common stock sold by the selling stockholder.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 12.

Underwriting

Price to

Discounts and

Proceeds to

Public

Commissions

Westlake

Per Share

Total

Delivery of the shares of common stock will be made on or about , 2004.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


Credit Suisse First Boston	JPMorgan	Deutsche Bank Securities

Banc of America Securities LLC

Goldman, Sachs & Co.

UBS Investment Bank

The date of this prospectus is , 2004

(FLOW CHART)

TABLE OF CONTENTS


	PAGE

INDUSTRY AND MARKET DATA		i
PRODUCTION CAPACITY		i
NON-GAAP FINANCIAL MEASURES		i
PROSPECTUS SUMMARY		1
RISK FACTORS		12
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS		22
THE TRANSACTIONS		24
USE OF PROCEEDS		24
DIVIDEND POLICY		24
DILUTION		25
CAPITALIZATION		26
SELECTED CONSOLIDATED FINANCIAL, OPERATING AND INDUSTRY DATA		27
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		31
INDUSTRY OVERVIEW		46
OUR BUSINESS		52
MANAGEMENT		65
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		75
PRINCIPAL AND SELLING STOCKHOLDER		76
DESCRIPTION OF CERTAIN INDEBTEDNESS		77
DESCRIPTION OF CAPITAL STOCK		80
SHARES ELIGIBLE FOR FUTURE SALE		86
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS		87
UNDERWRITING		90
NOTICE TO CANADIAN RESIDENTS		93
LEGAL MATTERS		94
EXPERTS		94
WHERE YOU CAN FIND MORE INFORMATION		94
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS		F-1
Form of Amended Certificate of Incorporation
Form of Bylaws
Form of Specimen Stock Certificate
Form of Opinion of Baker Botts L.L.P.
Form of Registration Rights Agreement
2004 Omnibus Incentive Plan
Subsidiaries of the Registrant
Consent of PricewaterhouseCoopers LLP

You should rely only on the information contained in this document. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Dealer Prospectus Delivery Obligation

Until , 2004 (25 days after the commencement of this offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

INDUSTRY AND MARKET DATA

Industry and market data used throughout this prospectus were obtained through internal company research, surveys and studies conducted by third parties and industry and general publications, including information from the Chemical Market Associates, Inc., or CMAI, Chemical Data, Inc. and the Freedonia Group. We have not independently verified market and industry data from third-party sources. While we believe internal company estimates are reliable and market definitions are appropriate, neither such estimates nor these definitions have been verified by any independent sources.

PRODUCTION CAPACITY

Unless we state otherwise, annual production capacity estimates used throughout this prospectus represent rated capacity at March 31, 2004. We calculated rated capacity by estimating the number of days in a typical year that a production unit of a plant is expected to operate, after allowing for downtime for regular maintenance, and multiplying that number by an amount equal to the unit’s optimal daily output based on the design feedstock mix. Because the rated capacity of a production unit is an estimated amount, actual production volumes may be more or less than the rated capacity.

NON-GAAP FINANCIAL MEASURES

The body of accounting principles generally accepted in the United States is commonly referred to as “GAAP.” For this purpose, a non-GAAP financial measure is generally defined by the Securities and Exchange Commission (“SEC”) as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. In this prospectus, we disclose so-called non-GAAP financial measures, primarily EBITDA. EBITDA is calculated as net income before interest expense, income taxes, depreciation and amortization. The non-GAAP financial measures described in this prospectus are not substitutes for the GAAP measures of earnings and cash flow.

EBITDA is included in this prospectus because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented for us may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes interest expense, depreciation and amortization, and income taxes.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before making an investment decision with respect to our common stock. You should carefully read this entire prospectus, including the consolidated financial statements and related notes, before making an investment decision with respect to our common stock. In this prospectus, we refer to our company and its consolidated subsidiaries as “we,” “us,” “our” or “Westlake” and TTWF LP, a Delaware limited partnership, as “TTWF LP” or the “selling stockholder,” unless we state otherwise or the context clearly indicates otherwise. Unless the context indicates otherwise, the information in this prospectus relating to us assumes that the mergers (the “Transactions”) described under “The Transactions” in this prospectus have been completed.

About Us

We are a vertically integrated manufacturer and marketer of basic chemicals, vinyls, polymers and fabricated products. Our products include some of the most widely used chemicals in the world, which are fundamental to many diverse consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, residential and commercial construction as well as other durable and non-durable goods. We believe that our business is characterized by highly integrated, world-class chemical production facilities, state-of-the-art technology, leading regional market positions by volume for particular products, a strong and stable customer base and experienced management. We operate in two principal business segments, Olefins and Vinyls, and we are one of the few fully integrated producers of vinyls and fabricated products in North America. For the year ended December 31, 2003, we had net sales of $1,423 million, income from operations of $66 million, net income of $15 million and EBITDA of $149 million. During the same period, our Olefins segment and our Vinyls segment contributed 62% and 38% of our net sales, after intercompany eliminations, 84% and 21% of our income from operations and 74% and 32% of our EBITDA, including corporate and other, respectively. Please read note 5 to the table under “Summary Consolidated Financial, Operating and Industry Data” beginning on page 9 for a discussion of EBITDA and a reconciliation of EBITDA to net income (loss) and to cash flows from operating activities.

We benefit from highly integrated production facilities that allow us to process raw materials into higher value-added chemicals and fabricated products. We have 8.3 billion pounds per year of active aggregate production capacity at 11 strategically located manufacturing sites in North America. We believe that with our highly integrated capabilities, we are less affected by volatility in product demand, have less exposure to the effects of cyclical raw material prices and operate at higher capacity utilization rates than non-integrated producers. In addition, the strategic location of our facilities lowers our transportation costs due to our high level of internally used production. In 2003, we used 70% of our basic chemical production internally to produce higher value-added chemicals and fabricated products for sale to external customers. We also have a 43% interest in a joint venture in China that produces polyvinyl chloride, or PVC, resin and film.

Olefins

In our Olefins segment, we manufacture ethylene, polyethylene, styrene and associated co-products at our manufacturing facilities in Lake Charles, Louisiana. For the year ended December 31, 2003, our Olefins segment had net sales to external customers of $877 million, income from operations of $55 million and EBITDA of $110 million.

450 million pounds of ethylene per year in our Vinyls segment at our Calvert City, Kentucky facilities, which is used internally in the production of vinyl chloride monomer, or VCM.

Polyethylene. Polyethylene, the world’s most widely consumed polymer, is used in the manufacture of a wide variety of packaging, film, coating and molded product applications including trash can liners, shopping and dry cleaning bags and housewares. We produce the three principal types of polyethylene: low-density polyethylene, or LDPE, linear low-density polyethylene, or LLDPE, and high-density polyethylene, or HDPE. We are the fourth largest producer of LDPE in North America based on capacity. We have the capacity to produce 850 million pounds of LDPE and 550 million pounds of either LLDPE or HDPE per year.

Styrene. Styrene is used to produce polystyrene and synthetic rubber, which are used in a number of applications including injection molding, disposables, food packaging, housewares, paints and coatings, resins, building materials and toys. We have the capacity to produce 450 million pounds of styrene per year.

Vinyls

In our Vinyls segment, we manufacture PVC, VCM, chlorine, caustic soda, ethylene and fabricated products. Chlorine and ethylene are the basic raw materials used to manufacture VCM, which we then convert into PVC. We use most of our PVC to manufacture fabricated products such as pipe, fence, deck and door and window components. We manage our integrated vinyls production chain, from the basic chemicals to finished fabricated products, to maximize product margins, pricing and capacity utilization. Our primary manufacturing facilities are in Calvert City, Kentucky. We also own eight strategically located PVC fabricated product facilities, each situated in close proximity to our markets and customers. In addition, in 2002, we acquired a vinyls facility in Geismar, Louisiana, and we started operation of the EDC portion of the Geismar facility in the fourth quarter of 2003. We plan to operate part or all of the remainder of the facility when market conditions support utilization of the additional capacity. We also own a 43% interest in a joint venture in China that produces PVC resin and film. For the year ended December 31, 2003, our Vinyls segment had net sales to external customers of $546 million, income from operations of $14 million and EBITDA of $47 million.

PVC. PVC, the world’s third most widely used plastic, is an attractive alternative to traditional materials such as glass, metal, wood, concrete and other plastic materials because of its versatility, durability and cost competitiveness. We have the capacity to produce 800 million pounds of PVC per year, excluding capacity of our China joint venture and 600 million pounds per year of potential capacity at our Geismar facility. In 2003, we used 63% of our PVC internally in the production of our fabricated products. PVC is used for construction materials including pipe, fence, siding and window and door components and film for packaging and other consumer applications.

VCM. VCM is used to produce PVC, solvents and PVC-related products. We have the capacity to produce 1.3 billion pounds of VCM per year, excluding 600 million pounds per year of potential capacity at our Geismar facility. In 2003, we used 63% of our VCM production in our PVC operations.

Chlorine and Caustic Soda. We produce chlorine and caustic soda, co-products commonly referred to as chlor-alkali, at our Calvert City facilities. We use chlorine to produce VCM and sell caustic soda to external customers who use it in a variety of end markets including the production of pulp and paper, organic and inorganic chemicals, and alumina. In 2002, we converted our chlorine facility to a more efficient, state-of-the-art membrane technology, resulting in an approximate 25% reduction in energy consumption per unit of production that has resulted in significant savings, as energy is a major cost of chlor-alkali production. This conversion also increased our annual production capacity by 64% from 250 to 410 million pounds of chlorine and from 275 to 450 million pounds of caustic soda.

Ethylene. Our Calvert City ethylene plant has annual production capacity of 450 million pounds and, in 2003, produced approximately 70% of the ethylene required for our VCM production. We obtain the

remainder of the ethylene we need for our Vinyls business from our Lake Charles facility. The ethylene is converted to EDC at our Geismar facility.

Fabricated Products. Products made from PVC are used in construction materials ranging from water and sewer systems to home and commercial applications for fence, deck, window and patio door systems. PVC windows and patio doors are more energy efficient, less costly and easier to maintain than many alternative products. PVC fence and deck products feature low maintenance materials and long product life. PVC pipe offers greater strength, lower installed cost, increased corrosion resistance, lighter weight and longer service life when compared to iron, steel and concrete alternatives. We are a leading manufacturer of PVC fabricated products by volume in the geographic regions where we operate. We market pipe products under the “North American Pipe” brand, PVC window and patio door components under the “NAPG” brand and PVC fence and deck products under the “Westech” brand, all of which are recognized brands in their respective markets. We sell substantially all of our products from our eight fabricated products facilities to distributors and manufacturers who, in turn, sell the products to municipalities or contractors. Since entering the market in 1992, we have increased our annual capacity of fabricated products from 194 million pounds to 600 million pounds.

China Joint Venture. We own a 43% interest in Suzhou Huasu Plastics Co. Ltd., a joint venture based near Shanghai, China. Our joint venture partners are Norway’s Norsk Hydro ASA, two local Chinese chemical companies and International Finance Corporation, a unit of the World Bank. In 1995, this joint venture constructed and began operating a PVC film plant that has a current annual capacity of 79 million pounds of PVC film. In 1999, the joint venture constructed and began operating a PVC resin plant that has an annual capacity of 286 million pounds of PVC resin.

Our Competitive Strengths

Vertically Integrated Operations. We operate in two vertically integrated business segments and use the majority of our internally produced basic chemicals to manufacture higher value-added chemicals and fabricated products. We are one of the few fully integrated producers of vinyls and fabricated products in North America. By operating integrated olefins and vinyls production processes, we believe we are less susceptible to volatility in product demand, have less exposure to the effects of cyclical raw material prices and are able to operate at higher capacity utilization rates than non-integrated chemical producers. We have also been able to lower our transportation costs due to our high level of internally used production. In 2003, we used almost 83% of our ethylene production to manufacture polyethylene, styrene monomer and VCM. We also used 63% of our VCM production to manufacture PVC and 63% of our PVC production to manufacture our fabricated products.

Efficient Modern Asset Base and Low Cost Operations. We operate some of the industry’s newest manufacturing facilities in North America and focus on continually improving our asset portfolio and cost position. We have invested approximately $1.2 billion since 1990 to construct new, state-of-the-art facilities and acquire and upgrade facilities and equipment in both our Olefins and Vinyls segments. We built two ethylene crackers in Lake Charles in 1991 and 1997, and constructed a gas-phase LLDPE/HDPE plant in Lake Charles in 1998. In addition, we recently completed the technology conversion and upgrade of our chlor-alkali facility at Calvert City, reducing per unit energy consumption by approximately 25% and increasing capacity by 64%. These newer plants increase operating efficiency and reduce our maintenance and environmental compliance costs. Our ethylene plants allow us to choose between ethane, propane and butane feedstocks. This flexibility enables us to react to changing market conditions and reduce raw material costs. We continually focus on reducing costs throughout our organization and believe that our selling, general and administrative costs of 3.8% of our net sales for 2003 is one of the lowest in the chemical industry. We minimize research and development expenses by selectively acquiring and licensing third-party proprietary technology as a cost-effective approach to product development and production efficiency improvement.

Strong Regional Market Presence. Fabricated products are sold on a regional basis, and we are a leading seller of PVC fabricated products by volume in the geographic regions where we operate. Our

vinyls facilities at Calvert City, Kentucky are located on the Tennessee River and provide a freight cost advantage to our customers in the high-volume Midwest and Northeast markets when compared to most of our competitors located on the Gulf Coast. Our eight fabricated products facilities in North America allow us to focus our sales effort on local markets where we have a strong market presence.

Experienced Management with Significant Equity Interest. Our senior management team has an average of over 25 years of experience in the petrochemical industry. We were founded by our chairman, T.T. Chao, and his family in 1985. The Chao family has more than 50 years of experience in the plastics and fabrications industries, both in Asia and the United States. The Chao family also owns a 49% interest in the Titan Group, Southeast Asia’s second largest polyolefin producer and fourth largest olefins and aromatics producer. Our management has demonstrated expertise in reducing costs and growing our business through acquisitions and capacity expansions.

Our Business Strategy

Since we began operations in 1986, our goal has been to achieve profitable growth — in businesses we understand, globally in areas where we can gain a competitive advantage, and in a disciplined and opportunistic manner. We have successfully pursued this goal through acquisitions, expansions and new facilities, as demonstrated by our increase in revenues from $66 million in 1987 to $1,423 million in 2003, representing a compound annual growth rate of 21%, and, for the same period, increased annual production capacity from 775 million pounds to 8,260 million pounds, representing a compound annual growth rate of 16%. Our strategies are:

Focus on growth in core businesses. We will endeavor to enhance our existing businesses and pursue opportunities that reduce costs, increase capacity, and improve integration in our product portfolio.

• Continue productivity improvements. We focus on productivity improvements and cost reduction across our businesses. For example, we have increased our production capacity by approximately 20% since 1999 with minimal change in employee headcount. We completed a conversion at our chlorine facility in 2002 that reduced energy consumption per ton by approximately 25% and increased annual capacity by 64%. We will continue to improve our feedstock flexibility at our ethylene facilities, which will enhance our ability to select feedstocks depending on prevailing market prices.

• Pursue low-cost expansion opportunities. We will continue to invest in opportunities to prudently expand capacity through new investments and debottlenecking initiatives. For example, we acquired a vinyls facility in Geismar, Louisiana in 2002 and started the EDC portion of the facility in the fourth quarter of 2003, enabling us to more economically provide basic chemicals to our vinyls chain. At a future date, if market conditions warrant, we could bring approximately 600 million pounds per year of VCM and PVC capacity on line. In our Olefins segment, we recently completed a scheduled turnaround at Lake Charles that increased ethylene capacity by 100 million pounds per year. These investments allow us to significantly increase sales and further improve operating efficiencies with modest incremental capital expenditures.

• Maintain a disciplined acquisition strategy. Since our formation, we have successfully integrated 12 acquisitions. Going forward, we will actively seek opportunities in our Vinyls and Olefins businesses that enhance our level of integration, improve our product portfolio, expand our market presence or provide operational synergies and cost savings.

Leverage global knowledge and expertise. Through our stake in the joint venture in China and the Chao family’s experience in the Asian chemical and fabrication markets, Westlake and its management have a broad base of knowledge in the region and a foothold in this rapidly growing market. We plan to continue to leverage this expertise and evaluate new opportunities that represent a logical fit with our existing business platform. In addition, we continue to evaluate cost-effective opportunities to selectively add production capacity in our key products in geographic areas that provide access to low cost raw materials, or new, higher growth end markets.

Current Industry Conditions

The profitability of our key olefins and vinyls products is cyclical and is therefore subject to volatility depending upon the relationship of supply to demand for our products. Periods of tight supply compared with demand lead to high operating rates and margins. Periods of oversupply, which generally occur when capacity additions exceed demand growth, lead to reduced operating rates and lower margins. Over the past few years, our Olefins and Vinyls businesses have been operating in a down cycle as a result of significant new capacity additions, weak demand reflecting general economic conditions and high raw material costs. Our primary raw materials are natural gas based feedstocks, which increased in price dramatically in 2003 and have remained at these escalated levels in 2004.

Recently, we have begun to see signs of recovery in our industry. Beginning in the second half of 2003, improving economic conditions have led to increased demand for many of our products. Despite continued high raw material costs, limited new capacity and higher demand have resulted in improving operating rates and margins for many of our products.

In the first quarter of 2004, consistent with the industry, we experienced higher selling prices and higher sales volumes in ethylene and styrene, which were partially offset by higher raw material costs for ethane, propane and benzene and lower polyethylene sales volumes. In our Vinyls business, consistent with the industry, we experienced higher selling prices for PVC pipe, PVC resin and VCM, as well as higher sales volumes for PVC pipe.

Over the medium term, CMAI projects that current industry fundamentals point to a cyclical recovery in the petrochemicals business, with the next peak expected over the 2005 – 2007 period. This forecast is supported by limited expected capacity additions in North America over the next several years, which, when combined with improving demand, should result in increasing operating rates and margins.

Recent Developments

On June 30, 2004, we signed a definitive agreement to purchase substantially all of the assets of Bristolpipe Corporation. Bristolpipe Corporation, headquartered in Elkhart, Indiana, operates three manufacturing plants located in Indiana, Pennsylvania and Georgia and primarily produces PVC pipe products for a wide range of applications, including domestic and commercial drainage, waste and venting; underground water; sewer pipe; and telecommunications cable ducting. Bristolpipe Corporation reported revenues of approximately $114.0 million for calendar year 2003. The purchase price of the assets is $33.0 million, subject to certain closing adjustments. We anticipate the closing to occur on or about July 31, 2004. The closing is subject to the approval of the shareholders of Heywood Williams Group PLC, the ultimate parent company of Bristolpipe Corporation, and the satisfaction of certain customary closing conditions.

The Transactions

partnership, will become the sole stockholder of our company, and members of the Chao family and related trusts and other entities, which are currently the stockholders of Westlake Chemical Corporation, WPPI and GPPI, will own all of the partnership interests in TTWF LP. The mergers will be treated as a reorganization of entities under common control, and our consolidated financial statements included in this prospectus reflect the mergers (but not the exchange of preferred stock for common stock) as if they had occurred prior to January 1, 1999. Unless the context indicates otherwise, the information in this prospectus relating to us assumes that the mergers described above have been completed.

Our principal executive offices are located at 2801 Post Oak Boulevard, Houston, Texas 77056 and our telephone number is (713) 960-9111. Our corporate Web site address is www.westlakegroup.com. The information contained in our corporate Web site is not part of this prospectus.

The Offering


Issuer		Westlake Chemical Corporation.

Common stock offered		shares.

Common stock to be outstanding after the offering		shares.

Common stock held by the selling stockholder after the offering		shares ( shares if the underwriters exercise the over-allotment option in full).

Use of proceeds		We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and our estimated offering expenses, will be approximately $ million. We intend to use the net proceeds from this offering for general corporate purposes, including the repayment of debt. See “Use of Proceeds.”

Over-allotment option		TTWF LP, as selling stockholder, has granted the underwriters a 30-day option to purchase a maximum of additional shares of our common stock at the initial public offering price to cover over-allotments. We will not receive any of the proceeds from the sale of any shares by the selling stockholder.


Risk factors		Please read “Risk Factors” beginning on page 12 of this prospectus for a discussion of factors you should carefully consider before deciding to purchase shares of our common stock.


Dividend policy		We intend to pay a regular quarterly dividend of $ per share to holders of our common stock.

Proposed New York Stock Exchange symbol for our common stock		“WLK.”

The number of shares of our common stock to be outstanding after this offering excludes shares of common stock reserved for issuance under our omnibus incentive plan.

Unless we specifically state otherwise, the information in this prospectus does not take into account the sale of a maximum of additional shares of common stock by the selling stockholder that the underwriters have the option to purchase to cover over-allotments.

Summary Consolidated Financial, Operating and Industry Data

We have provided in the table below summary consolidated financial, operating and industry data. We have derived the statement of operations data for each of the years in the three-year period ended December 31, 2003, and the balance sheet data as of December 31, 2002 and 2003, from audited consolidated financial statements appearing elsewhere in this prospectus. We have derived the statement of operations data for the years ended December 31, 1999 and 2000, and the balance sheet data as of December 31, 1999, 2000 and 2001, from consolidated financial statements not included in this prospectus. We have derived the statement of operations data for the three months ended March 31, 2003 and 2004, and the balance sheet data as of March 31, 2003 and 2004, from unaudited consolidated financial statements appearing elsewhere in this prospectus. The historical financial information may not be indicative of our future performance, and results of operations for the three-month period ended March 31, 2004 may not be indicative of the results of operations that may be achieved for the entire year. You should read this information in conjunction with “Selected Consolidated Financial, Operating and Industry Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.



																	Three Months Ended
		Year Ended December 31,															March 31,

		1999			2000			2001			2002			2003			2003			2004


		(Dollars in thousands, except per share data)
Statement of Operations Data:
Net sales		$	1,058,507		$	1,392,276		$	1,087,033		$	1,072,627		$	1,423,034		$	380,573		$	400,894
Gross profit			176,965			198,924			(29,921	)		75,259			121,952			44,839			38,807
Selling, general and administrative expenses			48,490			62,038			53,203			58,948			53,852			18,986			11,892
Impairment of long-lived assets(1)			2,748			10,777			7,677			2,239			2,285			—			—

Income (loss) from operations			125,727			126,109			(90,801	)		14,072			65,815			25,853			26,915
Interest expense			(47,516	)		(37,281	)		(35,454	)		(35,044	)		(38,589	)		(8,855	)		(10,752	)
Debt retirement cost			—			—			—			—			(11,343	)		—			—
Other income (expense), net(2)			7,287			1,866			8,916			6,769			7,620			3,511			(73	)

Income (loss) before income taxes			85,498			90,694			(117,339	)		(14,203	)		23,503			20,509			16,090
Provision for (benefit from) income taxes			30,276			35,695			(45,353	)		(7,141	)		8,747			7,633			5,405

Net income (loss)		$	55,222		$	54,999		$	(71,986	)	$	(7,062	)	$	14,756		$	12,876		$	10,685

Earnings per share information(3):
Basic and diluted earnings (loss) per share		$	49,526		$	49,326		$	(64,561	)	$	(6,334	)	$	13,234		$	11,548		$	9,583
Weighted average basic and diluted shares outstanding			1,115			1,115			1,115			1,115			1,115			1,115			1,115
Balance Sheet Data (end of period):
Cash and cash equivalents		$	9,131		$	11,529		$	79,095		$	11,123		$	37,381		$	18,044		$	36,839
Working capital(4)			108,107			117,818			138,211			158,993			197,715			140,951			223,439
Total assets			1,319,723			1,374,645			1,308,858			1,309,245			1,370,113			1,331,906			1,374,842
Total debt			508,691			425,559			540,855			533,350			537,289			500,850			536,989
Minority interest			19,700			19,700			22,100			22,100			22,100			22,100			22,100
Stockholders’ equity			449,834			504,203			430,752			428,519			445,603			441,947			456,146
Other Operating Data:
Cash flow from:
	Operating activities	$	132,618		$	173,377		$	26,370		$	(21,326	)	$	93,187		$	44,601		$	9,797
	Investing activities		(26,685	)		(87,693	)		(76,500	)		(38,686	)		(41,581	)		(5,180	)		(10,039	)
	Financing activities		(127,830	)		(83,286	)		117,696			(7,960	)		(25,348	)		(32,500	)		(300	)
Depreciation and amortization			84,947			78,757			81,690			88,018			87,293			22,248			20,898
Capital expenditures			30,604			78,893			76,500			43,587			44,931			8,372			11,045
EBITDA(5)			217,961			206,732			(195	)		108,859			149,385			51,612			47,740



											Three Months
											Ended
	Year Ended December 31,										March 31,

	1999		2000		2001		2002		2003		2003		2004


	(Millions of pounds)
External Sales Volume:
Ethylene		586		607		560		340		442		118		136
Polyethylene		1,117		1,213		1,076		1,199		1,280		343		300
Styrene		445		455		494		428		419		94		118
PVC		310		300		309		301		296		78		62
VCM		387		394		459		473		436		114		74
Caustic soda		318		335		327		403		387		97		116
Fabricated products		506		440		501		545		515		136		144

	(Cents per pound, except as noted)
Average Industry Pricing:(6)
Ethylene(7)		21.5		27.2		21.4		16.9		21.5		24.3		28.3
Polyethylene(8)		41.0		46.4		42.8		41.9		52.2		50.5		55.7
Styrene(9)		22.9		34.8		21.8		27.3		31.7		35.9		37.9
PVC(10)		32.8		36.7		31.4		34.4		42.5		40.5		40.5
VCM(11)		18.3		25.3		18.9		19.9		25.7		24.8		28.8
Caustic soda ($/ton)(12)		95.4		155.0		245.0		94.8		114.4		111.7		76.4
Natural gas ($/mmbtu)(13)		2.32		4.32		4.04		3.37		5.49		5.92		5.71

(1) The 2003 impairments related primarily to idled styrene assets and other miscellaneous assets written down to fair market value. The 2002 impairment related to a ceased product business. Impairments in 2001 and 2000 related primarily to assets that were acquired but never placed in service. Impairments in 1999 related primarily to a fabricated products business that was subsequently sold and an idled PVC plant.

(2) Other income (expense), net is composed of interest income, insurance proceeds, income and expenses related to our accounts receivable securitization facility which was terminated in July 2003, equity income, management fee income and other gains and losses.

(3) Does not reflect the issuance of common stock in exchange for the preferred stock as part of the Transactions. No cash dividends were paid during any of the periods presented.

(4) Working capital equals current assets less current liabilities.

(5) EBITDA (a non-GAAP financial measure) is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as “GAAP.” For this purpose a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this prospectus because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future


		debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented in this prospectus may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes (1) interest expense, which is a necessary element of our costs and ability to generate revenues because we have borrowed money to finance our operations, (2) depreciation, which is a necessary element of our costs and ability to generate revenues because we use capital assets and (3) income taxes, which is a necessary element of our operations. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. The following table reconciles EBITDA to net income (loss) and to cash flow from operating activities.

Reconciliation of EBITDA to Net Income (Loss) and

to Cash Flow from Operating Activities



	Year Ended December 31,															March 31,

	1999			2000			2001			2002			2003			2003			2004


																(Unaudited)

	(Dollars in thousands, except per share data)
EBITDA	$	217,961		$	206,732		$	(195	)	$	108,859		$	149,385		$	51,612		$	47,740
Less:
Income tax (provision) benefit		(30,276	)		(35,695	)		45,353			7,141			(8,747	)		(7,633	)		(5,405	)
Interest expense		(47,516	)		(37,281	)		(35,454	)		(35,044	)		(38,589	)		(8,855	)		(10,752	)
Depreciation and amortization		(84,947	)		(78,757	)		(81,690	)		(88,018	)		(87,293	)		(22,248	)		(20,898	)

Net income (loss)		55,222			54,999			(71,986	)		(7,062	)		14,756			12,876			10,685

Changes in operating assets and liabilities		45,078			74,602			133,779			(19,137	)		63,345			22,712			(5,043	)
Equity in income of unconsolidated subsidiary		(295	)		(8	)		(1,138	)		(770	)		(1,510	)		(612	)		(532	)
Deferred income taxes		28,565			32,951			(45,779	)		(4,716	)		7,112			8,584			5,144
Impairment of long-lived assets		2,748			10,777			7,677			2,239			2,285			—			—
Write off of debt issuance cost		—			—			—			—			7,343			—			—
Gain from disposition of fixed assets		—			—			—			(2,259	)		(2,903	)		(2,949	)		(231	)
Amortization of debt issue costs		—			—			—			—			887			—			552
Provision for doubtful accounts		1,300			56			3,817			10,379			1,872			3,990			(778	)

Cash flow from operating activities	$	132,618		$	173,377		$	26,370		$	(21,326	)	$	93,187		$	44,601		$	9,797

EBITDA has not been adjusted to exclude the effect of the following items:


Impairment of long-lived assets	$	(2,748	)	$	(10,777	)	$	(7,677	)	$	(2,239	)	$	(2,285	)	$	—	$	—
Debt retirement cost		—			—			—			—			(11,343	)		—		—
Other income (expense), net		7,287			1,866			8,916			6,769			7,620			3,511		(73	)

(6) These are average industry prices for the indicated products as reported by CMAI and are not the prices we realized.

(7) Represents average North American spot prices of ethylene over the period as reported by CMAI.

(8) Represents average North American contract prices of LDPE general purpose film over the period as reported by CMAI.

(9) Represents average North American spot prices of styrene over the period as reported by CMAI.

(10) Represents average North American contract prices of PVC over the period as reported by CMAI.

(11) Represents average North American contract prices of VCM over the period as reported by CMAI.

(12) Represents average North American spot prices of caustic soda (diaphragm grade) over the period as reported by CMAI.

(13) Represents average prices of Henry Hub natural gas over the period as reported by the New York Mercantile Exchange (NYMEX).

RISK FACTORS

You should carefully consider each of the following risks and all of the information set forth in this prospectus before deciding to invest in our common stock. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected. In that case, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to Our Business


	*Cyclicality in the petrochemical industry has in the past, and may in the future, result in reduced operating margins or operating losses.*

Our historical operating results reflect the cyclical and volatile nature of the petrochemical industry. The industry is mature and capital intensive. Margins in this industry are sensitive to supply and demand balances both domestically and internationally, which historically have been cyclical. The cycles are generally characterized by periods of tight supply, leading to high operating rates and margins, followed by periods of oversupply primarily resulting from significant capacity additions, leading to reduced operating rates and lower margins.

Moreover, profitability in the petrochemical industry is affected by the worldwide level of demand along with vigorous price competition which may intensify due to, among other things, new domestic and foreign industry capacity. In general, weak economic conditions either in the United States or in the world tend to reduce demand and put pressure on margins. It is not possible to predict accurately the supply and demand balances, market conditions and other factors that will affect industry operating margins in the future.


	*We sell commodity products in highly competitive markets and face significant competition and price pressure.*

We sell our products in highly competitive markets. Due to the commodity nature of many of our products, competition in these markets is based primarily on price and to a lesser extent on performance, product quality, product deliverability and customer service. As a result, we generally are not able to protect our market position for these products by product differentiation and may not be able to pass on cost increases to our customers. Accordingly, increases in raw material and other costs may not necessarily correlate with changes in prices for these products, either in the direction of the price change or in magnitude. Specifically, timing differences in pricing between raw material prices, which may change daily, and contract product prices, which in many cases are negotiated only monthly or less often, sometimes with an additional lag in effective dates for increases, have had and may continue to have a negative effect on profitability. Significant volatility in raw material costs tends to put pressure on product margins, as sales price increases generally tend to lag behind raw material cost increases. Conversely, when raw material costs decrease, customers seek relief in the form of lower sales prices.


	*High costs of raw materials and energy may result in increased operating expenses and adversely affect our results of operations and cash flow.*

Significant variations in the costs and availability of raw materials and energy may negatively affect our results of operations. These costs have risen significantly over the past several years due primarily to oil and natural gas cost increases. We purchase significant amounts of ethane and propane feedstock, natural gas, chlorine and salt to produce several basic chemicals. We also purchase significant amounts of electricity to supply the energy required in our production processes. The cost of these raw materials and energy, in the aggregate, represents a substantial portion of our operating expenses. The prices of raw materials and energy generally follow price trends of, and vary with market conditions for, crude oil and natural gas, which are highly volatile and cyclical. Our results of operations have been and could in the future be significantly affected by increases in these costs. Price increases increase our working capital needs and, accordingly, can adversely affect our liquidity and cash flow. We typically do not enter into

significant hedging arrangements with respect to prices of raw materials. However, we have occasionally entered into short-term contracts in order to hedge our costs for ethane and natural gas. In the future, we may decide not to hedge any of our raw material costs, or any hedges we enter into may not have successful results.

In addition, higher natural gas prices adversely affect the ability of many domestic chemical producers to compete internationally since U.S. producers are disproportionately reliant on natural gas and natural gas liquids as an energy source and as a raw material. In addition to the impact that this has on our exports, reduced competitiveness of U.S. producers also has in the past increased the availability of chemicals in North America, as U.S. production that would otherwise have been sold overseas was instead offered for sale domestically, resulting in excess supply and lower prices in North America. We could also face the threat of imported products from countries that have a cost advantage.


	*There is overcapacity in certain segments of the petrochemical industry that may result in lower operating rates and margins.*

Currently, there is overcapacity in the ethylene and polymers industries as a number of our competitors have added capacity. Future growth in product demand may not be sufficient to utilize this excess capacity. Excess industry capacity has depressed, and may continue to depress, our operating rates and margins. The global economic and political environment continues to be uncertain, contributing to reduced industry operating rates, adding to the volatility of raw materials and energy costs, and forestalling the industry’s recovery from trough conditions, which may place pressure on our results of operations.


	*External factors beyond our control can cause fluctuations in demand for our products and in our prices and margins, which may negatively affect our results of operations and cash flow.*

External factors beyond our control can cause volatility in raw material prices, demand for our products, product prices and volumes and deterioration in operating margins. These factors can also magnify the impact of economic cycles on our business and results of operations. Examples of external factors include:

• general economic conditions;

• the level of business activity in the industries that use our products;

• competitor action;

• technological innovations;

• currency fluctuations;

• international events and circumstances; and

• governmental regulation in the United States and abroad.

We believe that events in the Middle East have had a particular influence over the past few years and may continue to do so until the situations normalize. In addition, a number of our products are highly dependent on durable goods markets, such as housing and construction, which are themselves particularly cyclical. If the global economy does not continue to improve, demand for our products and our income and cash flow will continue to be adversely affected.

We may reduce production at or idle a facility for an extended period of time or exit a business because of high raw material prices, an oversupply of a particular product and/or a lack of demand for that particular product, which makes production uneconomical. Temporary outages sometimes last for several quarters or, in certain cases, longer and cause us to incur costs, including the expenses of maintaining and restarting these facilities. Factors such as increases in raw material costs or lower demand in the future may cause us to further reduce operating rates or idle facilities or exit uncompetitive businesses.

Continued hostilities in the Middle East and/or the occurrence or threat of occurrence of future terrorist attacks such as those against the United States on September 11, 2001 could adversely affect the economies of the United States and other developed countries. A lower level of economic activity could result in a decline in demand for our products, which could adversely affect our net sales and margins and limit our future growth prospects. In addition, these risks have and may continue to increase volatility in prices for crude oil and natural gas and could result in increased feedstock costs. In addition, these risks could cause increased instability in the financial and insurance markets and adversely affect our ability to access capital and to obtain insurance coverage that we consider adequate or are otherwise required by our contracts with third parties.


	*Our inability to compete successfully may reduce our operating profits.*

The petrochemical industry is highly competitive. In the last several years, there have been a number of mergers, acquisitions, spin-offs and joint ventures in the industry. This restructuring activity has resulted in fewer but more competitive producers, many of which are larger than we are and have greater financial resources than we do. Among our competitors are some of the world’s largest chemical companies and chemical industry joint ventures. Competition within the petrochemical industry and in the manufacturing of fabricated products is affected by a variety of factors, including:

• product price;

• technical support and customer service;

• quality;

• reliability of supply;

• availability of potential substitute materials; and

• product performance.

Changes in the competitive environment could have a material adverse effect on our business and our operations. These changes could include:

• the emergence of new domestic and international competitors;

• the rate of capacity additions by competitors;

• change in customer base due to mergers;

• the intensification of price competition in our markets;

• the introduction of new or substitute products by competitors;

• the technological innovations of competitors; and

• the adoption of new environmental laws and regulatory requirements.


	*Our production facilities process some volatile and hazardous materials that subject us to operating risks that could adversely affect our operating results.*

We have three major manufacturing facilities: our olefins complex in Lake Charles, Louisiana, our vinyls complex in Calvert City, Kentucky and our vinyls facility in Geismar, Louisiana. Our operations are subject to the usual hazards associated with commodity chemical and plastics manufacturing and the related use, storage, transportation and disposal of feedstocks, products and wastes, including:

• pipeline leaks and ruptures;

• explosions;

• fires;

• severe weather and natural disasters;

• mechanical failure;

• unscheduled downtime;

• labor difficulties;

• transportation interruptions;

• chemical spills;

• discharges or releases of toxic or hazardous substances or gases;

• storage tank leaks;

• other environmental risks; and

• terrorist attacks.

These hazards can cause personal injury and loss of life, catastrophic damage to or destruction of property and equipment and environmental damage, and may result in a suspension of operations and the imposition of civil or criminal penalties. We could become subject to environmental claims brought by governmental entities or third parties. The loss or shutdown over an extended period of operations at either of our major operating facilities would have a material adverse effect on us. We maintain property, business interruption and casualty insurance that we believe is in accordance with customary industry practices, but we cannot be fully insured against all potential hazards incident to our business, including losses resulting from war risks or terrorist acts. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. If we were to incur a significant liability for which we were not fully insured, it could have a material adverse effect on our financial position.


	*New regulations concerning the transportation of hazardous chemicals and the security of chemical manufacturing facilities could result in higher operating costs.*

Targets such as chemical manufacturing facilities may be at greater risk of future terrorist attacks than other targets in the United States. As a result, the chemical industry has responded to the issues surrounding the terrorist attacks of September 11, 2001 by starting new initiatives relating to the security of chemicals industry facilities and the transportation of hazardous chemicals in the United States. Simultaneously, local, state and federal governments have begun a regulatory process that could lead to new regulations impacting the security of chemical plant locations and the transportation of hazardous chemicals. Our business or our customers’ businesses could be adversely affected because of the cost of complying with new regulations.


	*Our operations and assets are subject to extensive environmental, health and safety laws and regulations.*

We use large quantities of hazardous substances and generate large quantities of hazardous wastes in our manufacturing operations. Due to the large quantities of hazardous substances and wastes, our industry is highly regulated and monitored by various environmental regulatory authorities. As such, we are subject to extensive federal, state and local laws and regulations pertaining to pollution and protection of the environment, health and safety and governing, among other things, emissions to the air, discharges onto land or waters, the maintenance of safe conditions in the workplace, the remediation of contaminated sites, and the generation, handling, storage, transportation, treatment and disposal of waste materials. Some of these laws and regulations are subject to varying and conflicting interpretations. Many of these laws and regulations provide for substantial fines and potential criminal sanctions for violations and require the installation of costly pollution control equipment or operational changes to limit pollution emissions and/or reduce the likelihood or impact of hazardous substance releases, whether permitted or not. For example, at our Calvert City facilities, we are currently planning equipment and operational changes necessary to comply with anticipated requirements of the U.S. Environmental Protection Agency’s recently promulgated

regulations related to the ethylene maximum achievable control technology, or MACT, standards that require compliance by July 2005. In addition, at all three of our petrochemical facilities, in Lake Charles, Calvert City and Geismar, we may need to make improvements to comply with the anticipated wastewater regulations of the synthetic organic chemical manufacturing industries.

In addition, we cannot accurately predict future developments, such as increasingly strict environmental laws or regulations, and inspection and enforcement policies, as well as resulting higher compliance costs, which might affect the handling, manufacture, use, emission, disposal or remediation of products, other materials or hazardous and non-hazardous waste, and we cannot predict with certainty the extent of our future liabilities and costs under environmental, health and safety laws and regulations. These liabilities and costs may be material.

We also may face liability for alleged personal injury or property damage due to exposure to chemicals or other hazardous substances at our facilities or to chemicals that we otherwise manufacture, handle or own. Although these types of claims have not historically had a material impact on our operations, a significant increase in the success of these types of claims could have a material adverse effect on our business, financial condition, operating results or cash flow.

Environmental laws may have a significant effect on the nature and scope of, and responsibility for, cleanup of contamination at our current and former operating facilities, the costs of transportation and storage of raw materials and finished products, the costs of reducing emissions and the costs of the storage and disposal of wastewater. In addition, the federal Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA, and similar state laws, impose joint and several liability for the costs of remedial investigations and actions on the entities that generated waste, arranged for disposal of the wastes, transported to or selected the disposal sites and the past and present owners and operators of such sites. All such potentially responsible parties (or any one of them, including us) may be required to bear all of such costs regardless of fault, legality of the original disposal or ownership of the disposal site. In addition, CERCLA and similar state laws could impose liability for damages to natural resources caused by contamination.

Although we seek to take preventive action, our operations are inherently subject to accidental spills, discharges or other releases of hazardous substances that may make us liable to governmental entities or private parties. This may involve contamination associated with our current and former facilities, facilities to which we sent wastes or by-products for treatment or disposal and other contamination. Accidental discharges may occur in the future, future action may be taken in connection with past discharges, governmental agencies may assess damages or penalties against us in connection with any past or future contamination, or third parties may assert claims against us for damages allegedly arising out of any past or future contamination. In addition, we may be liable for existing contamination related to certain of our facilities for which, in some cases, we believe third parties are liable in the event such third parties fail to perform their obligations. For further discussion of such existing contamination, see “Our Business — Environmental and Other Regulation.”


	*Our property insurance does not cover acts of terrorism and, in the event of a terrorist attack, we could lose net sales and our facilities.*

As a result of the terrorist attacks of September 11, 2001 and other events, our insurance carriers have created exclusions for losses from terrorism from our “all risk” property insurance policies. While separate terrorism insurance coverage is available, premiums for such coverage are very expensive, especially for chemical facilities, and the policies are subject to very high deductibles. Available terrorism coverage typically excludes coverage for losses from acts of foreign governments as well as nuclear, biological and chemical attacks. We have determined that it is not economically prudent to obtain terrorism insurance, especially given the significant risks that are not covered by such insurance, and we do not carry terrorism insurance on our property at this time. In the event of a terrorist attack impacting one or more of our facilities, we could lose the net sales from the facilities and the facilities themselves, and

could become liable for any contamination or for personal or property damage due to exposure to hazardous materials caused by any catastrophic release that may result from a terrorist attack.


	*We have significant debt, which could adversely affect our ability to operate our business.*

As of March 31, 2004, we had total outstanding debt of approximately $537 million, and we expect our annual interest expense for 2004 to be approximately $40 million and our current debt maturities during such period to be $28.2 million. With each 1% increase in the average interest rate on our floating rate debt, the amount of our annual debt service would increase by approximately $1.6 million. This debt represented approximately 52.9% of our total capitalization. At March 31, 2004, we had $187 million of available capacity under our $200 million credit facility and we may continue to borrow thereunder to fund working capital or other needs in the near term. On a pro forma basis as of March 31, 2004, after giving effect to the Transactions, the offering and the application of the net proceeds of the offering as described under “Use of Proceeds,” we would have had total outstanding debt of approximately $ million. Our level of debt and the limitations imposed on us by our existing or future debt agreements could have significant consequences on our business and future prospects, including the following:

• a significant portion of our cash flow from operations will be dedicated to the payment of interest and principal on our debt and will not be available for other purposes, including the payment of dividends;

• we may not be able to pay the regular quarterly dividend that we currently intend to pay;

• we may not be able to obtain necessary financing in the future for working capital, capital expenditures, acquisitions, debt service requirements or other purposes;

• our less leveraged competitors could have a competitive advantage because they have greater flexibility to utilize their cash flow to improve their operations;

• we may be exposed to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which would result in higher interest expense in the event of increases in interest rates; and

• we could be more vulnerable in the event of a downturn in our business that would leave us less able to take advantage of significant business opportunities and to react to changes in our business and in market or industry conditions.


	*To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.*

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures and pay cash dividends will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Our business may not generate sufficient cash flow from operations, currently anticipated cost savings and operating improvements may not be realized on schedule and future borrowings may not be available to us under our credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. In addition, we may not be able to refinance any of our indebtedness, including our credit facility, our term loan and our senior notes, on commercially reasonable terms or at all.


	Our credit facility, our term loan and the indenture governing our senior notes impose significant operating and financial restrictions, which may prevent us from capitalizing on business opportunities and taking some actions.

Our credit facility, our term loan and the indenture governing our senior notes impose significant operating and financial restrictions on us. These restrictions limit our ability to:

• pay dividends on, redeem or repurchase our capital stock;

• make investments and other restricted payments;

• incur additional indebtedness or issue preferred stock;

• create liens;

• permit dividend or other payment restrictions on our restricted subsidiaries;

• sell all or substantially all of our assets or consolidate or merge with or into other companies;

• engage in transactions with affiliates; and

• engage in sale-leaseback transactions.

These limitations are subject to a number of important qualifications and exceptions. Our credit facility also requires us to maintain a minimum fixed charge coverage ratio if availability falls below a specified level. These covenants may adversely affect our ability to finance our future operations and capital needs and to pursue available business opportunities. A breach of any of these covenants could result in a default in respect of the related debt. If a default occurred, the relevant lenders could elect to declare the debt, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that debt. In addition, any acceleration of debt under our credit facility or our term loan will constitute a default under some of our other debt, including the indenture governing our senior notes.


	*We may pursue acquisitions, dispositions and joint ventures and other transactions that may impact our results of operations and financial condition.*

We seek opportunities to maximize efficiency and create stockholder value through various transactions. These transactions may include various business combinations, purchases or sales of assets or contractual arrangements or joint ventures that are intended to result in the realization of synergies, the creation of efficiencies or the generation of cash to reduce debt. To the extent permitted under our credit facility and other debt agreements, some of these transactions may be financed by additional borrowings by us. Although these transactions are expected to yield longer-term benefits if the expected efficiencies and synergies of the transactions are realized, they could adversely affect our results of operations in the short term because of the costs associated with such transactions. Other transactions may advance future cash flows from some of our businesses, thereby yielding increased short-term liquidity, but consequently resulting in lower cash flows from these operations over the longer term.


	*We may have difficulties integrating the operations of the businesses we may acquire.*

If we are unable to integrate or to successfully manage the businesses we may acquire in the future, our business, financial condition and results of operations could be adversely affected. We may not be able to realize the operating efficiencies, synergies, cost savings or other benefits expected from the acquisitions for a number of reasons, including the following:

• we may fail to integrate the businesses we acquire into a cohesive, efficient enterprise;

• our resources, including management resources, are limited and may be strained if we engage in a significant number of acquisitions, and acquisitions may divert our management’s attention from initiating or carrying out programs to save costs or enhance revenues; and

• our failure to retain key employees and contracts of the businesses we acquire.

Risks Related to Our Principal Stockholder


	We will be controlled by the selling stockholder and its affiliates as long as they own a majority of our outstanding common stock, and you will be unable to affect the outcome of stockholder voting during that time.

As long as the selling stockholder and its affiliates (the “Selling Stockholder Affiliates”) own, directly or indirectly, a majority of our outstanding common stock, they will be able to exert significant control over us, including the ability to elect our entire board of directors. Investors in this offering, by themselves, will not be able to affect the outcome of any stockholder vote. As a result, the selling stockholder, subject to any fiduciary duty owed to our minority stockholders under Delaware law, will be able to control all matters affecting us, including:

• the composition of our board of directors and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers;

• the determination of incentive compensation, which may affect our ability to retain key employees;

• the allocation of business opportunities between the Selling Stockholder Affiliates and us;

• any determinations with respect to mergers or other business combinations;

• our acquisition or disposition of assets;

• our financing decisions and our capital raising activities;

• the payment of dividends on our common stock;

• amendments to our restated certificate of incorporation or bylaws; and

• determinations with respect to our tax returns.

The selling stockholder is generally not prohibited from selling a controlling interest in us to a third party.


	Our interests may conflict with those of the Selling Stockholder Affiliates with respect to our past and ongoing business relationships, and because of the selling stockholder’s initial controlling ownership, we may not be able to resolve these conflicts on terms commensurate with those possible in arms-length transactions.

Our interests may conflict with those of the Selling Stockholder Affiliates in a number of areas relating to our past and ongoing relationships, including:

• the solicitation and hiring of employees from each other;

• the timing and manner of any sales or distributions by the selling stockholder of all or any portion of its ownership interest in us;

• agreements with the Selling Stockholder Affiliates relating to corporate services that may be material to our business;

• business opportunities that may be presented to the Selling Stockholder Affiliates and to our officers and directors associated with the Selling Stockholder Affiliates;

• competition between Selling Stockholder Affiliates and us within the same lines of business; and

• our dividend policy.

We may not be able to resolve any potential conflicts with the Selling Stockholder Affiliates, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party. Our restated certificate of incorporation provides that the Selling Stockholder Affiliates have no duty to refrain from engaging in activities or lines of business similar to ours and that the Selling Stockholder Affiliates and their officers and directors will not be liable to us or our stockholders for failing to present specified corporate opportunities to us. See “Description of Capital Stock — Transactions and Corporate Opportunities.”


	*Transfers of our common stock by the selling stockholder could adversely affect your rights as a stockholder and cause our stock price to decline.*

The selling stockholder will be permitted to transfer a controlling interest in us without allowing you to participate or realize a premium for your shares of common stock. A sale of a controlling interest to a third party may adversely affect the market price of our common stock and our business and results of operations because the change in control may result in a change of management decisions and business policy.

Risks Related to This Offering, the Securities Markets and Ownership of Our Common Stock


	*Substantial sales of our common stock by the selling stockholder or us could cause our stock price to decline and issuances by us may dilute your ownership interest in our company.*

We are unable to predict whether significant amounts of our common stock will be sold by the selling stockholder after the offering. Any sales of substantial amounts of our common stock in the public market by the selling stockholder or us, or the perception that these sales might occur, could lower the market price of our common stock. Further, if we issue additional equity securities to raise additional capital, your ownership interest in our company may be diluted and the value of your investment may be reduced. Please read “Shares Eligible for Future Sale” for information about the number of shares that will be outstanding and could be sold after this offering.


	*The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering.*

Prior to this offering, the selling stockholder held all of our outstanding common stock, and therefore, there has been no public market for our common stock. An active market for our common stock may not develop or be sustained after this offering. The initial public offering price of our common stock will be determined by negotiations between us and representatives of the underwriters, based on numerous factors that we discuss in the “Underwriting” section of this prospectus. This price may not be indicative of the market price at which our common stock will trade after this initial public offering.


	*The price of our common stock may be volatile.*

The market price of our common stock could be subject to significant fluctuations after this offering, and may decline below the initial public offering price. You may not be able to resell your shares at or above the initial public offering price. Among the factors that could affect our stock price are:

• our operating and financial performance and prospects;

• quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and revenues;

• changes in revenue or earnings estimates or publication of research reports by analysts;

• speculation in the press or investment community;

• strategic actions by us or our competitors, such as acquisitions or restructurings;

• sales of our common stock by stockholders;

• actions by institutional investors or by the selling stockholder;

• fluctuations in oil and gas prices;

• general market conditions, including fluctuations in commodity prices; and

• U.S. and international economic, legal and regulatory factors unrelated to our performance.

The stock markets in general have experienced extreme volatility that has at times been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock.


	*If we are unable to pay regular dividends on our common stock, you may not receive funds without selling your common stock.*

We intend to pay a regular quarterly dividend of $ per share to holders of our common stock. Any payment of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends, and other considerations that our board of directors deems relevant. Our 8 3/4% senior notes, term loan agreement and revolving credit facility also include limitations on our payment of dividends. Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell your common stock and you may lose the entire amount of the investment.


	*Provisions in our charter documents or Delaware law may inhibit a takeover, which could adversely affect the value of our common stock.*

Our restated certificate of incorporation and bylaws, as well as Delaware corporate law, contain provisions that could delay or prevent a change of control or changes in our management that a stockholder might consider favorable. These provisions apply even if the offer may be considered beneficial by some of our stockholders. If a change of control or change in management is delayed or prevented, the market price of our common stock could decline. Please read “Description of Capital Stock” for a description of these provisions.


	*Purchasers in this offering will experience immediate and substantial dilution in net tangible book value per share.*

Dilution per share represents the difference between the initial public offering price and the net consolidated book value per share immediately after the offering of our common stock. Purchasers of our common stock in this offering will experience immediate dilution of $ in pro forma net tangible book value per share as of March 31, 2004.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this prospectus are forward-looking statements. All statements, other than statements of historical facts, included in this prospectus that address activities, events or developments that we expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements can be identified by the use of words such as “believes,” “intends,” “may,” “should,” “could,” “anticipates,” “expected” or comparable terminology, or by discussions of strategies or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Forward-looking statements relate to matters such as:

• future operating rates, margins, cash flow and demand for our products;

• production capacities;

• expected cyclical recovery in the olefins and vinyls industries;

• our ability to borrow additional funds under our credit facility;

• our intended quarterly dividends;

• future capacity additions and expansions in the industry;

• compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings; and

• effects of pending legal proceedings.

We have based these statements on assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe were appropriate in the circumstances when the statements were made. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly impact expected results, and actual future results could differ materially from those described in such statements. While it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause actual future results to differ materially are the risks and uncertainties discussed under “Risk Factors” and those described from time to time in our other filings with the SEC including, but not limited to, the following:

• general economic and business conditions;

• the cyclical nature of the chemical industry;

• the availability, cost and volatility of raw materials and energy;

• uncertainties associated with the United States and worldwide economies, including those due to political tensions in the Middle East and elsewhere;

• current and potential governmental regulatory actions in the United States and regulatory actions and political unrest in other countries;

• industry production capacity and operating rates;

• the supply/demand balance for our products;

• competitive products and pricing pressures;

• access to capital markets;

• terrorist acts;

• operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);

• changes in laws or regulations;

• technological developments;

• our ability to implement our business strategies; and

• creditworthiness of our customers.

Many of such factors are beyond our ability to control or predict. Any of the factors, or a combination of these factors, could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. These forward-looking statements are not guarantees of our future performance, and our actual results and future developments may differ materially from those projected in the forward-looking statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or prior earnings levels.

THE TRANSACTIONS

Prior to this offering, our parent entities will consummate a series of transactions designed to simplify our ownership structure in connection with this offering. Westlake Polymer & Petrochemical, Inc. (“WPPI”), our direct parent, and Gulf Polymer & Petrochemical, Inc., the direct parent of WPPI (“GPPI”), will both merge into Westlake Chemical Corporation, which will survive the mergers and continue our business. As a result of the mergers, all of the currently outstanding common and preferred stock of Westlake Chemical Corporation, WPPI and GPPI, as well as the currently outstanding preferred stock of a subsidiary of GPPI, will be exchanged for common stock. TTWF LP, a Delaware limited partnership, will become the sole stockholder of our company, and members of the Chao family and related trusts and other entities, which are currently the stockholders of Westlake Chemical Corporation, WPPI and GPPI, will own all of the partnership interests in TTWF LP. The mergers will be treated as a reorganization of entities under common control, and our consolidated financial statements included in this prospectus reflect the mergers (but not the exchange of preferred stock for common stock) as if they had occurred prior to January 1, 1999. Unless the context indicates otherwise, the information in this prospectus relating to us assumes that the mergers described above have been completed.

USE OF PROCEEDS

We estimate that our net proceeds from the sale of shares of our common stock in this offering will be approximately $ million, after deducting underwriting discounts and commissions and our estimated offering expenses. This estimate assumes a public offering price of $ per share, which is the mid-point of the offering price range indicated on the cover of this prospectus. We will not receive any of the proceeds from any sale of shares of our common stock by the selling stockholder if the underwriters’ over-allotment option is exercised.

We intend to use the net proceeds from this offering for general corporate purposes, including the repayment of debt.

DIVIDEND POLICY

We intend to pay a regular quarterly dividend of $ per share to the holders of our common stock. Our board of directors will determine the payment of future dividends on our common stock, if any, and the amount of any dividends in light of:

• any applicable contractual restrictions limiting our ability to pay dividends;

• our earnings and cash flows;

• our capital requirements;

• our financial condition; and

• other factors our board of directors deems relevant.

Our credit facility, term loan agreement and the indenture governing our 8 3/4% senior notes due 2011 restrict our ability to pay dividends or other distributions on our equity securities. As of March 31, 2004, on a pro forma basis after giving effect to the Transactions, the offering and the application of the net proceeds of the offering as described under “Use of Proceeds,” we would have had at least $ million available for the payment of dividends under the most restrictive of these covenants, provided that we have $100 million in specified availability under the credit facility and satisfy the fixed charge coverage ratios required by the credit facility and the term loan on the date we pay the dividend. We do not currently expect these restrictions to materially limit our ability to pay regular quarterly cash dividends.

DILUTION

The net tangible book value of our common stock at March 31, 2004 was approximately $ million, or $ per share. Net tangible book value per share represents our total tangible assets reduced by our total liabilities and divided by the aggregate number of shares of our common stock outstanding. Dilution in net tangible book value per share represents the difference between the amount per share of our common stock that you pay in this offering and the net tangible book value per share of our common stock immediately after this offering.

After giving effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, and after deducting an assumed underwriting discount and estimated offering expenses payable by us, our net tangible book value of our common stock at March 31, 2004 would have been approximately $ million, or $ per share. This represents an immediate increase in net tangible book value of $ per share to the selling stockholder and an immediate dilution in net tangible book value of $ per share to new investors purchasing shares of common stock in this offering. The following table illustrates this dilution per share:


Assumed initial public offering price per share		$

	Net tangible book value per share as of March 31, 2004	$

	Increase in net tangible book value per share attributable to new investors	$

Net tangible book value per share after this offering		$

Dilution in net tangible book value per share to new investors		$

These calculations do not give effect to any shares of common stock that the selling stockholder will sell if the underwriters exercise their over-allotment option.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and our capitalization as of March 31, 2004 (1) on an actual basis giving effect to the Transactions (except for the issuance of common stock in exchange for preferred stock), (2) as adjusted to reflect the issuance of common stock in exchange for preferred stock (the “Exchange”) and (3) as further adjusted to reflect the completion of this offering and the application of the net proceeds from this offering as described under “Use of Proceeds.” For a summary description of our principal debt, see “Description of Certain Indebtedness.” You should read this table in conjunction with “Selected Consolidated Financial, Operating and Industry Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Capital Stock” and our consolidated financial statements and related notes appearing elsewhere in this prospectus.



			March 31, 2004

									As Further
						As Adjusted			Adjusted
						for the			for the
			Actual			Exchange(1)			Offering


			(Dollars in thousands)
Cash and cash equivalents			$	36,839		$	36,839		$

Long-term debt, including current portion:
	Senior secured revolving credit facility		$	—		$	—		$
	Senior secured term loan			119,100			119,100
	8 3/4% Senior Notes due 2011			380,000			380,000
	Loan related to tax-exempt revenue bonds			10,889			10,889
	Bank loan			27,000			27,000

		Total long-term debt, including current portion		536,989			536,989

Minority interest				22,100			—			—


Stockholders’ equity:
	Preferred stock, no par value: 1,000 shares authorized; 120 shares issued and outstanding actual; preferred stock, $0.01 par value: shares authorized, no shares issued and outstanding, as adjusted for the Exchange			12,000			—			—
	Common stock, $1.00 par value: 10,000 shares authorized, 1,115 shares issued and outstanding actual; common stock, $0.01 par value: shares authorized, shares and shares issued and outstanding, as adjusted for the Exchange and as adjusted for this offering, respectively			1			1
	Additional paid-in capital			205,505			239,605
	Retained earnings			240,031			240,031
	Minimum pension liability, net of tax			(1,547	)		(1,547	)
	Cumulative translation adjustment			156			156

		Total stockholders’ equity		456,146			478,246

		Total capitalization and minority interest	$	1,015,235		$	1,015,235		$


(1)	Reflects the exchange of shares of preferred stock of Westlake Polymer & Petrochemical, Inc., Westlake International Corporation and Westlake Chemical Corporation for shares of our common stock, which will occur prior to the completion of this offering.

SELECTED CONSOLIDATED FINANCIAL, OPERATING AND INDUSTRY DATA

We have provided in the table below selected consolidated financial, operating and industry data. We have derived the statement of operations data for each of the years in the three-year period ended December 31, 2003, and the balance sheet data as of December 31, 2002 and 2003, from audited consolidated financial statements appearing elsewhere in this prospectus. We have derived the statement of operations data for the years ended December 31, 1999 and 2000, and the balance sheet data as of December 31, 1999, 2000 and 2001, from consolidated financial statements not included in this prospectus. We have derived the statement of operations data for the three months ended March 31, 2003 and 2004, and the balance sheet data as of March 31, 2003 and 2004, from unaudited consolidated financial statements appearing elsewhere in this prospectus. The historical financial information may not be indicative of our future performance, and results of operations for the three-month period ended March 31, 2004 may not be indicative of the results of operations that may be achieved for the entire year. You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this prospectus.



																	Three Months Ended
		Year Ended December 31,															March 31,

		1999			2000			2001			2002			2003			2003			2004


		(Dollars in thousands, except per share data)
Statement of Operations Data:
Net sales		$	1,058,507		$	1,392,276		$	1,087,033		$	1,072,627		$	1,423,034		$	380,573		$	400,894
Gross profit			176,965			198,924			(29,921	)		75,259			121,952			44,839			38,807
Selling, general and administrative expenses			48,490			62,038			53,203			58,948			53,852			18,986			11,892
Impairment of long-lived assets(1)			2,748			10,777			7,677			2,239			2,285			—			—

Income (loss) from operations			125,727			126,109			(90,801	)		14,072			65,815			25,853			26,915
Interest expense			(47,516	)		(37,281	)		(35,454	)		(35,044	)		(38,589	)		(8,855	)		(10,752	)
Debt retirement cost			—			—			—			—			(11,343	)		—			—
Other income (expense), net(2)			7,287			1,866			8,916			6,769			7,620			3,511			(73	)

Income (loss) before income taxes			85,498			90,694			(117,339	)		(14,203	)		23,503			20,509			16,090
Provision for (benefit from) income taxes			30,276			35,695			(45,353	)		(7,141	)		8,747			7,633			5,405

Net income (loss)		$	55,222		$	54,999		$	(71,986	)	$	(7,062	)	$	14,756		$	12,876		$	10,685

Earnings per share information(3):
Basic and diluted earnings (loss) per share		$	49,526		$	49,326		$	(64,561	)	$	(6,334	)	$	13,234		$	11,548		$	9,583
Weighted average basic and diluted shares outstanding			1,115			1,115			1,115			1,115			1,115			1,115			1,115
Balance Sheet Data (end of period):
Cash and cash equivalents		$	9,131		$	11,529		$	79,095		$	11,123		$	37,381		$	18,044		$	36,839
Working capital(4)			108,107			117,818			138,211			158,993			197,715			140,951			223,439
Total assets			1,319,723			1,374,645			1,308,858			1,309,245			1,370,113			1,331,906			1,374,842
Total debt			508,691			425,559			540,855			533,350			537,289			500,850			536,989
Minority interest			19,700			19,700			22,100			22,100			22,100			22,100			22,100
Stockholders’ equity			449,834			504,203			430,752			428,519			445,603			441,947			456,146
Other Operating Data:
Cash flow from:
	Operating activities	$	132,618		$	173,377		$	26,370		$	(21,326	)	$	93,187		$	44,601		$	9,797
	Investing activities		(26,685	)		(87,693	)		(76,500	)		(38,686	)		(41,581	)		(5,180	)		(10,039	)
	Financing activities		(127,830	)		(83,286	)		117,696			(7,960	)		(25,348	)		(32,500	)		(300	)
Depreciation and amortization			84,947			78,757			81,690			88,018			87,293			22,248			20,898
Capital expenditures			30,604			78,893			76,500			43,587			44,931			8,372			11,045
EBITDA(5)			217,961			206,732			(195	)		108,859			149,385			51,612			47,740



											Three Months
											Ended
	Year Ended December 31,										March 31,

	1999		2000		2001		2002		2003		2003		2004


	(Millions of pounds)
External Sales Volume:
Ethylene		586		607		560		340		442		118		136
Polyethylene		1,117		1,213		1,076		1,199		1,280		343		300
Styrene		445		455		494		428		419		94		118
PVC		310		300		309		301		296		78		62
VCM		387		394		459		473		436		114		74
Caustic soda		318		335		327		403		387		97		116
Fabricated products		506		440		501		545		515		136		144
	(Cents per pound, except as noted)
Average Industry Pricing:(6)
Ethylene(7)		21.5		27.2		21.4		16.9		21.5		24.3		28.3
Polyethylene(8)		41.0		46.4		42.8		41.9		52.2		50.5		55.7
Styrene(9)		22.9		34.8		21.8		27.3		31.7		35.9		37.9
PVC(10)		32.8		36.7		31.4		34.4		42.5		40.5		40.5
VCM(11)		18.3		25.3		18.9		19.9		25.7		24.8		28.8
Caustic soda ($/ton)(12)		95.4		155.0		245.0		94.8		114.4		111.7		76.4
Natural gas ($/mmbtu)(13)		2.32		4.32		4.04		3.37		5.49		5.92		5.71

(1) The 2003 impairments related primarily to idled styrene assets and other miscellaneous assets written down to fair market value. The 2002 impairment related to a ceased product business. Impairments in 2001 and 2000 related primarily to assets that were acquired but never placed in service. Impairments in 1999 related primarily to a fabricated products business that was subsequently sold and an idled PVC plant.

(2) Other income, net is composed of interest income, insurance proceeds, income and expenses related to our accounts receivable securitization facility which was terminated in July 2003, equity income, management fee income and other gains and losses.

(3) Does not reflect the issuance of common stock in exchange for preferred stock as part of the Transactions. No cash dividends were paid during any of the periods presented.

(4) Working capital equals current assets less current liabilities.

(5) EBITDA (a non-GAAP financial measure) is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as “GAAP.” For this purpose a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this prospectus because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future


		debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flow and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented in this prospectus may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes (1) interest expense, which is a necessary element of our costs and ability to generate revenues because we have borrowed money to finance our operations, (2) depreciation, which is a necessary element of our costs and ability to generate revenues because we use capital assets and (3) income taxes, which is a necessary element of our operations. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. The following table reconciles EBITDA to net income (loss) and to cash flow from operating activities.

Reconciliation of EBITDA to Net Income (Loss) and

to Cash Flow from Operating Activities



	Year Ended December 31,															March 31,

	1999			2000			2001			2002			2003			2003			2004


																(Unaudited)

	(Dollars in thousands, except per share data)
EBITDA	$	217,961		$	206,732		$	(195	)	$	108,859		$	149,385		$	51,612		$	47,740
Less:
Income tax (provision) benefit		(30,276	)		(35,695	)		45,353			7,141			(8,747	)		(7,633	)		(5,405	)
Interest expense		(47,516	)		(37,281	)		(35,454	)		(35,044	)		(38,589	)		(8,855	)		(10,752	)
Depreciation and amortization		(84,947	)		(78,757	)		(81,690	)		(88,018	)		(87,293	)		(22,248	)		(20,898	)
Net income (loss)		55,222			54,999			(71,986	)		(7,062	)		14,756			12,876			10,685

Changes in operating assets and liabilities		45,078			74,602			133,779			(19,137	)		63,345			22,712			(5,043	)
Equity in income of unconsolidated subsidiary		(295	)		(8	)		(1,138	)		(770	)		(1,510	)		(612	)		(532	)
Deferred income taxes		28,565			32,951			(45,779	)		(4,716	)		7,112			8,584			5,144
Impairment of long-lived assets		2,748			10,777			7,677			2,239			2,285			—			—
Write off of debt issuance cost		—			—			—			—			7,343			—			—
Gain from disposition of fixed assets		—			—			—			(2,259	)		(2,903	)		(2,949	)		(231	)
Amortization of debt issue costs		—			—			—			—			887			—			552
Provision for doubtful accounts		1,300			56			3,817			10,379			1,872			3,990			(778	)

Cash flow from operating activities	$	132,618		$	173,377		$	26,370		$	(21,326	)	$	93,187		$	44,601		$	9,797

EBITDA has not been adjusted to exclude the effect of the following items:


Impairment of long-lived assets	$	(2,748	)	$	(10,777	)	$	(7,677	)	$	(2,239	)	$	(2,285	)	$	—	$	—
Debt retirement cost		—			—			—			—			(11,343	)		—		—
Other income (expense), net		7,287			1,866			8,916			6,769			7,620			3,511		(73	)

(10) Represents average North American contract prices of PVC over the period as reported by CMAI.

(11) Represents average North American contract prices of VCM over the period as reported by CMAI.

(12) Represents average North American spot prices of caustic soda (diaphragm grade) over the period as reported by CMAI.

(13) Represents average prices of Henry Hub natural gas over the period as reported by the NYMEX.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our historical consolidated financial statements and the related notes included elsewhere in this prospectus. Except for the historical financial information contained herein, the matters discussed below may be considered “forward-looking” statements. Please see “Cautionary Statement About Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Overview

We are a vertically integrated manufacturer and marketer of petrochemicals, polymers and fabricated products. Our two principal business segments are Olefins and Vinyls. We use the majority of our internally-produced basic chemicals to produce higher value-added chemicals and fabricated products.

Consumption of the basic chemicals that we manufacture in the commodity portions of our ethylene and vinyls processes has increased significantly over the past 30 years. Our Olefins and Vinyls products are some of the most widely used chemicals in the world and are upgraded into a wide variety of higher value-added chemical products used in many end-markets. Petrochemicals are typically manufactured in large volume by a number of different producers using widely available technologies. The petrochemical industry exhibits cyclical commodity characteristics, and margins are influenced by changes in the balance between supply and demand and the resulting operating rates, the level of general economic activity and the price of raw materials. The cycle is generally characterized by periods of tight supply, leading to high operating rates and margins, followed by a decline in operating rates and margins primarily as a result of significant capacity additions. Due to the significant size of new plants, capacity additions are built in large increments and typically require several years of demand growth to be absorbed. We believe that the industry is currently emerging from a down cycle that resulted from significant new capacity additions in the past several years, combined with soft demand resulting from the global economic recession. Currently, no significant new olefins or vinyls capacity additions are expected in North America. Operating rates and margins began to improve during 2003, and are expected to increase as economic growth improves and excess capacity is absorbed. These factors are expected to result in increasing margins.

We purchase significant amounts of ethane and propane feedstock, natural gas, chlorine and salt from third parties for use in production of basic chemicals in the olefins and vinyls chains. We also purchase significant amounts of electricity to supply the energy required in our production processes. While we have agreements providing for the supply of ethane and propane feedstocks, natural gas, chlorine, salt and electricity, the contractual prices for these raw materials and energy vary with market conditions and may be highly volatile. Factors which have caused volatility in our raw material prices in the past and which may do so in the future, include:

• shortages of raw materials due to increasing demand;

• capacity constraints due to construction delays, strike action or involuntary shutdowns;

• the general level of business and economic activity; and

• the direct or indirect effect of governmental regulation.

Significant volatility in raw material costs tends to put pressure on product margins, as sales price increases generally tend to lag behind raw material cost increases. Conversely, when raw material costs decrease, customers seek relief in the form of lower sales prices. These dynamics are particularly pronounced during periods of excess industry capacity and contributed to the trough conditions experienced by the chemical industry and us in 2001 and 2002. We typically do not enter into significant hedging arrangements with respect to prices of raw materials.

In 2001 and 2002, we experienced two periods of dramatically increased raw material costs. In 2001, natural gas prices spiked to a high of $9.82 per million BTUs, or mmbtu, as compared to a three year average of $3.56 per mmbtu between 1999 and 2001. Prices for natural gas declined, but spiked again in

2002 to a high of $5.34 per mmbtu. As a result of weak industry conditions, in most cases we were unable to fully pass these raw material price increases through to customers and our margins declined. In 2003, we experienced another natural gas price spike with prices averaging $5.49 per mmbtu. In this period, we were able to pass higher feedstock prices through to our customers. As a result, margins improved compared to margins in 2001 and 2002. During the first quarter of 2004, natural gas prices have continued to increase, with prices averaging $5.71 per mmbtu. In this period, we were able to pass higher feedstock prices through to our customers, which resulted in improved margins for many of our products.

Our historical results have been significantly affected by our plant production capacity, our efficient use of the capacity and our ability to increase our capacity. Since our inception, we have followed a disciplined growth strategy that focuses on plant acquisitions, new plant construction and internal expansion. We evaluate each expansion project on the basis of its ability to produce sustained returns in excess of its cost of capital and its ability to improve efficiency or reduce operating costs.

Results of Operations


	*Segment Data*



											Three Months Ended
		Year Ended December 31,									March 31,

		2001			2002			2003			2003			2004


		(Dollars in thousands)
Net Sales:
Olefins		$	665,703		$	627,494		$	911,633		$	251,073		$	270,516
Vinyls			455,339			474,095			546,819			139,649			141,159
Intersegment eliminations			(34,009	)		(28,962	)		(35,418	)		(10,149	)		(10,781	)

	Total	$	1,087,033		$	1,072,627		$	1,423,034		$	380,573		$	400,894

Income (Loss) from Operations
Olefins		$	(39,929	)	$	12,599		$	55,298		$	26,232		$	30,974
Vinyls			(32,857	)		10,482			13,583			1,362			(3,261	)
Corporate and other			(18,015	)		(9,009	)		(3,066	)		(1,741	)		(798	)

Total		$	(90,801	)	$	14,072		$	65,815		$	25,853		$	26,915

EBITDA(1)
Olefins		$	9,584		$	71,347		$	109,845		$	40,725		$	42,973
Vinyls			(2,902	)		43,384			47,330			10,199			4,276
Corporate and other			(6,877	)		(5,872	)		(7,790	)		688			491

Total		$	(195	)	$	108,859		$	149,385		$	51,612		$	47,740

(1) The following tables reconcile EBITDA to our income (loss) from operations for each segment. See footnote 5 of the table in “Selected Consolidated Financial, Operating and Industry Data.”

Reconciliation of Income (Loss) from Operations to EBITDA – Olefins



								Three Months Ended
	Year Ended December 31,							March 31,

	2001			2002		2003		2003		2004


	(Dollars in thousands)
Income (loss) from operations	$	(39,929	)	$	12,599	$	55,298	$	26,232	$	30,974
Other income, net		2,794			6,837		3,459		1,864		(1,163	)
Depreciation and amortization		46,719			51,911		51,088		12,629		13,162

EBITDA	$	9,584		$	71,347	$	109,845	$	40,725	$	42,973

Reconciliation of Income (Loss) from Operations to EBITDA – Vinyls



								Three Months Ended
	Year Ended December 31,							March 31,

	2001			2002		2003		2003		2004


	(Dollars in thousands)
Income (loss) from operations	$	(32,857	)	$	10,482	$	13,583	$	1,362	$	(3,261	)
Other income (expense), net		(1,198	)		555		629		452		10
Depreciation and amortization		31,153			32,347		33,118		8,385		7,527

EBITDA	$	(2,902	)	$	43,384	$	47,330	$	10,199	$	4,276

Reconciliation of Income (Loss) from Operations to EBITDA – Corporate and Other



										Three Months Ended
	Year Ended December 31,									March 31,

	2001			2002			2003			2003			2004


	(Dollars in thousands)
Loss from operations	$	(18,015	)	$	(9,009	)	$	(3,066	)	$	(1,741	)	$	(798	)
Other income (expense), net		7,320			(623	)		(7,811	)(1)		1,195			1,080
Depreciation and amortization		3,818			3,760			3,087			1,234			209

EBITDA	$	(6,877	)	$	(5,872	)	$	(7,790	)	$	688		$	491

(1) Includes debt retirement costs of $11,343.


	*Three Months Ended March 31, 2004 Compared with Three Months Ended March 31, 2003*

Net Sales. Net sales increased by $20.3 million, or 5.3%, to $400.9 million in the first quarter of 2004 from $380.6 million in the first quarter of 2003. This increase was primarily due to price increases throughout our Olefins and Vinyls segments and higher sales volumes in ethylene, styrene and PVC pipe. Higher selling prices largely resulted from stronger demand for our products and higher raw material costs that were passed through to customers. These improvements were partially offset by lower sales volumes for polyethylene, PVC resin and VCM. Sales volumes for PVC resin and VCM were adversely impacted by a fire at our Calvert City ethylene plant in January 2004. The fire resulted in a 19-day outage for repairs and reduced PVC resin operating rates during that period.

Gross Margin. Gross margins decreased to 9.7% in the first quarter of 2004 from 11.8% in the first quarter of 2003. This decrease was due to lower production for ethylene, PVC resin and VCM in our Vinyls segment resulting from a fire at the Calvert City ethylene plant in January. We estimate that the gross margin impact of the outage in the first quarter of 2004 was approximately $12.5 million, which was comprised of higher maintenance cost of $3.5 million, lost margin on sales of approximately $8.6 million and a write-off of equipment of $0.4 million. This decrease was partially offset by higher selling prices for ethylene, polyethylene, styrene and PVC pipe and higher sales volumes for ethylene, styrene and PVC

pipe. The sales price increases were partially offset by higher raw material costs for propane and benzene. Our raw materials costs in both segments normally track industry prices, which experienced an increase of 2.8% for propane and 6.4% for benzene as compared to the first quarter of 2003.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $7.1 million, or 37.4%, in the first quarter of 2004 as compared to the first quarter of 2003. The decrease was largely due to the receipt of $1.5 million in the first quarter of 2004 resulting from a legal settlement with a customer and higher provisions for accounts receivable and legal expenses in the first quarter of 2003 as compared to the first quarter of 2004. Provision for doubtful accounts increased by $4.0 million in the first quarter of 2003 as compared to a reduction of $0.8 million in the first quarter of 2004.

Interest Expense. Interest expense increased $1.9 million in the first quarter of 2004 as compared to the first quarter of 2003. The increase was largely due to an increase in the average interest rate from 6.76% in the first quarter of 2003 to 7.37% in the first quarter of 2004, an increase in the average debt balance of $502.3 million in the first quarter of 2003 to $537.2 million in the first quarter of 2004 and an increase in the amortization of debt costs.

Other Income (Expense), Net. Other income (expense), net decreased by $3.6 million from income of $3.5 million in the first quarter of 2003 to an expense of $0.1 million in the first quarter of 2004 primarily as a result of insurance proceeds received in 2003 of $3.2 million related to a fire at one of our ethylene plants in 2002.

Income Taxes. The effective income tax rate was 33.6% in the first quarter of 2004 as compared to 37.2% in the first quarter of 2003. The effective tax rate in 2004 is below the statutory rate mainly due to a reduction in the Canadian statutory tax rate.


	*Olefins Segment*

Net Sales. Net sales before intersegment eliminations increased by $19.4 million, or 7.7%, to $270.5 million in the first quarter of 2004 from $251.1 million in the first quarter of 2003. This increase was primarily due to price increases for ethylene, polyethylene and styrene. Average selling prices for the Olefins segment increased by 10.2% in the first quarter of 2004 as compared to the first quarter of 2003. These increased prices were due to higher industry demand and slightly higher raw material costs that were passed through to customers. Overall sales volumes in the first quarter of 2004 were essentially equal to the first quarter of 2003. Higher ethylene and styrene sales volumes were offset by lower polyethylene sales volumes.

Income from Operations. Income from operations increased by $4.8 million, to $31.0 million in the first quarter of 2004 from $26.2 million in the first quarter of 2003. This increase was primarily due to price increases for ethylene, polyethylene and styrene partially offset by higher raw material costs for propane and benzene. The increase was also due in part to higher sales volumes for ethylene and styrene, partially offset by lower polyethylene sales volumes.


	*Vinyls Segment*

Net Sales. Net sales before intersegment eliminations increased by $1.6 million, or 1.2%, to $141.2 million in the first quarter of 2004 from $139.6 million in the first quarter of 2003. This increase was primarily due to price increases for PVC pipe, PVC resin and VCM and higher sales volumes for PVC pipe. Average selling prices for the Vinyls segment increased by 9.1% in the first quarter of 2004 as compared to the first quarter of 2003. These increases were largely due to stronger industry demand for our products and higher raw material costs for propane that were passed through to our customers. These increases were partially offset by lower sales volumes for PVC resin and VCM. PVC pipe sales volumes increased by 6.3%, however PVC resin sales volumes decreased by 20.5% and VCM sales volumes decreased by 35.1%, primarily due to the outage resulting from the Calvert City plant fire.

Income (Loss) from Operations. Income (loss) from operations in our Vinyls segment decreased by $4.7 million to a $3.3 million operating loss in the first quarter of 2004 from a $1.4 million operating profit in the first quarter of 2003. This decrease was primarily due to lower production volumes for ethylene, VCM and PVC resin and lower sales volumes for PVC resin and VCM, which resulted largely from a fire in our Calvert City ethylene unit in January. The ethylene unit experienced a 19-day outage for repairs. These reductions were partially offset by higher selling prices for PVC pipe, PVC resin and VCM and higher sales volumes for PVC pipe.


	*2003 Compared with 2002*

Net Sales. Net sales increased by $350.4 million, or 32.7%, to $1,423.0 million in 2003 from $1,072.6 million in 2002. This increase was primarily due to price increases throughout our Olefins and Vinyls segments and higher sales volumes in ethylene and polyethylene. Higher selling prices were primarily the result of higher energy and raw material costs that were passed through to customers. These improvements were partially offset by lower sales volumes for PVC pipe and resin resulting from lower market demand.

Gross Margin. Gross margins increased to 8.6% in 2003 from 7.0% in 2002. This improvement was primarily the result of higher prices and was partially reduced by higher energy and feedstock costs and lower sales volumes for PVC pipe and resin.

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $5.1 million in 2003 as compared to 2002. The decrease was primarily due to the receipt of $3.2 million in 2003 resulting from a legal settlement with a software vendor, which was offset against 2003 expenses, and a decrease in the provision for doubtful accounts of $3.6 million in 2003 as compared to 2002.

Impairment of Long-Lived Assets. Impairment of long–lived assets was $2.3 million in 2003 compared to $2.2 million in 2002. The impairments for 2003 included idled styrene assets and other miscellaneous assets written down to fair market value. The 2002 impairment was for assets related to a product in our Vinyls business that we no longer manufacture.

Interest Expense. Interest expense increased $3.5 million in 2003 as compared to 2002. The increase was primarily due to an increase in the average interest rate from 6.63% in 2002 to 7.07% in 2003 and an increase in the amortization of debt costs.

Debt Retirement Costs. We recognized $11.3 million in non-operating expense in the third quarter of 2003 related to our refinancing transaction described below under “— Liquidity and Capital Resources — Debt,” consisting of a $4.0 million make-whole premium in connection with the redemption of senior notes and a write-off of $7.3 million in previously capitalized debt issuance cost.

Other Income, Net. Other income, net increased by $0.9 million in 2003 as compared to 2002 primarily as a result of insurance proceeds of $1.0 million related to a fire at one of our ethylene plants in 2002, higher equity income from our unconsolidated subsidiary of $0.7 million and a small derivative gain of $0.04 million (compared to a derivative loss of $0.7 million in 2002). These increases were partially offset by reduced management fees of $0.8 million and lower interest income of $0.9 million.

Income Taxes. The effective income tax rate was 37.2% in 2003 as compared to 50.3% in 2002. The effective tax rate in 2002 was higher than the statutory rate and the 2003 effective tax rate due to the settlement of state tax examination issues.


	*Olefins Segment*

Net Sales. Net sales before intersegment eliminations increased by $284.1 million, or 45.3%, to $911.6 million in 2003 from $627.5 million in 2002. This increase was primarily due to price increases for ethylene, polyethylene and styrene and higher sales volumes of ethylene and polyethylene, partially offset by lower styrene sales volumes. Average selling prices for the Olefins segment increased by 29.1% as

compared to 2002. These increased prices were due to higher demand and higher energy and raw material costs that were passed through to customers. Ethylene and polyethylene sales volumes increased by 30.0% and 6.8%, respectively, largely due to higher demand while styrene sales volumes decreased by 2.0% due to a planned 30-day shut-down at our Lake Charles styrene facility for maintenance.

Income from Operations. Income from operations increased by $42.7 million to $55.3 million in 2003 from $12.6 million in 2002. This increase was due to price increases for ethylene, polyethylene and styrene, partially offset by higher raw material costs of ethane, propane and benzene and higher energy costs. The increase was also due to higher sales volumes for ethylene and polyethylene and higher production volume for ethylene. In the first quarter of 2002, one ethylene unit was down for 44 days due to a fire while the other unit ran at a reduced rate throughout the quarter due to furnace metallurgical failures, which were subsequently resolved.


	*Vinyls Segment*

Net Sales. Net sales before intersegment eliminations increased by $72.7 million, or 15.3%, to $546.8 million in 2003 from $474.1 million in 2002. This increase was primarily due to price increases for PVC pipe, PVC resin, VCM and caustic, partially offset by lower PVC pipe and resin sales volumes and lower VCM sales volumes. Average selling prices for the Vinyls segment increased by 22.4% in 2003 as compared to 2002. These price increases resulted from higher feedstock and energy costs that were passed through to customers. The PVC pipe and PVC resin sales volumes were lower by 3.2% and 1.7%, respectively, primarily due to heavy rainfall in the first six months of 2003 in the Midwest and Southeast regions resulting in slower activity in the construction sector. VCM sales, which were also impacted by these weather problems, were adversely impacted by an outage at a major customer due to the blackout in the Northeast in August 2003. VCM sales volumes were 7.8% lower in 2003 as compared to 2002.

Income from Operations. Income from operations increased by $3.1 million to $13.6 million in 2003 from $10.5 million in 2002. This increase was primarily due to price increases for PVC pipe and fence, PVC resin, VCM and caustic. These price increases were partially offset by lower sales volumes for PVC pipe, PVC resin and VCM and higher raw material costs for propane and chlorine. Additionally, VCM production and sales volumes were adversely impacted by an outage at a major customer as described above.


	*2002 Compared with 2001*

Net Sales. Net sales decreased by $14.4 million, or 1.3%, to $1,072.6 million in 2002 from $1,087.0 million in 2001. This decrease was primarily due to lower prices for ethylene, polyethylene and caustic and lower styrene sales volumes and was partially offset by higher sales volumes in both our Olefins and Vinyls segments and higher styrene prices. Ethylene and polyethylene prices fell primarily due to energy and raw material cost reductions in natural gas, ethane and propane. Sales volumes were higher for our Olefins and Vinyls products due to increases in 2002 demand as compared with 2001, when we experienced a slowdown in the general economy.

Gross Margin. Gross margin increased to positive 7.0% in 2002 from negative 2.8% in 2001. This improvement was primarily due to price increases, higher sales volumes and higher utilization rates, partially offset by higher energy and raw material costs and higher maintenance costs. Maintenance costs were higher in 2002 due to a fire at one of our ethylene units in Lake Charles, Louisiana resulting in 44 days of downtime for repairs. Maintenance costs were also higher in 2002 due to the conversion of the chlor-alkali plant to membrane technology and the subsequent start-up of that facility in the first half of 2002.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by approximately $5.7 million in 2002 compared with 2001 primarily due to increases in the provision for doubtful accounts of $5.2 million, depreciation of software and hardware of $2.0 million due to the startup of several information technology projects and an increase in insurance expense of $1.8 million due to rate

increases, partially offset by reductions in payroll and benefits of $2.5 million due to reductions in head count and bonuses.

Impairment of Long-Lived Assets. Impairment of long-lived assets decreased to $2.2 million in 2002 from $7.7 million in 2001. The 2002 impairment was for assets related to a discontinued product in our Vinyls business. The 2001 impairment included a $3.2 million write-down to fair market value of idled assets held for sale and $4.4 million relating to computer software and fixed assets.

Interest Expense. Interest expense decreased by $0.4 million in 2002 from 2001 primarily due to reduced debt balances, which were partially offset by higher interest rates. The weighted average interest rate on borrowings as of December 31, 2001 and 2002 was 6.28% and 6.63%, respectively.

Other Income, Net. Other income, net decreased by $2.1 million in 2002 from 2001, primarily as a result of reduced insurance claims proceeds and a reduction in management fees received from an affiliated company.

Income Taxes. The effective income tax rate increased to 50.3% in 2002 from 38.7% in 2001 due to the settlement of state tax examination issues.


	*Olefins Segment*

Net Sales. Net sales before intersegment eliminations decreased by $38.2 million, or 5.7%, to $627.5 million in 2002 from $665.7 million in 2001. This decrease primarily resulted from lower prices for ethylene and low density polyethylene and lower sales volumes for ethylene, styrene and ethylene co-products and was partially offset by higher styrene prices and higher low density polyethylene and linear low density polyethylene sales volumes. Average selling prices for the Olefins segment decreased by 13.4%. Sales volumes for low density polyethylene and linear low density polyethylene, which are higher value-added products, increased substantially in 2002 due to stronger market demand. Our polyethylene sales volumes increased by 11.4% in 2002 as compared to 2001. Our styrene sales volumes decreased by 13.4% in 2002 due to a reduction from 2001 levels in outside purchases of styrene for subsequent resale.

Income (Loss) from Operations. Income (loss) from operations increased by $52.5 million to income of $12.6 million in 2002 from a loss of $39.9 million in 2001. This increase was primarily due to higher polyethylene margins, higher styrene margins, higher polyethylene sales volumes and higher utilization rates in polyethylene and styrene. Polyethylene margins were higher in 2002 largely due to decreased raw material costs as compared to 2001 levels. Styrene margins were higher in 2002 mainly due to price increases and lower raw material costs. Increased utilization rates resulted from increased demand for ethylene, polyethylene and styrene. Operating costs were lower primarily due to cost cutting measures, primarily a reduction in force initiated in 2002. These improvements were partially offset by an outage at one of our ethylene units due to a fire resulting in 44 days of downtime in the first quarter of 2002. Our second ethylene unit was operating at reduced rates for the first half of 2002 due to furnace metallurgical failures, which were subsequently resolved.


	*Vinyls Segment*

Net Sales. Net sales before intersegment eliminations increased by $18.8 million, or 4.1%, to $474.1 million in 2002 from $455.3 million in 2001. This increase was primarily due to higher prices for PVC pipe, VCM and ethylene co-products and higher sales volumes for PVC pipe, VCM, caustic and ethylene co-products. These increases were partially offset by lower caustic prices, lower PVC resin volumes and lower caustic trading volumes. Average selling prices for the overall Vinyls segment decreased by 5.0% in 2003. VCM sales volumes increased by 3.1% due to increased demand and caustic sales volumes increased 23.4% primarily due to the expansion of our chlor-alkali facility that started up in the second quarter of 2002.

Income (Loss) from Operations. Income (loss) from operations increased by $43.4 million to income of $10.5 million in 2002 from a loss of $32.9 million in 2001. This increase was primarily due to higher prices for fabricated products and PVC resin prices combined with lower raw material costs for

propane and chlorine and higher utilization rates for the PVC pipe, PVC fence, PVC, VCM and chlor-alkali plants. The higher profit margins and utilization rates were primarily due to the impact of increased demand for our Vinyls products as a result of a more favorable environment for construction spending as interest rates fell throughout 2002. As a result of the improved demand, the industry was able to institute several price increases during 2002. The chlor-alkali plant was converted to membrane technology beginning in 2001. This project was completed and brought on line in the second quarter of 2002. This conversion positively affected income (loss) from operations due to an approximate 25% reduction in per unit energy cost and higher chlorine and caustic soda production. Our VCM and ethylene plants underwent debottlenecking during 2001, which reduced overall operating costs. The benefit of these lower operating costs was not fully realized until 2002.

Cash Flows


	*Operating Activities*

First Three Months of 2004 and 2003. Operating activities generated cash of $9.8 million in the first quarter of 2004 compared to $44.6 million in the same period in 2003. The $34.8 million reduction in cash flows was primarily due to unfavorable changes in working capital. Income from operations increased by $1.1 million in the first three months of 2004 as compared to the first three months of 2003. Changes in components of working capital, which we define for purposes of this cash flow discussion as accounts receivable, inventories, prepaid expense and other current assets less accounts payable and accrued liabilities, used cash of $25.5 million in the first three months of 2004, compared to no cash used or provided in the first three months of 2003, a decrease of $25.5 million. In the first three months of 2004, receivables decreased by $2.3 million, while inventory increased by $17.5 million, primarily due to higher feedstock and energy prices. Accounts payable and accrued liabilities decreased by $11.1 million primarily as a result of a semi-annual payment for accrued interest on the 8.75% senior notes, which was paid in January 2004.

2003 and 2002. Operating activities provided cash of $93.2 million in 2003 compared to a use of cash of $21.3 million in 2002, and cash provided of $26.4 million in 2001. The $114.5 million improvement in cash flows from operating activities in 2003 as compared to 2002 was primarily due to improvements in income (loss) from operations, as described above, and favorable changes in working capital. These increases were partially offset by a $4.0 million make-whole premium payment in connection with the refinancing described below. Changes in components of working capital provided cash of $5.3 million in 2003, compared to $95.9 million cash used in 2002, an improvement of $101.2 million. In 2003, receivables increased by $42.2 million due to higher average selling prices and sales volumes and the termination of our receivables securitization facility as described below, while inventory increased by $9.9 million, primarily due to higher feedstock and energy prices. The resulting effect on operating cash flows was offset by a $51.0 million increase in accounts payable and accrued liabilities, primarily due to increased inventory and higher energy and feedstock costs. A $6.3 million reduction in prepaid expenses in 2003 was related to feedstock purchases in the fourth quarter of 2002. The primary reason for the $95.9 million use of cash in 2002 related to working capital components was a $54.2 million increase in receivables, a $42.6 million increase in inventories and an $11.9 million increase in prepaid expenses, partially offset by an increase in accounts payable. The increase in receivables was due to higher average selling prices and sales volumes. The increase in inventories was due to higher production and higher feedstock and energy prices. The increase in prepaid expenses was due to feedstock purchases made in December 2002.

2002 and 2001. Operating activities used cash of $21.3 million in 2002, compared to cash provided of $26.4 million in 2001. The $47.7 million decrease in operating cash flows in 2002 as compared to 2001 was primarily due to increase in working capital components partially offset by improvement in income (loss) from operations described above. Changes in working capital components used $95.9 million of cash in 2002 and provided $62.6 million of cash in 2001. In 2002, accounts receivable increased by $54.2 million due to higher product sales, decreased utilization of our receivables securitization facility and higher product prices in the fourth quarter of 2002. Inventory increased by $42.6 million in 2002 due to

both higher raw material prices and purchases made at year end in anticipation of rising prices. Prepaid expenses increased in 2002 by $11.9 million as a result of prepaid feedstock purchases. In 2002, accounts payable increased by $14.5 million, primarily due to increased inventory levels.


	*Investing Activities*

First Three Months of 2004 and 2003. Net cash used in investing activities was $10.0 million in the first three months of 2004 as compared to $5.2 million in the first three months of 2003. The capital expenditures in the first three months of 2004 of $11.0 million related to refurbishment and upgrades related to the fire at the Calvert City ethylene plant ($2.6 million), and maintenance capital, safety and environmental related projects ($8.4 million). These expenditures were offset by $1.0 million of proceeds from the disposition of assets. Capital spending in the first three months of 2003 of $8.4 million was primarily related to maintenance, safety and environmental projects. These expenditures were offset by $3.2 million of insurance proceeds.

2003, 2002 and 2001. Net cash used in investing activities was $41.6 million in 2003 as compared to $38.7 million in 2002 and $76.5 million in 2001. We made capital expenditures in 2003 of $44.9 million related to operational improvements, maintenance capital, safety and environmental related projects. These expenditures were offset by $3.3 million of insurance proceeds received in 2003 related to a fire at one of our ethylene plants in 2002. We made capital expenditures in 2002 of $43.6 million related to operational improvements, maintenance capital, safety and environmental projects, the completion of the conversion of the Calvert City chlorine plant from mercury cell to membrane technology and $5.0 million to acquire the Geismar facility. These expenditures were offset by $4.9 million of insurance proceeds received in 2002. In 2001, we made capital expenditures for operational improvements, maintenance capital, environmental and safety expenditures of $29.0 million. The remainder of the 2001 capital expenditures of $47.5 million was related primarily to the conversion of the Calvert City chlorine plant to membrane technology.


	*Financing Activities*

First Three Months of 2004 and 2003. Net cash used by financing activities during the first three months of 2004 was $0.3 million and related to the quarterly payment on the term loan. In the first three months of 2003, we used cash generated from operating activities to repay $32.5 million of debt.

2003, 2002 and 2001. Financing activities used cash of $25.3 million in 2003, compared to $8.0 million in 2002, and net cash provided by financing activities of $117.7 million in 2001. In 2003, we incurred $14.1 million in costs associated with the refinancing that were capitalized and that will be amortized over the term of the new debt. In 2002, our affiliates contributed $6.0 million to fund the purchase of the Geismar facility from Borden Chemical Limited Partnership. Also, during 2002, we repaid $5.8 million in borrowings with available cash on hand and incurred $9.4 million in costs associated with the refinancing completed in that year. In 2001, debt increased by $115.3 million to fund investing activities of $76.5 million and to increase cash balances by $67.6 million.

Liquidity and Capital Resources


	*Liquidity and Financing Arrangements*

Our principal sources of liquidity are from cash and cash equivalents, cash from operations, short-term borrowings under our revolving credit facility and our long-term financing.


	*Cash*

Cash balances were $36.8 million at March 31, 2004 compared to $18.0 million at March 31, 2003. Cash balances were $37.4 million at December 31, 2003 compared to $11.1 million at December 31, 2002. We believe the March 31, 2004 cash levels are adequate to fund our short-term cash requirements.


	*Debt*

Our current debt structure is used to fund our business operations, and our revolving credit facility is a source of liquidity. At March 31, 2004, our long-term debt, including current maturities, totaled $537.0 million, consisting of $380.0 million principal amount of 8 3/4% senior notes due 2011, a $119.1 million senior collateralized term loan due in 2010, a $27.0 million bank loan due on December 31, 2004 and a $10.9 million loan from the proceeds of tax-exempt revenue bonds (supported by a $11.3 million letter of credit). Debt outstanding under the term loan, the bank loan and the tax-exempt bonds bore interest at variable rates.

On July 31, 2003, we completed a refinancing of substantially all of our outstanding long-term debt. We used net proceeds from the refinancing of approximately $506.9 million to:

• repay in full all outstanding amounts under our then-existing revolving credit facility, term loan and 9.5% Series A and Series B notes, including accrued and unpaid interest, fees and a $4.0 million make-whole premium to the noteholders; and

• provide $2.4 million in cash collateral for outstanding letter of credit obligations of $2.2 million.

In conjunction with the refinancing, we terminated our accounts receivable securitization facility by repurchasing all accounts receivable previously sold to our unconsolidated accounts receivable securitization subsidiary. The net accounts receivable repurchased totaled $15.1 million. No gain or loss was recognized as a result of the accounts receivable repurchase. We also obtained a $12.4 million letter of credit to secure our obligations under a letter of credit reimbursement agreement related to outstanding tax-exempt revenue bonds in the amount of $10.9 million. As a result of the refinancing, we recognized $11.3 million in non-operating expense in the third quarter of 2003 consisting of the $4.0 million make-whole premium and a write-off of $7.3 million in previously capitalized debt issuance expenses.

The refinancing consisted of:

• $380.0 million in aggregate principal amount of 8 3/4% senior notes due 2011;

• $120.0 million senior collateralized term loan due in 2010; and

• $21.0 million in borrowings under a new $200.0 million senior collateralized working capital revolving credit facility due in 2007.

We incurred approximately $14.1 million in costs associated with the refinancing that were capitalized and that will be amortized over the term of the new debt.

The 8 3/4% senior notes are unsecured. There is no sinking fund and no scheduled amortization of the notes prior to maturity. The notes are subject to redemption and holders may require us to repurchase the notes upon a change of control. All domestic restricted subsidiaries are guarantors of the senior notes.

The term loan bears interest at either LIBOR plus 3.75% or prime rate plus 2.75%. Quarterly principal payments of $0.3 million are due on the term loan beginning on September 30, 2003, with the balance due in four equal quarterly installments in the seventh year of the loan. Mandatory prepayments are due on the term loan with the proceeds of asset sales and casualty events subject, in some instances, to reinvestment provisions. The term loan also requires prepayment with 50% of excess cash flow as determined under the term loan agreement. The term loan is collateralized by our Lake Charles and Calvert City facilities and some related intangible assets.

On December 8, 2001, we entered into a $27 million line of credit facility with a bank. The facility has been renewed annually and will mature on December 31, 2004. The facility bears interest at LIBOR plus 0.6%, and borrowings under the facility can be repaid at the end of each interest period without penalty. Interest is payable on the last day of each applicable interest period or quarterly if the interest period is longer than three months.

The $200 million revolving credit facility bears interest at either LIBOR plus 2.25% or prime rate plus 0.25%, subject to grid pricing adjustment based on a fixed charge coverage ratio after the first year and

subject to a 0.5% unused line fee. The revolving credit facility is also subject to a termination fee if terminated during the first two years. The revolving credit facility is collateralized by accounts receivable and contract rights, inventory, chattel paper, instruments, documents, deposit accounts and related intangible assets. The revolving credit facility matures in 2007. We had standby letters of credit outstanding at March 31, 2004 of $13.0 million. We had $187.0 million of available borrowing capacity at March 31, 2004 under this facility.

The agreements governing the 8 3/4% senior notes, the term loan, the bank loan and the revolving credit facility each contain customary covenants and events of default. Accordingly, these agreements impose significant operating and financial restrictions on us. These restrictions, among other things, limit incurrence of additional indebtedness, payment of dividends, significant investments and sales of assets. These limitations are subject to a number of important qualifications and exceptions. None of the credit agreements requires us to maintain specified financial ratios, except that our revolving credit facility requires us to maintain a minimum fixed charge coverage ratio of 1.0 when availability falls below $50 million for three consecutive business days, or below $35 million at any time.


	*Contractual Obligations and Commercial Commitments*

In addition to long-term debt, we are required to make payments relating to various types of obligations. The following table summarizes our minimum payments as of December 31, 2003 relating to long-term debt, unconditional purchase obligations and operating leases for the next five years and thereafter, after giving effect to the refinancing transaction described above.



			Payments Due by Period

			Total		2004		2005-2006		2007-2008		Thereafter


			(In millions)
Contractual Obligations
	Long-term debt		$	537.3	$	28.2	$	2.4	$	2.4	$	504.3
	Operating leases			138.6		17.6		29.1		24.9		67.0
	Unconditional purchase obligations			63.7		9.6		16.4		14.7		23.0
	Other long-term liabilities included in the balance sheet			14.6		3.1		8.3		3.2		—
	Interest payments			273.2		39.6		78.4		78.1		77.1

		Total	$	1,027.4	$	98.1	$	134.6	$	123.3	$	671.4

Other Commercial Commitments
	Standby letters of credit		$	13.0	$	—	$	11.3	$	1.7	$	—

Long-Term Debt. Long-term debt amortization is based on the contractual terms of the debt agreements in place at December 31, 2003.

Other Long-Term Liabilities. The amounts include a technology license used to produce LLDPE and HDPE. The license requires us to make annual payments of $3.1 million through May 2007. Also included are affiliate loans and a long-term incentive agreement with an employee. The amounts do not include pension liabilities, post-retirement medical liabilities, deferred charges and other items due to the uncertainty of the future payment schedule. Pension and post-retirement liabilities totaled $19.4 million as of December 31, 2003.

Interest Payments. Interest payments are based on interest rates in effect at December 31, 2003 and assume contractual amortization payments.

Operating Leases. We lease various facilities and equipment under noncancelable operating leases for various periods.

Unconditional Purchase Obligations. We are party to various unconditional obligations to purchase products and services, primarily including commitments to purchase nitrogen, waste water treatment services and pipeline usage.

Standby Letters of Credit. This includes (1) our obligation under a $11.3 million letter of credit issued in connection with the $10.9 million tax-exempt revenue bonds and (2) other letters of credit totaling $1.7 million issued to support obligations under our insurance programs, including for workers’ compensation claims.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based on our current level of operations, we believe our cash flow from operations, available cash and available borrowings under our new revolving credit facility will be adequate to meet our future liquidity needs for the foreseeable future.

Our business may not generate sufficient cash flow from operations, and future borrowings may not be available to us under our revolving credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all.


	*Off-Balance Sheet Arrangements*

Prior to the July 2003 refinancing transaction described above, we sold trade receivables to Westlake AR Corporation, or WARC, a wholly owned, non-consolidated subsidiary. WARC, in turn, had an agreement with an independent issuer of receivables-backed commercial paper under which it sold receivables and received cash proceeds of up to $49.5 million. The proceeds received from this accounts receivables securitization facility effectively reduced our debt. The amount of proceeds we received varied depending on a number of factors, including the availability of receivables, the credit and aging of the receivables, concentration of credit risk and our utilization of the facility. The balances of receivables sold to WARC as of December 31, 2001 and 2002 were $38.0 million and $15.1 million, respectively. Immediately prior to the July 2003 refinancing, we repurchased all accounts receivable sold to WARC and terminated the securitization facility.

Critical Accounting Policies

Critical accounting policies are those that are important to our financial condition and require management’s most difficult, subjective, or complex judgments. Different amounts would be reported under different operating conditions or under alternative assumptions. We have evaluated the accounting policies used in the preparation of the accompanying consolidated financial statements and related notes and believe those policies are reasonable and appropriate.

We apply those accounting policies that we believe best reflect the underlying business and economic events, consistent with GAAP. Our more critical accounting policies include those related to long-lived assets, accruals for long-term employee benefits, transfer of financial assets, inventories and environmental and legal obligations. Inherent in such policies are certain key assumptions and estimates. We periodically update the estimates used in the preparation of the financial statements based on our latest assessment of the current and projected business and general economic environment. Our significant accounting policies are summarized in note 1 to the audited consolidated financial statements appearing elsewhere in this prospectus. We believe the following to be our most critical accounting policies applied in the preparation of our financial statements.

Long-Lived Assets. Key estimates related to long-lived assets include useful lives, recoverability of carrying values and existence of any retirement obligations and such estimates could be significantly modified. The carrying values of long-lived assets could be impaired by new technological developments, new chemical industry entrants with significant raw material or other cost advantages, uncertainties associated with the U.S. and world economies, the cyclical nature of the chemical and refining industries and uncertainties associated with governmental actions.

We periodically evaluate long-lived assets for potential impairment indicators. Our judgments regarding the existence of impairment indicators are based on legal factors, market conditions and the operational performance of our businesses. Actual impairment losses incurred could vary significantly from amounts estimated. Additionally, future events could cause us to conclude that impairment indicators exist and that associated long-lived assets of our businesses are impaired. Any resulting impairment loss could have a material adverse impact on our financial condition and results of operations.

The estimated useful lives of long-lived assets range from three to 25 years. Depreciation and amortization of these assets, including amortization of deferred turnaround costs, under the straight-line method over their estimated useful lives totaled $81.7 million, $88.0 million, and $87.3 million in 2001, 2002 and 2003, respectively. If the useful lives of the assets were found to be shorter than originally estimated, depreciation charges would be accelerated.

We defer the costs of turnaround maintenance and repair activities and amortize the costs over the period until the next expected major turnaround of the affected unit. During 2001, 2002 and 2003, cash expenditures of $12.9 million, $16.3 million, and $14.0 million, respectively, were deferred and are being amortized, generally over three to five year periods. Amortization in 2001, 2002 and 2003 of previously deferred turnaround costs was $3.2 million, $5.0 million, and $5.1 million, respectively. As of December 31, 2003, capitalized turnaround costs, net of accumulated amortization, totaled $15.5 million. Expensing turnaround costs would likely result in greater variability of our quarterly operating results and would adversely affect our financial position and results of operations.

Additional information concerning long-lived assets and related depreciation and amortization appears in note 5 to the audited consolidated financial statements appearing elsewhere in this prospectus.

Long-Term Employee Benefit Costs. Our costs for long-term employee benefits, particularly pension and postretirement medical and life benefits, are incurred over long periods of time and involve many uncertainties over those periods. The net periodic benefit cost attributable to current periods is based on several assumptions about such future uncertainties, and is sensitive to changes in those assumptions. It is our responsibility, often with the assistance of independent experts, to select assumptions that represent the best estimates of those uncertainties. It is also our responsibility to review those assumptions periodically and, if necessary, adjust the assumptions to reflect changes in economic or other factors.

Accounting for employee retirement plans involves estimating the cost of benefits that are to be provided in the future and attempting to match, for each employee, that estimated cost to the period worked. To accomplish this, we rely extensively on advice from actuaries, and assumptions are made about inflation, investment returns, mortality, employee turnover and discount rates that ultimately impact amounts recorded. While we believe that the amounts recorded in the consolidated financial statements appearing elsewhere in this prospectus related to these retirement plans are based on the best estimates and judgments available, the actual outcomes could differ from these estimates.

Additional information on the key assumptions underlying these benefit costs appears in note 11 to the audited consolidated financial statements appearing elsewhere in this prospectus.

Transfers of Financial Assets. We account for the transfers of financial assets, including transfers to a Qualified Special Purpose Entity, or QSPE, in accordance with Statement of Financial Accounting Standards (“SFAS”) 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. In accordance with SFAS 140, we recognize transfers of financial assets as sales provided that control has been relinquished. Control is deemed to be relinquished only when all of the following conditions have been met: (1) the assets have been isolated from the transferor, even in bankruptcy or other receivership (true sale opinions are required); (2) the transferee has the right to pledge or exchange the assets received and (3) the transferor has not maintained effective control over the transferred assets ( e.g. , a unilateral ability to repurchase a unique or specific asset). We are also required to follow the accounting guidance under SFAS 140 and Emerging Issues Task Force (“EITF”) Topic D-14, Transactions Involving Special-Purpose Entities, to determine whether or not a special purpose entity is required to be consolidated.

Our transfers of financial assets relate to securitization transactions with a special purpose entity, or SPE, meeting the SFAS 140 definition of a QSPE. A QSPE can generally be described as an entity with significantly limited powers that are intended to limit it to passively holding financial assets and distributing cash flows based upon established terms. Based upon the guidance in SFAS 140, we are not required to and do not consolidate our QSPE. Rather, we account for involvement with our QSPE under a financial components approach in which we recognize only our retained interest in assets transferred to the QSPE. We account for such retained interests at fair value with changes in fair value reported in earnings. As discussed under “— Liquidity and Capital Resources — Debt,” we terminated our securitization facility in conjunction with our refinancing transaction.

Inventories. Inventories primarily include product, materials and supplies. Inventories are stated at lower of cost or market. Cost is determined using the first-in, first-out, or FIFO, method. The use of other methods, such as LIFO, could result in differing amounts being reported as inventories and cost of sales depending on price changes and sales turnover levels.

Environmental and Legal Obligations. We consult with various professionals to assist us in making estimates relating to environmental costs and legal proceedings. We accrue an expense when we determine that it is probable that a liability has been incurred and the amount is reasonably estimable. While we believe that the amounts recorded in the accompanying consolidated financial statements related to these contingencies are based on the best estimates and judgments available, the actual outcomes could differ from our estimates. See note 15 to the audited consolidated financial statements appearing elsewhere in this prospectus.

Accounting Changes

Effective January 1, 2002, we implemented SFAS 141, Business Combinations, SFAS 142, Goodwill and Other Intangible Assets, and SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. On January 1, 2003, we implemented SFAS 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets and SFAS 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. Implementation of SFAS 141, SFAS 142, SFAS 143, SFAS 144 and SFAS 145 did not have a material effect on our consolidated financial statements.

Recent Accounting Pronouncements

In August 2002, the FASB issued SFAS 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. This statement requires: (a) an existing legal obligation associated with the retirement of a tangible long-lived asset must be recognized as a liability when incurred and the amount of the liability be initially measured at fair value, (b) an entity must recognize subsequent changes in the liability that result from the passage of time and revisions in either the timing or amount of estimated cash flows and (c) upon initially recognizing a liability for an asset retirement obligation, an entity must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. SFAS 143 will be effective for financial statements issued for fiscal years beginning after June 15, 2002. As of December 31, 2003, we did not have legal or contractual obligations to close any of our facilities. Our adoption of SFAS 143 on January 1, 2003 did not have a material impact on our consolidated results of operations, cash flows or financial position.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections . SFAS 145 rescinds SFAS 4, Reporting Gains and Losses from Extinguishment of Debt . By rescinding SFAS 4, gains or losses from extinguishment of debt that do not meet the criteria of APB No. 30 should not be reported as an extraordinary item and should be reclassified to income from continuing operations in all periods presented. APB No. 30 states that extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. SFAS 145 is effective for fiscal years beginning after May 15, 2002. Our adoption of SFAS 145 on January 1, 2003 did not have a material impact on our consolidated results of operations, cash flow or financial position. As discussed under “— Liquidity and

Capital Resources — Debt,” we completed a refinancing of substantially all of our outstanding long-term debt on July 31, 2003. As a result of the refinancing, we recognized $11.3 million in non-operating expense in the third quarter of 2003, consisting of the $4.0 million make-whole premium and $7.3 million in previously capitalized debt issuance costs.

In December 2003, the FASB issued Interpretation No. 46R, Consolidations of Variable Interest Entities, an interpretation of ARB No. 51. We are required to comply with the consolidation requirements of FIN No. 46R. We have determined that application of FIN No. 46R will not have a material impact on our consolidated results of operations, cash flows or financial position.

In March 2003, the FASB issued SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149 is effective for contracts entered into, modified or designated as hedges after June 30, 2003. We have adopted this standard as of July 1, 2003 and do not expect it to have a significant effect on our consolidated results of operations, cash flows or financial position.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement changes the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities in statements of financial position. This statement will be effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. We have adopted SFAS 150 as of July 1, 2003, and its adoption did not have a significant effect on our consolidated results of operations, cash flows or financial position.

Quantitative and Qualitative Disclosures About Market Risk


	*Commodity Price Risk*

A substantial portion of our products and raw materials are commodities whose prices fluctuate as market supply and demand fundamentals change. Accordingly, product margins and the level of our profitability tend to fluctuate with changes in the business cycle. We try to protect against such instability through various business strategies. Generally, our strategy is to limit our exposure to price variances by locking in prices for future purchases and sales. Our strategies also include ethylene product feedstock flexibility and moving downstream into the olefins and vinyls products where pricing is more stable. We use derivative instruments in certain instances to reduce price volatility risk on feedstocks and products. Based on our open derivative positions at March 31, 2004, a hypothetical $1.00 increase in the price of an mmbtu of natural gas would have decreased our income before taxes by $3.4 million and a hypothetical $0.10 increase in the price of a gallon of propane would have increased our income before taxes by $1.8 million. Additional information concerning derivative commodity instruments appears in the consolidated financial information appearing elsewhere in this prospectus.


	*Interest Rate Risk*

We are exposed to interest rate risk with respect to fixed and variable rate debt. At March 31, 2004, we had variable rate debt of $157.0 million outstanding. All of the debt under our credit facility, tax exempt revenue bonds, and term loan is at variable rates. We do not currently hedge our variable interest rate debt, but we may do so in the future. The average variable interest rate for our variable rate debt of $157.0 million as of March 31, 2004 was 4.13%. A hypothetical 100 basis point increase in the average interest rate on our variable rate debt would increase our annual interest expense by approximately $1.6 million. Also, at March 31, 2004, we had $380 million of fixed rate debt. As a result, we are subject to the risk of higher interest cost if and when this debt is refinanced. If interest rates are 1% higher at the time of refinancing, our annual interest expense would increase by approximately $3.8 million.

INDUSTRY OVERVIEW

Summary

Olefins and vinyl products are some of the key building blocks of the petrochemical industry and primarily include ethylene, chlorine and their derivative products. Olefins, including ethylene, polyethylene and styrene, are used in the manufacture of a wide range of consumer non-durable plastics and films including flexible and rigid packaging, as well as consumer durables and industrial products including automotive products and coatings. PVC and fabricated products made from PVC are also used in a wide variety of applications, with particular focus in the plastic pipe and construction industries. Demand for these products has historically been driven by economic growth, with other key factors being rising living standards in developing nations and the continued substitution of plastics and synthetics for other materials. As a result, global olefins and vinyl products demand has historically risen in excess of the rate of increase of U.S. gross domestic product, or U.S. GDP.

Petrochemicals are typically manufactured in large volumes by a number of different producers using widely available technologies. Changes in the balance between supply and demand and the resulting operating rates, the level of general economic activity and the price of raw materials all influence the petrochemical industry cycle and margins. The cycle is characterized by periods of tight supply, leading to high operating rates and peak margins, followed by a decline in operating rates and margins primarily as a result of significant capacity additions. Due to the significant size of new plants, capacity additions are built in large increments and typically require several years of demand growth to be absorbed. The industry is currently emerging from a down cycle that resulted from significant new capacity additions in the past several years, combined with soft demand resulting from the global economic slowdown.

Olefins

Ethylene. Ethylene is the most widely consumed petrochemical in the world, with over 214 billion pounds used in 2003. It is a basic raw material for a broad array of chemical products including: (1) polyethylene (in the form of HDPE, LDPE and LLDPE), which is used in numerous consumer and industrial products, including trash bags, packaging film, toys, housewares and plastic bottles; (2) EDC, which is further processed into PVC; (3) styrene, which is then used in packaging and containers; and (4) ethylene oxide, which is used in the production of ethylene glycol, and further processed into antifreeze, polyester fibers and resins. North America is the largest consumer of ethylene, with an estimated 64 billion pounds consumed per year, or 30% of world demand. The following chart shows 2003 North American ethylene consumption by end use.


	*2003 North American Ethylene Consumption by End Use*

(PIE CHART)

Source: CMAI.

Between 1990 and 2003, the global and North American compound annual growth rates for ethylene demand were 4.5% and 2.6%, respectively. The world’s 2003 ethylene capacity totaled approximately 245 billion pounds, with North American capacity accounting for approximately 31% of the total. While significant new ethylene capacity was built over the past several years, no major capacity additions are expected in North America in the next four years, and it typically takes three to four years to construct a new ethylene facility. The North American ethylene industry has been altered by consolidation and alliances among producers with the aggregate capacity share of the five largest North American producers increasing.

Cash margins in the U.S. ethylene market reached a peak in 1995, with operating rates increasing in response to both strong demand and limited capacity additions. The 1996 to 1998 period was characterized by significant capacity additions and lower demand due to the Asian crisis, resulting in lower margins. As the world economy recovered in 1999 and 2000, demand for ethylene improved, resulting in increased operating rates and margins. Operating rates and margins declined dramatically by late 2000 and continued to be depressed into 2003 due to the impact of increased capacity from new plants, the sharp slowdown in the economy and increased raw material costs. In 2003, higher feedstock costs prompted price increases. During the first quarter of 2004, demand and producer operating rates increased due to the improving economy.

According to CMAI, ethylene industry fundamentals suggest a sustained cyclical recovery in ethylene prices and margins beginning in 2004, with the next peak expected to occur in 2006. This recovery in the ethylene market is supported by minimal new capacity additions expected in North America and significant capacity shutdowns announced by a number of large producers. CMAI expects operating rates and margins to improve as demand recovers due to improved global economic conditions.

Polyethylene. Polyethylene is produced through the polymerization of ethylene. There are three primary types of polyethylene: LDPE, HDPE and LLDPE. LDPE is typically used in applications requiring flexibility and film clarity, such as household bags and wraps. HDPE is a rigid plastic most commonly used for blow molding in the manufacture of milk bottles, liquid detergent bottles, industrial drums, bottles and gas tanks. LLDPE is a tough yet flexible plastic with its major end use in cost-sensitive film applications such as stretch wrap, trash can liners and injection molding applications, including housewares and lids. Historically, polyethylene demand has grown at or above U.S. GDP, driven by the replacement of other materials with plastics. Between 1993 and 2003, North American LLDPE demand has grown at a compound annual growth rate of 7.1%, followed by HDPE at 4.5% and LDPE at approximately 1%. The following charts show 2003 North American polyethylene consumption by end use.


	*2003 North American Polyethylene Consumption by End Use*


LDPE		LLDPE

HDPE

(PIE CHART)

Source: CMAI.

The world’s 2003 polyethylene capacity totaled approximately 153 billion pounds, with North American capacity of 44 billion pounds accounting for 29% of the total. Limited polyethylene capacity additions are expected in North America over the next three years, with the lead-time to build a new plant typically around two years. As with ethylene, the industry has been concentrated into fewer, larger competitors in recent years.

As in the ethylene market, North American polyethylene operating rates and margins peaked in 1995 in response to strong demand growth and limited capacity expansions. In the period of 1998 through 2000, significant capacity additions came on stream, and by 2001 the impact of these additions, combined with rising energy and feedstock costs and the manufacturing recession that began in late 2000, resulted in a cyclical trough in margins in 2001 and in early 2002. A modest improvement in demand, a reduction in feedstock costs and the closure of some older polyethylene capacity occurred in 2002, resulting in marginally improved industry profitability. In 2003, demand was flat and feedstock costs rose, but polyethylene producers were generally able to improve margins through price increases.

Styrene. Styrene is used primarily in the production of polystyrene and is also used to make styrene butadiene rubber, acrylonitrile-butadiene-styrene, or ABS, styrene-acrylonitrile, or SAN, resins, styrene co-polymers, unsaturated polyester resins, and other downstream chemical products. The following chart shows 2003 North American styrene consumption by end use.


	*2003 North American Styrene Consumption by End Use*

(PIE CHART)

Source: CMAI.

Historically, styrene demand has grown in line with economic growth rates, driven by the increased replacement of other materials with polystyrene. Between 1990 and 2003, North American styrene demand has grown at a compound annual growth rate of 2.2%. The world’s 2003 styrene demand totaled approximately 50 billion pounds, with North American demand accounting for 22% of the total. The styrene industry is characterized by backward-integrated producers that produce ethylene and benzene, as well as forward-integrated producers that produce polystyrene and ABS.

Following peak cash margins in 1995, margins declined from 1996 to 1998 as a result of modest demand growth combined with significant new capacity additions. During 1999 and 2000, the styrene industry experienced an increase in demand growth from developing regions and high utilization rates, which, when combined with reducing feedstock costs, resulted in a strong improvement in margins. During 2001, the North American manufacturing recession significantly reduced demand while higher U.S. feedstock costs made North American styrene less attractive to Asian buyers. Utilization rates in North America dropped in 2001 and the industry’s profitability level declined significantly. During 2002 and 2003, utilization rates rose due to improving North American demand and an increase in exports, leading to higher profitability as compared to 2001.

Vinyls

Chlorine and Caustic Soda. Chlorine and caustic soda are co-products manufactured by breaking salt into its components through the application of electric power. Chlorine and caustic soda are produced in a fixed ratio forming what is commonly referred to as an electrochemical unit, or ECU. Electric power is the most significant cost component in the production of chlorine and caustic soda. Chlorine is used in a wide variety of chemical processes and products, including those used to make plastics and PVC resins. Other applications include the manufacture of propylene oxide and titanium dioxide, water purification and pulp and paper bleaching. Caustic soda is used in the production of pulp and paper, alumina, oil, textiles, soaps, detergents and a variety of other chemical processes. The following charts show 2003 consumption of chlorine and caustic soda by end use.


	*2003 North American Chlor-Alkali Consumption by End Use*


Chlorine		Caustic Soda

Source: CMAI.

Between 1990 and 2003, global and North American chlorine demand has increased at compound annual growth rates of 1.5% and 0.1%, respectively. In North America, growth resulting from the increased demand for PVC resins and propylene oxide has been offset by declining usage as a bleaching agent in pulp and paper. Caustic soda supply has been driven by chlorine production, as the two co-products are produced in a fixed ratio of 1.1 to 1, and historically, there has been a large market for caustic soda at a given price due to its wide variety of applications as a pH modifying agent.

There are generally three main processes for manufacturing chlorine: (1) the mercury cell process, the oldest and highest cost technology, (2) the diaphragm process and (3) the membrane process, the newest, lowest cost process. North American chlorine capacity is approximately 34 billion pounds, and is made up almost entirely of diaphragm and membrane technology. No new major chlorine capacity expansions are expected, and it typically takes two to three years to build a new facility. As a result, when combined with increasing demand of PVC and stable demand of pulp and paper, operating rates and margins are expected to improve over the near to medium term.

While long-term growth has typically been driven by chlorine demand, short-term demand fluctuations will cause chlorine and caustic soda prices typically to move in opposite directions, with the “higher demand” product dictating the premium price. As a result, manufacturers generally track pricing on an ECU basis, which is essentially the combination of chlorine and caustic soda prices. ECU prices reached a peak in 1995 at over $400 per ton, trending down to a trough in 1999 to just over $200 per ton from weak but balanced demand for both chlorine and caustic soda. The industry experienced a recovery in ECU pricing in 2000 and early 2001, driven particularly by strong caustic soda demand. Beginning in late 2001 and into 2002, a significant decline in demand caused by the global economic recession resulted in lower operating rates and ECU prices. Beginning in late 2002 and throughout 2003, rising energy prices resulted in dramatic increases in ECU prices, as producers have pushed to maintain margins.

PVC and VCM. PVC is a plastic resin manufactured from VCM, which in turn is manufactured from ethylene and chlorine. PVC resins are one of the most widely used plastics in the world today, with estimated demand of 60.6 billion pounds globally, with North America accounting for 28% of the total. Applications are diverse and include pipe and fittings, window frames, siding, fence, flooring, shower curtains, packaging, bottles, film, medical tubing, business machine housings and credit cards. The following chart shows 2003 consumption of PVC by end use.

2003 North American PVC Consumption by End Use

(PIE CHART)

Source: CMAI.

Between 1990 and 2003, North American PVC demand has increased at a compound annual growth rate of 3.3%, driven by increased economic and new/remodeling housing activity and the cost-effective replacement of metal and other materials. Minimal capacity expansions are expected over the next four years. The capacity additions are not, however, expected to keep up with anticipated increases in demand. It typically takes one to two years to build new capacity.

According to CMAI, PVC industry fundamentals suggest a cyclical recovery in PVC prices and margins beginning in 2004. This recovery in the PVC market is supported by minimal new capacity

additions expected in North America. CMAI expects operating rates and margins to improve as demand recovers due to improved global economic conditions.

After reaching peak margins in 1994 and 1995, margins declined in the 1996 to 1999 period due to the absorption of significant new capacity additions. The industry experienced a significant decline in North American demand and operating rates in 2000 and 2001. The industry experienced a return to growth driven by the housing sector in 2002, and, when combined with modest new capacity, producers were able to maintain operating rates and margins. Due to weather conditions during the busy spring and summer construction period, demand for PVC decreased in 2003 as compared to 2002. The first quarter of 2004 has been characterized by increasing product prices driven by increased demand and feedstock cost increases, with PVC producers able to modestly improve margins.

Fabricated Products. Fabricated products manufactured from PVC resin include pipe, siding, fence, deck, garden accessories and window and door components. The construction building materials market is the largest consumer of PVC-based fabricated products in North America due to PVC’s durability, ease of installation and low maintenance requirements.

Pipe fabricated from PVC resin is the largest market for PVC resin in North America. PVC pipe is especially advantageous in more demanding applications, proving itself as one of the more durable and reliable materials on the market today. PVC pipe offers greater strength, lower installed cost, increased corrosion resistance, lighter weight and longer service life when compared to iron, steel and concrete alternatives. According to Chemical Data, Inc., the PVC “Rigid Pipe and Tubing” market grew at a compound annual growth rate of 4.3% from 1994 through 2003.

Windows and patio doors manufactured from PVC resin are more energy efficient, less costly and easier to maintain than many alternative products. According to Chemical Data, Inc., the PVC “Windows and Doors” market grew at a compound annual growth rate of 10.3% between 1994 and 2003.

Fence products manufactured from PVC resin feature low maintenance materials and long product life. According to the Freedonia Group, from 1997 through 2002, PVC fence demand grew at a compound annual growth rate of 23%.

OUR BUSINESS

General

We began operations in 1986 after the Chao family acquired our first polyethylene plant, an Olefins segment business, near Lake Charles, Louisiana from Occidental Petroleum Corporation. We began our vinyls operations in 1990 with the acquisition of a VCM plant in Calvert City, Kentucky from the Goodrich Corporation. In 1992, we commenced our Vinyls segment fabricated products operations after acquiring three PVC pipe plants. Since 1986, we have grown rapidly into an integrated producer of petrochemicals, polymers and fabricated products. We achieved this by acquiring 15 plants, constructing six new plants (including our joint venture in China) and completing numerous capacity or production line expansions.

We benefit from highly integrated production facilities that allow us to process raw materials into higher value-added chemicals and fabricated products. We have 8.3 billion pounds per year of active aggregate production capacity at 11 strategically located manufacturing sites in North America. We believe that with our highly integrated capabilities we are less affected by volatility in product demand, have less exposure to the effects of cyclical raw material prices and operate at higher capacity utilization rates than non-integrated producers. In addition, the strategic location of our facilities lowers our transportation costs due to our high level of internally used production. We also have a 43% interest in a joint venture in China that operates a vinyls plant.

Our Competitive Strengths

Efficient Modern Asset Base and Low Cost Operations. We operate some of the industry’s newest manufacturing facilities in North America and focus on continually improving our asset portfolio and cost position. We have invested approximately $1.2 billion since 1990 to construct new, state-of-the-art facilities and acquire and upgrade facilities and equipment in both our Olefins and Vinyls segments. We built two ethylene crackers in Lake Charles in 1991 and 1997, and constructed a gas-phase LLDPE/ HDPE plant in Lake Charles in 1998. In addition, we recently completed the technology conversion and upgrade of our chlor-alkali facility at Calvert City, reducing per unit energy consumption by approximately 25% and increasing capacity by 64%. These newer plants increase operating efficiency and reduce our maintenance and environmental compliance costs. Our ethylene plants allow us to choose between ethane, propane and butane feedstocks. This flexibility enables us to react to changing market conditions and reduce raw

material costs. We continually focus on reducing costs throughout our organization and, based on the public filings of other U.S. chemical companies, we believe that our selling, general and administrative costs of 3.7% of our net sales for 2003 is one of the lowest in the chemical industry. We minimize research and development expenses by selectively acquiring and licensing third-party proprietary technology as a cost-effective approach to product development and production efficiency improvement.

Strong Regional Market Presence. Fabricated products are sold on a regional basis, and we are a leading seller of PVC fabricated products by volume in the geographic regions where we operate. Our vinyls facilities at Calvert City, Kentucky are located on the Tennessee River and provide a freight cost advantage to our customers in the high-volume Midwest and Northeast markets when compared to most of our competitors located on the Gulf Coast. Our eight fabricated products facilities in North America allow us to focus our sales effort on local markets where we have a strong market presence.

Our Business Strategy

• Continue productivity improvements. We focus on productivity improvements and cost reduction across our businesses. For example, we have increased our production capacity by approximately 20% since 1999 with minimal change in employee headcount. We completed a conversion at our chlorine facility in 2002 that reduced energy consumption per ton by approximately 25% and increased annual capacity by 64%. We will continue to improve our feedstock flexibility at our ethylene facilities, which will enhance our ability to select feedstocks depending on prevailing market prices.

• Pursue low-cost expansion opportunities. We will continue to invest in opportunities to prudently expand capacity through new investments and debottlenecking initiatives. For example, we acquired a vinyls facility in Geismar, Louisiana in 2002 and started the EDC portion in the fourth quarter of 2003, enabling us to more economically provide basic chemicals to our vinyls chain. At a future date, if market conditions warrant, we could bring approximately 600 million pounds per year of VCM and PVC capacity on line. In our Olefins segment, we recently completed a scheduled turnaround at Lake Charles that increased ethylene capacity by 100 million pounds per year. These investments allow us to significantly increase sales and further improve operating efficiencies with modest incremental capital expenditures.

• Maintain a disciplined acquisition strategy. Since our formation, we have successfully integrated 12 acquisitions. Going forward, we will actively seek opportunities in our Vinyls and Olefins businesses that enhance our level of integration, improve our product portfolio, expand our market presence or provide operational synergies and cost savings.

Maintain rigorous financial discipline. We maintain rigorous financial discipline in investing capital in our core businesses. For capital investment decisions, we typically evaluate a project’s return against the cost of capital utilizing the economic value added, or EVA ^TM , model. EVA ^TM is a metric developed by Stern Stewart & Co. that is used to measure a firm’s net economic profit, and is equal to a firm’s net operating profit after taxes less a capital charge (consisting of a firm’s weighted average cost of capital multiplied by the amount of capital). We believe that EVA ^TM is a useful tool for managing and assessing operating budgets, capital projects, acquisitions and divestitures, benchmarking and incentive compensation. Furthermore, over 100 employees participate in a variable compensation plan based upon achieving improvements in EVA ^TM criteria.

Olefins Business


	*Products*

Olefins are the basic building blocks used to create a wide variety of petrochemical products. We manufacture ethylene, polyethylene, styrene, and associated co-products at our manufacturing facilities in Lake Charles, Louisiana. We have two ethylene plants, two polyethylene plants and one styrene monomer plant at our Lake Charles complex. The following table illustrates our production capacities by principal product and the primary end uses of these materials:


Product	Annual Capacity		End Uses

	(Millions of pounds)
Ethylene		2,400	Polyethylene, EDC, styrene, ethylene oxide/ ethylene glycol
Low-Density Polyethylene		850	High clarity packaging, shrink films, laundry and dry cleaning bags, ice bags, frozen foods packaging, bakery bags, coated paper board, cup stock, paper folding cartons, lids, housewares, closures and general purpose molding
Linear Low-Density and High-Density Polyethylene		550	Heavy-duty films and bags, general purpose liners (LLDPE); thin-walled food tubs, housewares, pails, totes and crates (HDPE)
Styrene		450	Disposables, packaging material, appliances, paints and coatings, resins and building materials

Ethylene. Ethylene is the world’s most widely used petrochemical in terms of volume. It is the key building block used to produce a large number of higher value-added chemicals including polyethylene, EDC, VCM and styrene. We have the capacity to produce 2.4 billion pounds of ethylene per year at our Lake Charles complex and consume the majority of our production internally to produce polyethylene and styrene monomer in our Olefins business and to produce VCM in our Vinyls business. We also produce ethylene in our Vinyls segment at our Calvert City, Kentucky facilities, all of which is used internally in the production of VCM. In addition, we produce ethylene co-products including chemical grade propylene, crude butadiene, pyrolisis gasoline and hydrogen. We sell our entire output of these co-products to third

parties. We started the EDC portion of the Geismar facility in the fourth quarter of 2003, and we use a portion of our Lake Charles ethylene production to produce that EDC.

Polyethylene. Polyethylene, the world’s most widely consumed polymer, is used in the manufacture of a wide variety of packaging, film, coatings and molded product applications. Polyethylene is generally classified as either LDPE, LLDPE or HDPE. The density correlates to the relative stiffness of the products. The difference between LDPE and LLDPE is molecular, and products produced from LLDPE are stronger than products produced from LDPE. LDPE is used in end products such as bread bags, dry cleaning bags, food wraps and milk carton and snack package coatings. LLDPE is used for higher film strength applications such as stretch film and heavy duty sacks. HDPE is used to manufacture products such as grocery, merchandise and trash bags, plastic containers and plastic caps and closures.

We are the fourth largest producer of LDPE in North America based on capacity and, in 2003, our annual capacity of 850 million pounds was available in numerous formulations to meet the needs of our diverse customer base. We also have the combined capacity to produce 550 million pounds of either LLDPE or HDPE per year in various different formulations. We produce the three primary types of polyethylene and sell them to third parties as a final product in pellet form. We produce LDPE at one of our polyethylene plants and have the flexibility to produce both LLDPE and HDPE at the other polyethylene plant. This flexibility allows us to maximize production of either HDPE or LLDPE depending on prevailing market conditions.

Styrene. Styrene is used to produce polystyrene and synthetic rubber, which are used in a number of applications including injection molding, disposables, food packaging, housewares, paints and coatings, resins, building materials and toys. We produce styrene at our Lake Charles plant, where we have the capacity to produce 450 million pounds of styrene per year, all of which is sold to external customers.


	*Feedstocks*

We are highly integrated along our olefins product chain. We produce all of the ethylene required to produce our polyethylene, styrene and VCM. Ethylene can be produced from either petroleum liquid feedstocks, such as naphtha, condensates and gas oils, or from natural gas liquid feedstocks, such as ethane, propane and butane. One of our ethylene plants uses ethane as its feedstock and the other can use ethane, ethane/propane mix, propane and, most recently, butane, a heavier feedstock. We continue to seek ways to minimize our feedstock cost by increasing our ability to use alternative feedstocks. We receive ethane, propane and butane at our Lake Charles facilities through several pipelines from a variety of suppliers in Texas and Louisiana.

In addition to our internally supplied ethylene, we also require butene or hexene to manufacture polyethylene and benzene to manufacture styrene. We receive butene and hexene at the Lake Charles complex via rail car from four primary suppliers. We receive benzene via pipeline pursuant to a supply contract with a nearby supplier. Our current butene supply contracts expire on December 31, 2005, December 31, 2006 and May 31, 2007; our current hexene supply contract expires May 31, 2007; and our current benzene supply contract expires on December 31, 2004. The butene, hexene and benzene contracts are renewable for an additional term subject to either party to the contract notifying the other party that it does not wish to renew the contract. The counterparty to the benzene contract has notified us that it does not wish to renew the benzene contract after it expires on December 31, 2004.


	*Marketing, Sales and Distribution*

We use the majority of our Lake Charles ethylene production in our polyethylene, styrene and VCM operations. We sell the remainder to third parties. In addition, we sell our ethylene co-products to third parties. Our primary ethylene co-products are chemical grade propylene, crude butadiene, pyrolysis gasoline and hydrogen. The majority of sales in our Olefins business are made under agreements for one year or more. Contract volumes are established within a range. The terms of these contracts are fixed for a period (typically more than one year), although earlier termination may occur if the parties fail to agree

on price and deliveries are suspended for a period of several months. In most cases, these contracts also contemplate extension of the term unless terminated by one of the parties.

We typically ship our ethylene and propylene via a pipeline system that connects our plants to numerous customers. Our hydrogen is sold via pipeline to a single customer. We also have storage agreements and exchange agreements that allow us access to customers who are not directly connected to the pipeline system. We transport our polyethylene by rail or truck and we move our styrene, crude butadiene and pyrolysis gasoline by barge, rail or truck.

We have an internal sales force that sells directly to our customers. Our polyethylene customers are some of the nation’s largest purchasers of film and flexible packaging. No single Olefins customer accounted for more than 10% of our segment net sales in 2003.


	*Competition*

The markets in which our Olefins business operates are highly competitive. We compete on the basis of price, customer service, product deliverability, product quality and product performance. Our competitors in the ethylene, polyethylene and styrene markets are typically some of the world’s largest chemical companies, including Equistar Chemicals, LP, The Dow Chemical Company, ExxonMobil Chemical Company, Lyondell Chemical Company, Chevron Phillips Chemical Company LP and NOVA Chemicals Corporation.

Vinyls Business


	*Products*

Principal products in our integrated Vinyls segment include PVC, VCM, EDC, chlorine, caustic soda and ethylene. We also manufacture and sell products fabricated from the PVC we produce, including pipe, fence and deck, and window and patio door components. We manage our integrated Vinyls production chain, from the basic chemicals to finished fabricated products, to maximize product margins, pricing and capacity utilization. Our primary manufacturing facilities are in Calvert City, Kentucky and include an ethylene plant, a chlor-alkali plant, a VCM plant and a PVC plant. We also own eight strategically located PVC fabricated product facilities. In addition, in 2002 we acquired a vinyls facility in Geismar, Louisiana. We started the EDC portion of the Geismar facility in the fourth quarter of 2003. We plan to operate part or all of the remainder of the facility when market conditions support utilization of the additional capacity. We also own a 43% interest in a joint venture in China that produces PVC resin and film. The following table illustrates our production capacities by principal product and the end uses of these products:


Product(1)	Annual Capacity(2)		End Uses

	(Millions of pounds)
PVC		800	Construction materials including pipe, siding, profiles for windows and doors, film for packaging and other consumer applications

VCM		1,300	PVC

Chlorine		410	VCM, organic/inorganic chemicals, bleach

Caustic Soda		450	Pulp and paper, organic/inorganic chemicals, neutralization, alumina

Ethylene		450	VCM

Fabricated Products		600	Pipe: water and sewer, plumbing, irrigation, conduit; window and door components; fence and deck components

(1) EDC, a VCM intermediate product, is not included in the table.

(2) Annual capacity excludes total capacity of 79 million pounds of PVC film and 286 million pounds of PVC resin from the joint venture in China (in which we have a 43% interest) and 600 million pounds of potential PVC and VCM capacity at our facilities in Geismar, Louisiana.

PVC. PVC, the world’s third most widely used plastic, is an attractive alternative to traditional materials such as glass, metal, wood, concrete and other plastic materials because of its versatility, durability and cost competitiveness. PVC is produced from VCM, which is, in turn, made from chlorine and ethylene. PVC compounds are made by combining PVC resin with various additives in order to make either rigid and impact-resistant or soft and flexible compounds. The various compounds are then fabricated into end-products through extrusion, calendering, injection-molding or blow-molding. Flexible PVC compounds are used for wire and cable insulation, automotive interior and exterior trims and packaging. Rigid extrusion PVC compounds are commonly used in window frames, vertical blinds and construction products, including pipes. Injection-molding PVC compounds are used in specialty products such as computer housings and keyboards, appliance parts and bottles. We have the capacity to produce 800 million pounds of PVC per year at our Calvert City facilities. We use a majority of our PVC internally in the production of our fabricated products. The remainder of our PVC is sold to downstream fabricators.

VCM. VCM is used to produce PVC, solvents and PVC-related products. We use ethylene and chlorine to produce VCM. Our current annual capacity of 1.3 billion pounds of VCM at our Calvert City facilities is primarily used in our PVC operations. The remainder of our VCM production is sold under a long-term contract with an external customer.

Chlorine and Caustic Soda. We combine salt and electricity to produce chlorine and caustic soda, co-products commonly referred to as chlor-alkali, at our Calvert City facilities. We use our chlorine production in our VCM plant. We have the capacity to supply approximately 50% of our internal chlorine requirements. We purchase the remaining amount at market prices. Our caustic soda is sold to external customers who use it for, among other things, the production of pulp and paper, organic and inorganic chemicals and alumina. In 2002, we modernized and expanded our chlorine plant by replacing the mercury cell technology with a more efficient, state-of-the-art membrane technology.

Ethylene. We use all of the ethylene produced at Calvert City internally to produce VCM and, in 2003, we produced approximately 70% of the ethylene required for our VCM production. We obtain the remainder of the ethylene we need for our Vinyls business from our Lake Charles ethylene production in the form of EDC. The EDC portion of our Geismar facility began production in the fourth quarter of 2003, and this EDC is used internally in our production of VCM at Calvert City.

Fabricated Products. Products made from PVC are used in construction materials ranging from water and sewer systems to home and commercial applications for fence, deck, window and patio door systems. We manufacture and market water, sewer, irrigation and conduit pipe products under the “North American Pipe” brand. PVC pipe offers greater strength, lower installed cost, increased corrosion resistance, lighter weight and longer service life when compared to iron, steel and concrete alternatives. We also manufacture and market PVC window and patio door profiles under the “NAPG” brand and PVC fence and deck products under the “Westech” brand. PVC windows and patio doors are more energy efficient, less costly and easier to maintain than many alternative products. PVC fence and deck products feature low maintenance materials and long product life. All of our fabricated products production is sold to third parties.


	*Feedstocks*

We are highly integrated along our vinyls production chain. We produce all the ethylene, VCM and PVC used in our Vinyls business, and approximately 50% of our chlorine requirements. The remainder of our chlorine requirements are purchased at market prices. Ethylene produced at our Calvert City facility utilizes propane feedstock. We purchase the salt required for our chlor-alkali plant pursuant to a long-term contract that expires in 2005. We purchase electricity for our chlor-alkali production from the Tennessee Valley Authority under a contract that expires in 2005.

We are one of the few fully integrated producers of vinyls and fabricated products in North America. Our Calvert City PVC plant supplies all the PVC required for our fabricated products plants. The remaining feedstocks for fabricated products include pigments, fillers and stabilizers, which we purchase under short-term contracts based on prevailing market prices.


	*Marketing, Sales and Distribution*

We are a leading manufacturer of PVC fabricated products by volume in the geographic regions where we operate. We sell our PVC pipe through a combination of distributors, manufacturer representatives and our internal salaried sales force. We use a regional sales approach that allows us to provide focused customer service and to meet the specified needs of individual customers. We use an internal salaried sales force to market and sell our fence and window and patio door profiles.

We use a majority of our VCM production in our PVC operations. We sell all of our caustic soda production to external customers, concentrating on customers who can receive the product by barge over the Mississippi, Tennessee and Ohio Rivers to minimize transportation costs. In 2003, one contract customer in our Vinyls segment accounted for 19% of segment net sales.


	*Competition*

Competition in the vinyls market is based on price, product availability, product performance and customer service. We compete in the vinyls market with other large and medium-sized producers including Oxy Vinyls, LP, The Dow Chemical Company, Shintech, Inc., Georgia Gulf Corporation and Formosa Plastics Corporation.

Competition in the fabricated products market is based on price, on-time delivery, product quality, customer service and product consistency. We compete in the fabricated products market with other medium and large-sized producers and fabricators including J-M Manufacturing Company, Inc., Diamond Plastics Corporation, National Pipe & Plastics, Inc. and PW Eagle, Inc. We are a leading manufacturer of PVC pipe by volume in the geographic areas served by our North American Pipe Corporation subsidiary. We believe that we are the second largest manufacturer of PVC fence and deck components by volume in the United States.

Environmental and Other Regulation

As is common in our industry, obtaining, producing and distributing many of our products involves the use, storage, transportation and disposal of large quantities of toxic and hazardous materials, and our manufacturing operations require the generation and disposal of large quantities of hazardous wastes. We are subject to extensive, evolving and increasingly stringent federal and local environmental laws and regulations, which address, among other things, the following:

• emissions to the air;

• discharges to land or to surface and subsurface waters;

• other releases into the environment;

• remediation of contaminated sites;

• generation, handling, storage, transportation, treatment and disposal of waste materials; and

• maintenance of safe conditions in the workplace.

We are subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require us to remove or mitigate the effects of the disposal or release of chemical substances at various sites. Under some of these laws and regulations, a current or previous owner or operator of property may be held liable for the costs of removal or remediation of hazardous substances on, under, or in its property, without regard to whether the owner or operator knew of, or caused the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. Because several of our production sites have a history of industrial use, it is impossible to predict precisely what effect these laws and regulations will have on us in the future. As is typical for chemical businesses, soil and groundwater contamination has occurred in the past at some of our sites, and might occur or be discovered at other sites in the future. We have typically conducted extensive soil and groundwater assessments either prior to acquisitions or in connection with subsequent permitting requirements. Our investigations have not revealed any contamination caused by our operations that would likely require us to incur material long-term remediation efforts and associated liabilities.

Calvert City. In connection with our 1990 and 1997 acquisitions of the Goodrich Corporation chemical manufacturing complex in Calvert City, Goodrich agreed to indemnify us for any liabilities related to pre-existing contamination at the site. In addition, we agreed to indemnify Goodrich for contamination attributable to the ownership, use or operation of the plant after the closing date. The soil and groundwater at the manufacturing complex, which does not include our PVC facility in Calvert City, had been extensively contaminated by Goodrich’s operations. In 1993, the Geon Corporation was spun off from Goodrich, and Geon assumed the responsibility to operate the site-wide remediation system and the indemnification obligations for any liabilities arising from pre-existing contamination at the site. Subsequently, Geon’s name was changed to PolyOne. Part of the former Goodrich facility, which we did not acquire and on which we do not operate and that we believe is still owned by either Goodrich or PolyOne, is listed on the National Priorities List under CERCLA. The investigation and remediation of contamination at our manufacturing complex is currently being coordinated by PolyOne.

Given the scope and extent of the underlying contamination at our manufacturing complex, the remediation will likely take a number of years. The costs incurred to treat contaminated groundwater collected from beneath the site were $2.6 million in 2003, and we expect this level of expenditures to continue for the life of the remediation. For the past three years, PolyOne has suggested that our actions after our acquisition of the complex have contributed to or otherwise exacerbated the contamination at the site. We have denied those allegations and have retained technical experts to evaluate our position. Goodrich has also asserted claims similar to those of PolyOne. In addition, Goodrich has asserted that we are responsible for a portion of the ongoing costs of treating contaminated groundwater being pumped from beneath the site and, since May 2003, has withheld payment of 45% of the costs that we incur to operate Goodrich’s pollution control equipment located on our property. We met with Goodrich representatives in July and August of 2003 to discuss Goodrich’s assertions.

In October 2003, we filed suit against Goodrich in the United States District Court for the Western District of Kentucky for unpaid invoices related to the groundwater treatment, which totaled approximately $0.9 million as of March 31, 2004. Goodrich has filed an answer and counterclaim in which it alleges that we are responsible for contamination at the facility. We have denied those allegations and have filed a motion to dismiss Goodrich’s counterclaim. The court has recently ruled on our motion to dismiss and has dismissed part of Goodrich’s counterclaim while retaining the remainder. Goodrich also filed a third party complaint against PolyOne, which in turn has filed motions to dismiss, counterclaims against Goodrich and third-party claims against us. On April 28, 2004, the parties agreed on discovery procedures. Further, on June 8, 2004, we filed a motion for summary judgment on our claim against Goodrich.

In addition, we have intervened in administrative proceedings in Kentucky that were initiated in the fall of 2003 in which both Goodrich and PolyOne are seeking to shift Goodrich’s cleanup responsibilities

under its Resource Conservation and Recovery Act, or RCRA, permit to other parties, including us. These proceedings are currently in mediation.

In January 2004, the State of Kentucky notified us by letter that, due to our ownership of a closed landfill (known as Pond 4) at the manufacturing complex, we would be required to submit a post-closure permit application under RCRA. This could require us to bear the responsibility and cost of performing remediation work on the pond and solid waste management units and areas of concern located on property that we own adjacent to the pond. We acquired Pond 4 from Goodrich in 1997 as part of the acquisition of other facilities. Under our contract, we have the right to require Goodrich to retake title to Pond 4 in the event that ownership of Pond 4 requires us to be added to Goodrich’s permit associated with the facility clean-up issued under RCRA. We believe that the letter sent to us by the State of Kentucky triggers our right to tender ownership of Pond 4 back to Goodrich. We have notified Goodrich of its obligation to accept ownership and have tendered title to Pond 4 back to Goodrich. We have also filed an appeal with the State of Kentucky regarding its letter. Goodrich and PolyOne have both filed motions to intervene in this appeal.

None of the parties involved in the proceedings relating to our disputes with Goodrich and PolyOne and the State of Kentucky described above has formally quantified the amount of monetary relief that they are seeking from us. Nor has the court or the State of Kentucky proposed or established an allocation of the costs of remediation among the various participants. Goodrich is withholding 45% of the groundwater treatment costs that we are charging to them. As of March 31, 2004, the aggregate amount withheld by Goodrich was approximately $0.9 million. Any monetary liabilities that we might incur with respect to the remediation of contamination at our manufacturing complex in Calvert City would likely be spread out over an extended period. While we have denied responsibility for any such remediation costs and are actively defending our position, we are not in a position at this time to state what effect, if any, these proceedings could have on our financial condition, results of operations, or cash flows.

In March and June 2002, the U.S. Environmental Protection Agency’s National Enforcement Investigations Center, or NEIC, conducted an environmental investigation of our manufacturing complex in Calvert City consisting of our EDC/VCM, ethylene and chlor-alkali plants. In May 2003, we received a report prepared by the NEIC summarizing the results of that investigation. Among other things, the NEIC concluded that the requirements of several regulatory provisions had not been met. We have analyzed the NEIC report and have identified areas where we believe that erroneous factual or legal conclusions, or both, may have been drawn by the NEIC. We have held a number of discussions with the EPA concerning its conclusions. In February 2004, representatives of the EPA orally informed us that the agency proposed to assess monetary penalties against us and to require us to implement certain injunctive relief to ensure compliance. In addition, the EPA’s representatives informed us that the EPA, the NEIC and the State of Kentucky would conduct an inspection of our PVC facility in Calvert City, which is separate from our manufacturing complex and was not visited during the 2002 inspection. That additional inspection took place in late February 2004. We have not yet received a written report from the agencies regarding the actions that they propose to take in response to that visit. The EPA has recently submitted to us an information request under Section 114 of the Clean Air Act and has issued a Notice of Violation, both pertaining to the inspection of the EDC/VCM plant. The Notice of Violation does not propose any specific penalties. We met with the EPA on June 8 and 9, 2004 and are engaged in settlement discussions. The EPA has also issued to us information requests under Section 3007 of RCRA and Section 114 of the Clean Air Act regarding the PVC plant inspection. It is likely that monetary penalties will be imposed, that capital expenditures for installation of environmental controls will be required, or that other relief will be sought, or all or some combination of the preceding, by either the EPA or the State of Kentucky as a result of the environmental investigations in Calvert City. In such case, we expect that, based on the EPA’s past practices, the amount of any monetary penalties may be able to be reduced by a percentage of the expenditures that we would agree to make for certain “supplemental environmental projects.” We are not in a position at this time to state what effect, if any, these proceedings could have on our financial condition, results of operations, or cash flows.

Geismar. In 2002, we acquired portions of an idled chemical complex in Geismar, Louisiana that were previously owned and operated by Borden Chemicals, Inc. and Borden Chemicals and Plastics Operating Limited Partnership, or BCP. In 1998, BCP entered into a consent decree with the EPA and the Louisiana Department of Environmental Quality, or LDEQ, to investigate and remediate contaminated soil and groundwater at the site. As a part of BCP’s bankruptcy reorganization, Borden Chemicals assumed BCP’s obligations under the 1998 consent decree in a separate settlement agreement with the EPA and the LDEQ. The EPA has estimated that the cleanup obligations of BCP and Borden Chemicals may total approximately $33 million. We believe that approximately $20 million of these costs relate to property that we did not acquire and on which we do not operate. Early in 2002, CERCLA was amended to create a new defense against liability for purchasers of contaminated property. We believe we meet the criteria set forth in the statute to take advantage of the “bona fide purchaser” defense with respect to pre-existing contamination as long as, among other things, we do not release hazardous substances at the site that create a material effect and we cooperate with Borden Chemicals as it performs its remediation obligations at the site. In August 2003, the LDEQ notified us that it will look first to Borden Chemicals to address cleanup responsibilities for existing contamination on the property we acquired.

General. It is our policy to comply with all environmental, health and safety requirements and to provide safe and environmentally sound workplaces for our employees. In some cases, compliance can be achieved only by incurring capital expenditures, and we are faced with instances of non-compliance from time to time. In 2003, we made capital expenditures of $4.3 million related to environmental compliance. We estimate that we will make capital expenditures of $4.9 million and $5.2 million in 2004 and 2005, respectively, related to environmental compliance. We anticipate that stringent environmental regulations will continue to be imposed on us and the industry in general. Although we cannot predict with certainty future expenditures, management believes that our current spending trends will continue.

It is difficult to estimate the future costs of environmental protection and remediation because of many uncertainties, including uncertainties about the status of laws, regulations and information related to individual locations and sites and our ability to rely on third parties to carry out such remediation. Subject to the foregoing, but taking into consideration our experience regarding environmental matters of a similar nature and facts currently known, and except for the outcome of pending litigation and regulatory proceedings, which we cannot predict, but which could have a material adverse effect on us, we believe that capital expenditures and remedial actions to comply with existing laws governing environmental protection will not have a material adverse effect on our business and financial results.

Employees

As of March 31, 2004, we had 1,631 employees, 307 contractors and 6 consultants in the following areas:


Category	Number

Olefins segment		626
Vinyls segment		1,228
Headquarters		90

Approximately 18% of our employees are represented by labor unions. Approximately 87% of these union-represented employees are working under collective bargaining agreements that expire later in 2004 and that we expect will be renegotiated. There have been no strikes or lockouts and we have not experienced any work stoppages throughout our history. We believe that our relationship with the local union officials and bargaining committees is open and positive.

Technology and Intellectual Property

Our technology strategy is to selectively acquire and license third-party proprietary technology. Our selection process incorporates many factors, including the cost of the technology, our customers’ requirements, raw material and energy consumption rates, product quality, capital costs, maintenance

requirements and reliability. We believe that the most cost-effective way to acquire technology applicable to our businesses is to purchase or license it from third-party market providers. As a result, we have eliminated the need for research expenditures and believe we are able to select the best available technology at the time our need arises. After acquiring a technology, we devote considerable efforts to further develop and effectively apply the technology with a view to continuously improving our competitive position.

We license technology from a number of third-party providers. In 1988, we selected the MW Kellogg technology for our first ethylene plant at our Lake Charles complex. In 1995, we selected the ABB Lummus Crest technology, as a state-of-the-art, low-cost and efficient method of producing ethylene, for the second ethylene plant at Lake Charles. In 1990, we selected Mobil/Badger technology for our styrene monomer plant at Lake Charles and in 1996 selected BP technology for our second Lake Charles polyethylene plant. In 1997, we entered into a corporate-wide technology agreement with Aspen Technology. The Aspen Technology Plantelligence ^TM includes an advanced process control software system which improves process control and economic optimization. In 1998, we licensed Asahi Chemical membrane technology for our chlor-alkali plant. Other than the license with BP Chemicals Limited, which requires us to make annual payments of $3.1 million through May 2007, all of our other significant technology licenses are perpetual and paid in full.

Properties

Our manufacturing facilities and principal products are set forth below. Except as noted, we own each of these facilities. Our Lake Charles and Calvert City facilities have been pledged to secure our term loan.


Location		Principal Products

Lake Charles, Louisiana		Ethylene, polyethylene, styrene
Calvert City, Kentucky(1)		PVC, VCM, chlorine, caustic soda, ethylene
Geismar, Louisiana(2)		PVC, VCM and EDC
Booneville, Mississippi		PVC pipe
Springfield, Kentucky		PVC pipe
Litchfield, Illinois		PVC pipe
Wichita Falls, Texas		PVC pipe
Van Buren, Arkansas		PVC pipe
Evansville, Indiana		Fence and deck components
Calgary, Alberta, Canada(3)		Window and patio door components
Pawling, New York		Window, patio door and fence components

(1) We lease a portion of our Calvert City facilities.

(2) We started the EDC portion of the Geismar facility in the fourth quarter of 2003. We plan to operate part or all of the remainder of the facility when market conditions support utilization of the additional capacity.

(3) We lease our Calgary facility.


	*Olefins*

Our Lake Charles complex consists of three tracts on over 1,300 acres in Lake Charles, Louisiana, each within two miles of one another. The complex includes two ethylene plants, two polyethylene plants and a styrene monomer plant. The combined capacity of our two ethylene plants is approximately 2.4 billion pounds per year. The capacity of our two polyethylene plants is approximately 1.4 billion pounds per year and the capacity of our styrene plant is approximately 450 million pounds per year. We operate some of the newest manufacturing facilities in North America and focus on continually improving our asset portfolio and cost position. Our newest polyethylene plant has two production units that use gas

phase technology to manufacture both LLDPE and HDPE. Our styrene monomer plant is being modernized with state-of-the-art technology and underwent debottlenecking in the second quarter of 2003 for additional capacity.

Our Lake Charles complex includes a marine terminal that provides for worldwide shipping capabilities. The complex also is located near rail transportation facilities, which allows for efficient delivery of raw materials and prompt shipment of our products to customers. In addition, the complex is connected by pipeline systems to our ethylene feedstock sources in both Texas and Louisiana. Within the complex, our ethylene plants are connected by pipeline systems to our polyethylene and styrene plants. Our location, combined with our integration in ethylene and our new and modernized plant facilities, allows for low-cost production and distribution of products in our Olefins business.


	*Vinyls*

Our Calvert City complex is situated on 550 acres on the Tennessee River in Kentucky and includes an ethylene plant, a chlor-alkali plant, a VCM plant and a PVC plant. The capacity of our Calvert City ethylene plant is 450 million pounds per year and of our chlor-alkali plant is 410 million pounds of chlorine and 450 million pounds of caustic soda per year. In 2002, we modernized and expanded our chlorine plant by replacing the mercury cell technology with a more efficient, state-of-the-art membrane technology. Our VCM plant has a capacity of 1.3 billion pounds per year and our Calvert City PVC plant has a capacity of 800 million pounds per year.

We currently operate eight fabricated products plants, consisting of five PVC pipe plants, a fence and deck plant and two window and patio door profiles plants. The majority of our plants are strategically located near our Calvert City complex and serve customers throughout the middle United States. One of our profiles plants is located in Calgary, Alberta and the other is in Pawling, New York. The combined capacity of our fabricated products plants is 600 million pounds per year. Our Pawling, New York plant also fabricates fence.

In 2002, we acquired a vinyls facility in Geismar, Louisiana. The facility was purchased for $5 million in cash plus a percentage of future earnings not to exceed $4 million. The site includes a PVC plant with a potential capacity of 600 million pounds per year and a VCM plant with a potential capacity of 600 million pounds per year with related EDC capacity. We started the EDC portion of the facility in the fourth quarter of 2003. We plan to operate part or all of the remainder of the facility when market conditions support utilization of the additional capacity.

We believe that our current facilities are adequate to meet the requirements of our present and foreseeable future operations.


	*Headquarters*

Our principal executive offices are located in Houston, Texas. Our office space is leased, at market rates, from an affiliate under a lease expiring on December 31, 2004. See “Certain Relationships and Related Party Transactions.”

Legal Proceedings

In connection with the purchase of our Calvert City facilities in 1997, we acquired 10 barges that we use to transport chemicals on the Mississippi, Ohio and Illinois Rivers. In April 1999, the U.S. Coast Guard issued a forfeiture order permanently barring the use of our barges in coastwise trade due to an alleged violation of a federal statute regarding the citizenship of the purchaser. We appealed the forfeiture order with the Coast Guard and, in June 1999, we filed suit in the U.S. Court of Appeals for the D.C. Circuit seeking a stay of the order pending resolution of the Coast Guard appeal. The D.C. Circuit granted the stay and we are able to use the barges pending resolution of our appeal with the Coast Guard. In October 2003, the Coast Guard issued notice that it would not change its regulations. As a result, we are now seeking legislative relief through a private bill from the U.S. Congress, and the Coast Guard has

stated that it will not oppose such efforts. The D.C. Circuit is holding further proceedings in abeyance pending the outcome of those efforts. We do not believe that the ultimate outcome of this matter will have a material adverse effect on our business, although there can be no assurance in this regard.

In October 2003, we filed suit against CITGO Petroleum Corporation in state court in Lake Charles, Louisiana, asserting that CITGO had failed to take sufficient hydrogen under two successive contracts pursuant to which we supplied and we supply to CITGO hydrogen that we generate as a co-product in our ethylene plants in Lake Charles. In December 2003, CITGO responded with an answer and a counterclaim against us, asserting that CITGO had overpaid us for hydrogen due to a faulty sales meter and that we are obligated to reimburse CITGO for the overpayments. In January 2004, we filed a motion to compel arbitration of CITGO’s counterclaim and to stay all court proceedings relating to the counterclaim. In May 2004, the parties filed a joint motion with the court to provide for CITGO’s counterclaim to be resolved by arbitration. Our claim against CITGO is approximately $8.1 million plus $1.4 million in interest, for a total of about $9.5 million. CITGO’s claim against us is approximately $7.8 million plus $1.5 million in interest, for a total of about $9.3 million. The parties held a mediation conference in April 2004 at which they agreed to conduct further discovery with a view towards holding another mediation conference to attempt to settle their disputes. We can offer no assurance that a settlement can be achieved, and we are vigorously pursuing our claim against CITGO and our defense of CITGO’s counterclaim.

In December 2003, we were served with a petition as a defendant in a suit in state court in Denver, Colorado, brought by International Window – Colorado, Inc., or IWC, against several other parties. As the suit relates to us, IWC claims that we breached an exclusive license agreement by supplying window-profiles products into a restricted territory and that we improperly assisted a competitor of IWC, resulting in lost profits to IWC and a collapse of IWC’s business. IWC has claimed damages of approximately $5.4 million. The case is in the early discovery phase. We are vigorously defending our position in this case.

In addition to the matters described above and under “— Environmental and Other Regulation,” we are involved in various routine legal proceedings incidental to the conduct of our business. We do not believe that any of these routine legal proceedings will have a material adverse effect on our financial condition, results of operations or cash flows.

MANAGEMENT

Directors and Executive Officers

The following table sets forth the names and positions of our directors and executive officers and their ages as of May 1, 2004:


				Director
Name	Age		Position(s)	Class

T.T. Chao		82	Chairman of the Board		Class director
James Chao		56	Vice Chairman of the Board		Class director
Albert Chao		54	Chief Executive Officer, President and Director		Class director
Dorothy C. Jenkins		58	Director		Class director
Wei Fong Chao		83	Director		Class director
Ruth I. Dreessen		48	Senior Vice President and Chief Financial Officer		N/A
David R. Hansen		53	Senior Vice President, Administration, and Secretary		N/A
Wayne D. Morse		61	Senior Vice President, Vinyls and Manufacturing		N/A
Tai-li Keng		56	Vice President and Treasurer		N/A
George J. Mangieri		53	Vice President and Controller		N/A
Jeffrey L. Taylor		50	Vice President, Polyethylene		N/A
Stephen Wallace		57	Vice President and General Counsel		N/A
Warren W. Wilder		46	Vice President, Olefins and Styrene		N/A

T.T. Chao. Mr. Chao has been our Chairman of the Board since 1985 and has over 50 years of international experience in the chemical industry. He is the founder of China General Plastics Group (Taiwan) and was Chairman of Titan Group (Malaysia) until June 2003, when he became Chairman Emeritus and Founder. Mr. Chao is the father of James Chao, our Vice Chairman of the Board, Albert Chao, our Chief Executive Officer and President, and Dorothy C. Jenkins, a director, and the husband of Wei Fong Chao, a director.

James Chao. Mr. Chao has been our Vice Chairman of the Board since May 1996 and became a director in June 2003. Mr. Chao also has responsibility for the oversight of our Vinyls business. Mr. Chao has over 30 years of international experience in the chemical industry. In June 2003, he was named Chairman of Titan Group and previously served as the Managing Director. He has served as a Special Assistant to the Chairman of China General Plastics Group and worked in various financial, managerial and technical positions at Mattel Incorporated, Developmental Bank of Singapore, Singapore Gulf Plastics Pte. Ltd. and Gulf Oil Corporation. Mr. Chao, along with his brother Albert Chao, assisted T.T. Chao in founding Westlake Group and served as Westlake’s first president from 1985 to 1996. Mr. Chao received his Bachelor of Science degree from the Massachusetts Institute of Technology and an M.B.A. from Columbia University.

Albert Chao. Mr. Chao has been our President since May 1996 and a director since June 2003. Mr. Chao has over 30 years of international experience in the chemical industry. In 1985, Mr. Chao assisted T.T. Chao and James Chao in founding Westlake, where he served as Executive Vice President until he succeeded his brother James as President. He has held positions in the Controller’s Group of Mobil Oil Corporation, in the Technical Department of Hercules Incorporated, in the Plastics Group of Gulf Oil Corporation and has served as Assistant to the Chairman of China General Plastics Group and Deputy Managing Director of a plastics fabrication business in Singapore. He is also a director of Titan

Group. Mr. Chao received a bachelor’s degree from Brandeis University and an M.B.A. from Columbia University.

Dorothy C. Jenkins. Ms. Jenkins has been a director since June 2003. Ms. Jenkins is a director of A-Group Holdings, an affiliate of ours. For the past five years, Ms. Jenkins has managed her personal investments. She is also a member of the boards of various civic and charitable organizations including Polk Museum of Art and the John and Mable Ringling Museum of Art Foundation, Inc. Ms. Jenkins is the sister of James Chao and Albert Chao, and the daughter of T.T. Chao and Wei Fong Chao. She is a graduate of Wellesley College and holds a B.S. in Mathematics with additional graduate studies in mathematics at the University of South Florida.

Wei Fong Chao. Mrs. Chao has been a director since December 2003. Mrs. Chao is also the Chairman of A-Group Holdings, an affiliate of ours. For the past five years, Mrs. Chao has managed her personal investments. She is the wife of our Chairman, Mr. T.T. Chao, and the mother of James Chao, Albert Chao and Dorothy Jenkins.

Ruth I. Dreessen. Ms. Dreessen has been our Senior Vice President and Chief Financial Officer since June 2003. She was employed by JPMorgan Chase & Company for 21 years where she last served as Managing Director of the Global Chemicals Group. She was formerly a member of the board of Georgia Gulf Corporation and is currently a member of the board of Better Minerals & Aggregates Corporation. She received her undergraduate degree from New College of Florida and a Masters in International Affairs from Columbia University.

David R. Hansen. Mr. Hansen has been our Senior Vice President, Administration, since September 1999 and served as Vice President, Human Resources from 1993 to 1999. In August 2003 he was elected to the additional office of Secretary of the corporation. Prior to joining Westlake in 1990, Mr. Hansen served as Director of Human Resources & Administration for Agrico Chemical Company and held various human resources and administrative management positions within the Williams Companies. He has over 28 years of administrative management experience in the oil, gas, energy, chemicals, pipeline, plastics and computer industries. He received his Bachelor of Science degree in Social Science from the University of Utah and has completed extensive graduate work toward an M.S. in Human Resources Management.

Wayne D. Morse. Mr. Morse has been a Senior Vice President since 1994 and was most recently named Senior Vice President, Vinyls and Manufacturing in January 2003. Mr. Morse joined Westlake in 1990 after 23 years of service with Goodrich Corporation. He held the position of Vice President and General Manager of BFG Intermediates Division, which had ethylene, chlor-alkali and EDC/ VCM operations. Since joining Westlake, Mr. Morse has had broad executive responsibility for all chemical operations and is the senior manufacturing executive of our company. Mr. Morse earned a B.S. degree in Chemical Engineering from the University of Louisville.

Tai-li Keng. Ms. Keng has been our Vice President and Treasurer since June 2003. She was appointed Treasurer in 2002 and previously served as Manager, Banking and Investments from 1996 to 2002. Ms. Keng joined Westlake in 1992 after nine years in commercial banking, where she last served as a Vice President of NationsBank and its predecessors. Ms. Keng is a graduate of the National Taiwan University and the State University of New York. She holds a Masters in International Management from the American Graduate School of International Management.

George J. Mangieri. Mr. Mangieri has been our Vice President and Controller since joining us in April 2000. Prior to joining Westlake, Mr. Mangieri served as Vice President and Controller of Zurn Industries, Inc. from 1998 to 2000. He previously was employed as Vice President and Controller for Imo Industries, Inc. in New Jersey, and spent over 10 years in public accounting with Ernst & Young LLP, where he served as Senior Manager. He received his Bachelor of Science degree from Monmouth College and is a Certified Public Accountant.

Jeffrey L. Taylor. Mr. Taylor has been our Vice President, Polyethylene, since January 2003. Mr. Taylor joined Westlake in March 2002 as Manager, PE Marketing. Mr. Taylor joined Westlake after a 25-year career with Chevron Phillips Chemical Company where he served as the Vice President,

Polyethylene, Americas from 2000 to 2001 and Marketing Manager – Polyethylene from 1999 to 2000. During his career, he has held a variety of sales, marketing, operations and general management assignments. He is a graduate of the University of Delaware with a B.S. in Business Administration and a B.A. in Mathematics.

Stephen Wallace. Mr. Wallace joined our company in December 2003 as our Vice President and General Counsel. He began his legal career over 20 years ago at the law firm of Baker Botts L.L.P., which he left as a partner in 1993. He subsequently held senior corporate legal positions with Transworld Oil U.S.A., Inc. (1993-1996; 2002-2003), Oman Oil Company Ltd. (1996-1997), and Enron Global Exploration & Production Inc. and its affiliates (1997-2002). Mr. Wallace holds a B.A. from Rice University and a Ph.D. from Cornell University in linguistics, and received his J.D. from the University of Houston.

Warren W. Wilder. Mr. Wilder has been our Vice President, Olefins and Styrene, since January 2003. Mr. Wilder joined Westlake in January 2000 as Vice President, Planning and Business Development, and in February 2001, he was appointed Vice President, Polyethylene. Prior to joining Westlake, he was an executive with Koch Industries, Inc. for over 10 years where he held positions in planning and business development, finance, operations and general management, including Vice President, Koch Hydrocarbons from 1996 to 1999. Mr. Wilder holds a B.S. in Chemical Engineering from the University of Washington and an M.B.A. from the University of Chicago.

Board Structure and Compensation of Directors

We plan to recruit three additional directors who satisfy the New York Stock Exchange and SEC requirements for independence of members of audit committees and appoint them at the first meeting of our board of directors following the offering.

Our directors will be divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors will serve until our annual meetings of stockholders in 2005, 2006 and 2007, respectively. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. This classification of our board of directors could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors.

Because we will be considered to be controlled by the selling stockholder under New York Stock Exchange rules, we will be eligible for exemptions from provisions of these rules requiring a majority of independent directors, nominating and governance and compensation committees composed entirely of independent directors and written charters addressing specified matters. We have elected to take advantage of certain of these exemptions. In the event that we cease to be a controlled company within the meaning of these rules, we will be required to comply with these provisions after the specified transition periods.

Directors who are also full-time officers or employees of our company or affiliates of the selling stockholder will receive no additional compensation for serving as directors, except that our Chairman of the Board receives $120,000 per year. All other directors will receive an annual retainer of $ . The executive committee chairman will receive an additional $ annual retainer. The audit committee chairman will receive an additional $ annual retainer. The nominating and governance committee chairman will receive an additional $ annual retainer. The compensation committee chairman will receive an additional $ annual retainer. The chairmen of these committees will receive these retainers only if they are non-employee directors. Non-employee directors will also receive a fee of $ for each board or board committee meeting attended in person and $ for each board or board committee meeting attended by telephone or videoconference, plus incurred expenses where appropriate.

Under our omnibus incentive plan, the board will have authority to determine the awards made to outside directors under the plan from time to time without the prior approval of our stockholders.

Board Committees

Our board of directors plans to have an executive committee, an audit committee, a nominating and governance committee and a compensation committee following this offering.

The executive committee will assist the board of directors in fulfilling its responsibilities with respect to providing guidance on our overall business development and corporate oversight. It is responsible for providing long range, strategic planning and for appointing special committees to work with management with regard to possible transactions involving mergers, acquisitions or dispositions. It may also, to the extent determined by the entire board of directors, exercise the authority of the board of directors when the board of directors is not in session, except in cases where the action of the entire board of directors is required by our restated certificate of incorporation, bylaws or applicable law.

The audit committee, which is expected to consist of three directors who satisfy the New York Stock Exchange and SEC independence requirements, will review and report to the board of directors the scope and results of audits by our outside auditor and our internal auditing staff and review with the outside auditor the adequacy of our system of internal controls. It will review transactions between us and our directors and officers, our policies regarding those transactions and compliance with our business ethics and conflict of interest policies. The audit committee will also recommend to the board of directors a firm of certified public accountants to serve as our outside auditor for each fiscal year, review the audit and other professional services rendered by the outside auditor and periodically review the independence of the outside auditor.

The nominating and governance committee, which is expected to consist of at least one director who satisfies the New York Stock Exchange independence requirements, will assist the board of directors by identifying individuals qualified to become board members and members of board committees, recommending nominees for the next annual meeting of stockholders and nominees for each committee of the board of directors, leading the board of directors in its annual review of the board’s and management’s performance, monitoring our corporate governance structure and periodically reviewing and recommending any proposed changes to the corporate governance guidelines applicable to us.

The compensation committee, which is expected to consist of at least one director who satisfies the New York Stock Exchange independence requirements, will review and recommend to the board of directors the compensation and benefits of our executive officers, establish and review general policies relating to our compensation and benefits and administer our stock plans.

Compensation Committee Interlocks and Insider Participation

During 2003, Albert Chao and James Chao participated in deliberations of our board of directors concerning executive officer compensation.

Stock Ownership of Directors and Executive Officers

The following table sets forth the beneficial ownership of our common stock as of June 1, 2004 (as if the Transactions had occurred prior to June 1, 2004), by each beneficial owner of 5% or more of the outstanding shares of common stock, by each of our directors, by each named executive officer and by all directors and executive officers as a group. To our knowledge, except as indicated in the footnotes to this table or as provided by applicable community property laws, the persons named in the table have sole investment and voting power with respect to the shares of common stock indicated.



	Common Stock

	Number of		Percent of
Name and Address of Beneficial Owner(1)	Shares		Class

TTWF LP				100.0	%
T.T. Chao		—		—
James Chao(2)		—		—
Albert Chao(2)		—		—
Dorothy C. Jenkins(2)		—		—
Wei Fong Chao		—		—
Wayne D. Morse		—		—
David R. Hansen		—		—
Warren W. Wilder		—		—
All directors and executive officers as a group(2)		—		—

(1) The address of each beneficial owner is 2801 Post Oak Boulevard, Houston, Texas 77056.

(2) James Chao, Albert Chao and Dorothy C. Jenkins are each a manager of TTWFGP LLC, a Delaware limited liability company that is the general partner of TTWF LP. The limited partners of TTWF LP are five trusts principally for the benefit of members of the Chao family and two corporations owned by certain of these trusts and by other entities owned by members of the Chao family. James Chao, Albert Chao and Dorothy C. Jenkins share investment and voting power with respect to the shares of our common stock beneficially owned by TTWF LP.

Executive Compensation


	*Summary Compensation*

The following table provides information regarding the compensation awarded to or earned during 2003, 2002 and 2001 by our principal executive officer and the next four most highly compensated individuals who were serving as executive officers at the end of 2003 (collectively, the “named executive officers”).


									Long-Term
									Compensation

				Annual Compensation					Long-Term
									Incentive		All Other
		Year		Salary		Bonus			Payouts		Compensation(1)

Albert Chao			2003	$	265,352	$	67,351		$	—	$	11,443
	Chief Executive Officer and		2002		242,112		1,320			36,667		9,268
	President		2001		240,938		72,199			37,038		9,124
Wayne D. Morse			2003		243,444		102,023			30,870		6,768
	Senior Vice President,		2002		235,584		1,682			52,800		6,268
	Vinyls and Manufacturing		2001		234,442		71,303			44,446		5,724
James Chao			2003		221,128		56,128			—		15,175
	Vice Chairman		2002		168,140		550			36,667		13,839
			2001		162,951		59,647			37,038		13,898
David R. Hansen			2003		193,980		64,733			15,435		16,119
	Senior Vice President,		2002		190,800		1,040			32,267		14,733
	Administration, and Secretary		2001		189,874		51,118			33,334		14,193
Warren W. Wilder			2003		178,536		66,342			—		11,689
	Vice President, Olefins and		2002		171,396		30,319	(2)		—		7,230
	Styrene		2001		170,564		90,014	(2)		—		2,634

(1) Consists of company contributions to a defined contribution plan, matching contributions deposited into our 401(k) plan and premiums paid on behalf of the executive for term life insurance as follows:


			Defined				Term Life
			Contribution		401(k)		Insurance
	Year		Plan		Contribution		Premiums

Albert Chao		2003	$	10,000	$	675	$	768
		2002		8,500		—		768
		2001		8,500		—		624
Wayne D. Morse		2003		—		6,000		768
		2002		—		5,500		768
		2001		—		5,100		624
James Chao		2003		8,407		6,000		768
		2002		8,148		5,044		647
		2001		8,500		4,889		509
David R. Hansen		2003		9,540		5,819		760
		2002		8,500		5,500		733
		2001		8,500		5,100		593
Warren W. Wilder		2003		8,570		2,432		687
		2002		4,285		2,286		659
		2001		—		2,100		534

(2) Includes a $30,000 signing bonus.

Long-Term Incentive Plan – Awards in 2003

The following table provides information regarding units awarded to the named executive officers for services provided in 2003 under the Performance Unit Plan.

Performance or Other

Estimated Future Payouts

Period Until

Under Non-Stock-Price

Name

Number of Units

Maturation or Payout

Based Plans Target(1)

Albert Chao

66,989

2/7/10 years

Wayne D. Morse

50,102

2/7/10 years

James Chao

55,284

2/7/10 years

David R. Hansen

41,388

2/7/10 years

Warren W. Wilder

51,029

2/7/10 years

(1) The value of these units will be determined based upon the percentage increase in book value through December 31, 2004.

The Performance Unit Plan is a discretionary, non-qualified, non-equity based long-term incentive plan that covers essentially all of our executives and other selected key employees, including the named executive officers. The employees who participate in the plan and all awards under the plan are determined on a discretionary basis by the Chairman’s Office. Units are granted on the first day of each year and 50% of the units vest two years after the grant date and the remaining 50% vest seven years after the grant date. All units will convert to cash as described below if not exercised before the end of ten years from the date of grant. The cash value of each unit is based on the percentage increase or decrease in our consolidated book value over the life of the grant as measured on December 31 of each year. Book value at the date of each grant is established by the Chairman’s Office. Increases in the book value exclude any capital contributions or increases in capital due to mergers, and book value is adjusted to reflect the payment of any dividends. There are no minimum or maximum payouts with respect to the units issued under the plan. After the offering, we do not expect to make additional grants under the Performance Unit Plan.

Pension Plan Table

The following table provides estimated annual pension benefits payable to some of our employees, including Wayne D. Morse, upon retirement at age 65 based on credited service as of January 1, 2004 under the provisions of the Westlake Group Salaried Employees’ Defined Benefit Plan. None of the other named executive officers participates in this plan.



		Approximate Annual Benefit for Years of Service Indicated(1)
Average Final Earnings (Base Salary Plus Annual Bonus) Highest Four
Consecutive Years Out of the Last 10 Years		15 Years		20 Years		25 Years		30 Years		35 Years

$ 125,000		$	26,876	$	35,834	$	44,793	$	53,752	$	62,710
	150,000		32,876		43,834		54,793		65,752		76,710
	175,000		38,876		51,834		64,793		77,752		90,710
	200,000		44,876		59,834		74,793		89,752		104,710
	225,000		46,076		61,434		76,793		92,152		107,510
	250,000		46,076		61,434		76,793		92,152		107,510
	300,000		46,076		61,434		76,793		92,152		107,510
	400,000		46,076		61,434		76,793		92,152		107,510
	450,000		46,076		61,434		76,793		92,152		107,510
	500,000		46,076		61,434		76,793		92,152		107,510

(1) Mr. Morse had 36 estimated credited years of service as of January 1, 2004.

The amounts shown in the above table are necessarily based upon certain assumptions, including retirement of the employee at age 65 based on credited services as of January 1, 2004 and payment of the

benefit under the basic form of allowance provided under the Westlake Group Salaried Employees’ Defined Benefit Plan (payment for the life of the employee five years certain). The amounts will change if the payment is made under any other form of allowance permitted by the retirement plan or if an employee’s actual retirement occurs after January 1, 2004 since the “annual covered compensation level” of such employee (one of the factors used in computing the annual retirement benefits) may change during the employee’s subsequent years of benefit service. The covered compensation for which retirement benefits are computed under the Westlake Group Salaried Employees’ Defined Benefit Plan is the average of the participant’s highest four consecutive years out of the last ten years of base salary plus annual bonus. Base salary and annual bonus amounts for 2003 are set forth under the “Salary” and “Bonus” headings in the Summary Compensation Table for Mr. Morse. The benefits shown are not subject to deduction for Social Security benefits or other offset amounts, including any offset for payments made from the Goodrich Corporation plan for certain former employees of Goodrich Corporation, including Mr. Morse.

Omnibus Incentive Plan

Our board of directors has adopted, and our sole stockholder has approved, the Westlake Chemical Corporation 2004 Omnibus Incentive Plan, which we refer to as the “2004 plan,” to be effective on the closing of the offering.

Eligibility. Our employees and nonemployee directors are eligible to be considered for awards under the 2004 plan, as well as individuals who have agreed to become our employees within six months of the date of grant.

Shares Available for Awards. Up to shares of our common stock may be issued under the 2004 plan. No more than of these shares may be used for awards to nonemployee directors. Shares of our common stock will be made available either from authorized but unissued shares or from treasury shares that have been issued but reacquired by us.

Shares subject to awards under the 2004 plan that are forfeited, terminated, expire unexercised, settled in cash, exchanged for other awards, tendered to satisfy the purchase price of an award, withheld to satisfy tax obligations or otherwise lapse will become available for awards under the 2004 plan. Shares delivered in settlement, assumption, or substitution of awards granted by another entity as a result of an acquisition or under an acquired entity’s plan will not reduce the number of shares available under the 2004 plan to the extent allowed under the rules of the New York Stock Exchange.

The administrator of the 2004 plan may make appropriate adjustments in the number of shares available under the 2004 plan to reflect any stock split, stock dividend, recapitalization, reorganization, consolidation, merger, combination or exchange of shares, distribution to stockholders (other than normal cash dividends or dividends payable in common stock) or other similar event.

Administration. Prior to the closing of this offering, our board of directors will serve as the administrator of the 2004 plan. Subsequent to the closing of this offering, our board of directors initially will continue to serve as administrator of the 2004 plan and may designate a committee to serve as administrator. The administrator has the discretion to determine the employees and nonemployee directors who will be granted awards, the sizes and types of such awards, and the terms and conditions of such awards, subject to the limitations set forth in the 2004 plan. In addition, the administrator has full and final authority to interpret the 2004 plan and may, from time to time, adopt rules and regulations in order to carry out the terms of the 2004 plan.

Subject to certain restrictions contained in the 2004 plan, the administrator has the discretion to extend the exercisability of an award, accelerate the vesting or exercisability of an award, or otherwise amend the award in a manner that is not adverse to, or is consented to, by the recipient of the award.

To the extent allowed by applicable law, the administrator may delegate to the chief executive officer, other senior officer or a subcommittee of the administrator the authority to grant awards out of a specified pool of cash or shares under the 2004 plan. The administrator may also delegate to the chief executive

officer and other senior officers its administrative duties under the 2004 plan (excluding its granting authority).

Awards. At the discretion of the administrator, employees may be granted awards under the 2004 plan in the form of stock options, stock appreciation rights, stock awards or cash awards (any of which may be a performance award). Furthermore, at the discretion of the administrator, nonemployee directors may be granted awards under the 2004 plan in the form of stock options, stock appreciation rights or stock awards (any of which may be a performance award). Awards under the 2004 plan may be granted singly, in combination, or in tandem.

Stock Options. The 2004 plan provides for the granting to employees of incentive stock options, which are intended to comply with Section 422 of the Internal Revenue Code, and non-qualified stock options. Directors may be granted non-qualified stock options under the 2004 Plan.

A stock option is a right to purchase a specified number of shares of common stock at a specified grant price. All stock options granted under the 2004 plan must have an exercise price per share that is not less than the fair market value (as defined in the 2004 plan) of our common stock on the date of grant. All stock options granted under the 2004 plan must have a term of no more than ten years. The grant price, number of shares, terms and conditions of exercise, whether a stock option may qualify as an incentive stock option under the Internal Revenue Code, and other terms of a stock option grant will be fixed by the administrator as of the grant date. However, without stockholder approval, stock options may not be repriced, including by means of a substitute award.

The grant price of any stock option must be paid in full at the time the stock is delivered to the participant. The price must be paid in cash or, if permitted by the administrator and elected by the participant, by means of tendering (either by actual delivery or by attestation) previously owned shares of our common stock or shares issued pursuant to an award under the 2004 plan or another compensation equity plan.

Stock Appreciation Rights. The 2004 plan also provides for the granting of stock appreciation rights or SARs to employees or directors. A SAR is a right to receive a payment, in cash or common stock, equal to the excess of the fair market value of a specified number of shares of our common stock over a specified grant price. A SAR may be granted to the holder of a stock option with respect to all or a portion of the shares of our common stock subject to such stock option (a “tandem” SAR) or may be granted separately. The holder of a tandem SAR may elect to exercise either the stock option or the SAR, but not both. All stock appreciation rights granted under the 2004 plan must have a grant price per share that is not less than the fair market value (as defined in the 2004 plan) of a share of our common stock on the date of grant and a term of no more than ten years.

Stock Awards. The 2004 plan also provides for the granting of stock awards, restricted stock and stock units to employees and directors that consist of grants of common stock or units denominated in common stock. The terms, conditions and limitations applicable to any stock award will be decided by the administrator. At the discretion of the administrator, the terms of a stock award may include rights to receive dividends or dividend equivalents.

Cash Awards. The 2004 plan also provides for the granting of cash awards to employees. The terms, conditions and limitations applicable to any cash awards granted pursuant to the 2004 plan will be determined by the administrator.

Performance Awards. At the discretion of the administrator, any of the above-described awards may be made in the form of a performance award. A performance award is an award that is subject to the attainment of one or more future performance goals. The terms, conditions and limitations applicable to any performance award will be decided by the administrator.

At the discretion of the administrator, certain awards under the 2004 plan may be intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. Section 162(m) generally disallows deductions for compensation in excess of $1,000,000 for some executive officers unless

the compensation qualifies as performance-based compensation. The 2004 plan contains provisions consistent with the Section 162(m) requirements for performance-based compensation.

In making qualified awards, the administrator may base a performance goal on one or more of the following business criteria that may be applied to the employee, one or more of our business units or the applicable sector, or to us as a whole: increased revenue; net income measures (including but not limited to income after capital costs and income before or after taxes); stock price measures (including but not limited to growth measures and total stockholder return); price per share of common stock; market share; net earnings; earnings per share (actual or targeted growth); earnings before interest, taxes, depreciation, and amortization (“EBITDA”); earnings before interest and taxes (“EBIT”); net operating profit after tax (“NOPAT”); economic value added (or an equivalent metric); market value added; debt to equity ratio; cash flow measures (including but not limited to cash flow per share, cash flow return on capital, cash flow return on tangible capital, net cash flow, net cash flow before financing activities and improvement in or attainment of working capital levels); return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); operating measures (including operating income, funds from operations, cash from operations, after-tax operating income; sales volumes, operating efficiency, production volumes and production efficiency); expense measures (including but not limited to overhead cost, product cost, general and administrative expense and improvement in or attainment of expense levels); margins; stockholder value; proceeds from dispositions; total market value; reliability; productivity; corporate values measures (including ethics compliance, environmental, and safety); product quality and debt reduction. A performance goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses. A performance goal may also be based on performance relative to a peer group of companies.

Award Limitations. Under the 2004 plan, no employee may be granted during any calendar year:

• stock options and/or SARs covering more than                      shares of common stock;

• stock awards covering more than                      shares of common stock; or

• cash awards (including performance awards) in respect of any calendar year having a maximum payment value in excess of $                    .

Deferred Payment. At the discretion of the administrator, amounts payable in respect of awards granted under the 2004 plan may be deferred. Any deferred payment may be forfeited if and to the extent that the terms of the applicable award so provide.

Amendment, Modification, and Termination. Our board of directors may amend, modify, suspend, or terminate the 2004 plan at any time for the purpose of addressing changes in legal requirements or for other purposes permitted by law. However, no amendment will be effective prior to approval by our stockholders if such approval is required by law or the requirements of the exchange on which our common stock is listed.

No awards may be made following the tenth anniversary of the effective date of the 2004 plan.

Employment Agreements

We have entered into an agreement with Mr. Morse under which we have agreed to pay him $1.8 million in satisfaction of a previous long-term incentive award on the earlier of the date he ceases to be our employee for any reason and January 3, 2005. In addition, we have agreed to pay him for twelve months at his then current salary in the event of his involuntary termination, except in the case of cause, death, disability or retirement.

We have entered into an agreement with Mr. Wilder under which we have agreed to pay him for twelve months at his then current salary and a bonus in the event of his involuntary termination, except in the case of cause, death, disability or retirement.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We currently lease, at market rates, our principal executive offices in Houston, Texas, under a lease with Westlake Post Oak Center Ltd., one of our affiliates. Total annual payments under the lease in 2001, 2002 and 2003 were approximately $1.7 million, $1.5 million, and $1.4 million, respectively. We expect to make payments of approximately $1.6 million under the lease in 2004. See “Our Business — Properties — Headquarters.”

We utilized Peerless Agency, Inc., an affiliated party, as an insurance agent and paid Peerless $0.5 million, $1.0 million and $0.1 million for the years ended December 31, 2001, 2002 and 2003, respectively. This arrangement was terminated in 2003.

In June 1998, one of our subsidiaries, Westlake Management Services, Inc., entered into a management advice and technical assistance agreement with Titan Petrochemicals (M) SDN. BDH., Titan Polyethylene (Malaysia) SDN. BHD. and Titan PP Polymers (M) SDN. BHD., three Malaysian affiliates. Under the agreement, Westlake Management Services agrees to provide various management, administrative and expatriate services at cost. The agreement expires on December 31, 2008. Westlake Management Services and the three Malaysian affiliates are engaged in discussions to amend the agreement to take into account current and future service level requirements. Any amendment of this agreement would require the approval of the boards of directors of each of the three Malaysian affiliates. Westlake Management Services received $2.6 million, $2.2 million and $1.4 million for these services in 2001, 2002 and 2003, respectively, and is expected to receive $1.0 million in 2004.

In 2000, Westlake International Investments Corporation, one of our subsidiaries, issued a $2.0 million promissory note to Gulf United Investments Corporation, one of our affiliates. In 2002, accrued interest was added to the principal and a new $2.3 million promissory note was issued with a maturity date of August 2004. Interest on this note accrues at the prime rate and is due at maturity. As of December 31, 2002, the principal balance of the note was $0.3 million. The balance of the note was paid off on December 4, 2003.

In 2002, a predecessor of Geismar Vinyls Company LP, one of our subsidiaries, issued a $0.1 million promissory note to Gulf United Investments Corporation. The loan accrued interest at the prime rate and was repaid in full in July 2003.

From 1999 to 2002, we issued various promissory notes to Gulf United Investments Corporation evidencing borrowings totaling approximately $5.4 million. Interest on the notes accrues at the prime rate. Approximately $5.2 million of the notes matures in 2004, and the remainder matures in 2005.

From 2002 to 2003, we issued promissory notes to Westlake Industries, Inc., one of our affiliates, evidencing borrowings totaling $0.3 million. Interest on the notes accrues at the prime rate, and the notes mature in 2004.

We are engaged in discussions with Suzhou Huasu Plastics Co. Ltd., a joint venture of which we have a 43% interest, regarding the execution of a services agreement whereby Westlake Management Services, Inc. would perform certain technical and administrative services, including technical training, engineering, plant operations, project management, tax, accounting, human resources, legal and risk management, for Suzhou Huasu Plastics for agreed fees based on actual cost. Any such services agreement would need to be approved by the board of directors of Suzhou Huasu Plastics. In addition, we are in discussions with TTWFGP LLC, the general partner of TTWF LP, the selling stockholder, regarding the execution of a services agreement whereby Westlake Management Services, Inc. would perform certain administrative services, including tax, accounting, human resources, legal and risk management, for TTWFGP LLC for agreed fees based on actual cost. Any such services agreement would need to be approved by the board of managers of TTWFGP LLC.

PRINCIPAL AND SELLING STOCKHOLDER

As a result of the Transactions, we are wholly owned by TTWF LP, the selling stockholder in this offering. The selling stockholder is wholly owned by members of the Chao family and related trusts and other entities. Immediately prior to the closing of this offering, the selling stockholder will own all of our outstanding capital stock. Upon the closing of this offering, the selling stockholder will own shares of our common stock, representing % of all of the outstanding shares of our common stock. The foregoing percentage owned would be reduced to % if the underwriters exercise their over-allotment option in full. Under Delaware corporate law and our charter documents, the selling stockholder will be able, acting alone, to elect our entire board of directors and to approve any action requiring the approval of our stockholders. None of our executive officers or directors (other than members of the Chao family indirectly through the selling stockholder) currently own any shares of our common stock. Please read “Management — Board Structure and Compensation of Directors” and “— Stock Ownership of Directors and Executive Officers” for information about awards granted to our directors and executive officers that are affiliated with the selling stockholder. The selling stockholder’s principal executive office is located at 2801 Post Oak Boulevard, Suite 600, Houston, Texas 77056.

The selling stockholder has agreed that it will not, for a period of 180 days after the date of this prospectus, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Credit Suisse First Boston LLC.

Registration Rights Agreement

Because our shares of common stock held by the selling stockholder after this offering will be deemed “restricted securities” as defined in Rule 144, the selling stockholder may only sell a limited number of shares of our common stock into the public markets without registration under the Securities Act of 1933, as amended (the “Securities Act”). We will enter into a registration rights agreement with the selling stockholder under which, at the request of the selling stockholder, we will use our best efforts to register shares of our common stock that are held by the selling stockholder after the closing of this offering, or subsequently acquired, for public sale under the Securities Act. As long as the selling stockholder owns a majority of the voting power of our outstanding common stock, there is no limit to the number of registrations that it may request. Once the selling stockholder owns less than a majority of the shares of our outstanding common stock, it can request a total of five additional registrations. We will also provide the selling stockholder and its permitted transferees with “piggy-back” rights to include its shares in future registrations of our common stock under the Securities Act. There is no limit on the number of these “piggy-back” registrations in which the selling stockholder may request its shares be included. These rights will terminate once the selling stockholder is able to dispose of all of its shares of our common stock within a three-month period pursuant to the exemption from registration provided under Rule 144 of the Securities Act. We have agreed to cooperate in these registrations and related offerings. We and the selling stockholder have agreed to restrictions on the ability of each party to sell securities following registrations requested by either party. In addition, the selling stockholder has agreed not to exercise its registration rights without the prior written consent of Credit Suisse First Boston LLC for a period of 180 days after the date of this prospectus. A copy of the registration rights agreement has been filed as an exhibit to the registration statement of which this prospectus is a part.

DESCRIPTION OF CERTAIN INDEBTEDNESS

Senior Notes

On July 31, 2003, we issued $380 million aggregate principal amount of 8 3/4% senior notes due July 15, 2011. We issued the senior notes in transactions exempt from or not subject to registration under the Securities Act, pursuant to Rule 144A and Regulation S under the Securities Act. In connection with the senior notes offering, we exchanged the existing senior notes for new registered senior notes with substantially identical terms in January 2004.

Interest. Interest on the senior notes accrues at the rate of 8 3/4% per annum and is payable semi-annually on January 15 and July 15. Interest on overdue principal and interest accrues at a rate that is 1% higher than the then applicable interest rate on the senior notes. We make each interest payment to the holders of record on the immediately preceding January 1 and July 1.

Subsidiary Guarantees. Our obligations under the senior notes are jointly and severally guaranteed on a senior unsecured basis by all of our existing and future domestic restricted subsidiaries.

Optional Redemption. We may redeem any of the senior notes at any time on or after July 15, 2007, in whole or in part, in cash at the redemption prices described in the indenture governing the senior notes, plus accrued and unpaid interest to the date of redemption. In addition, on or before July 15, 2007, we may redeem up to 35% of the aggregate principal amount of senior notes with the net proceeds of certain underwritten equity offerings at a price of 108.75% of the principal amount of the senior notes. We may make that redemption only if, after the redemption, at least 65% of the aggregate principal amount of senior notes remains outstanding. We may redeem any of the senior notes at any time before July 15, 2007 in cash at 100% of the principal amount plus accrued and unpaid interest to the date of redemption and a make-whole premium.

Change of Control. Upon a change of control, we may be required to make an offer to purchase each holder’s senior notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.

Certain Covenants. The indenture governing the senior notes contains covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to:

These limitations are subject to a number of important qualifications and exceptions as described in the indenture governing the senior notes.

Credit Facility

On July 31, 2003, we entered into a $200 million senior secured revolving credit facility that matures in July 2007. The credit facility was amended in September 2003 and February 2004. Amounts drawn under the facility are limited to (1) 85% of the net amount of eligible accounts receivable, plus (2) the lesser of (a) 70% of the value of lower of cost or market of eligible inventory, or (b) 85% of the appraised net orderly liquidation value of the eligible inventory, minus (3) such reserves as Bank of America, the

agent, may establish. Advances on inventory are limited to $120 million. The facility includes a $50 million sub-limit for letters of credit, and any outstanding letters of credit will be deducted from availability under the facility.

Amounts drawn under the facility initially bear interest at either LIBOR plus 2.25% or Bank of America’s prime rate plus 0.25%. The interest rate margins are subject to grid pricing adjustments based on a fixed charge coverage ratio after the first year. We pay a fee on the unused portion of the facility of 0.5% per year. We may terminate the facility at any time, with payment of a termination fee in the first two years. The facility is secured by first priority liens on existing and future acquired accounts receivable and contract rights, inventory, chattel paper, instruments, documents, deposit accounts and related general intangibles of our domestic subsidiaries. Each of our domestic restricted subsidiaries guarantees the facility.

The facility contains a number of negative covenants restricting, among other things, prepayment or redemption of our 8 3/4% senior notes, distributions, dividends and repurchases of capital stock and other equity interests, acquisitions and investments, indebtedness, liens and affiliate transactions. We are required to maintain a fixed charge coverage ratio if the excess availability under the senior secured credit facility falls below $50 million for any three consecutive business days, or is less than $35 million at any time. The facility contains customary events of default.

Term Loan

On July 31, 2003, we entered into a $120 million senior secured term loan that matures in July 2010. The term loan provides for increases in the amount of the loan by up to $50 million, but these increases are not pre-committed by the lenders. Principal payments of 0.25% of the term loan are due quarterly during the first six years, with the balance due in three quarterly installments of 23.5% of the term loan in the seventh year of the loan, with the balance due on the maturity date. Amounts outstanding under the loan bear interest at either LIBOR plus 3.75% or Bank of America’s prime rate plus 2.75%. We may prepay the term loan at any time after the first year without penalty. During the first year, we may prepay up to 35% of the term loan with the proceeds of equity offerings at 101%. We must prepay the term loan with the proceeds from assets sales or casualty events if the assets sold or subject to a casualty event are term loan collateral. In addition, we must prepay the term loan with the proceeds from asset sales or casualty events if the proceeds are not reinvested within one year. We must also prepay the term loan with 50% of excess cash flow under an annual cash sweep arrangement if excess cash flow for the fiscal year is at least $2 million.

The term loan is secured by first priority liens on our Lake Charles and our Calvert City facilities and some related general intangibles. Our obligations under this loan are guaranteed by each of our domestic restricted subsidiaries. The term loan contains a number of negative covenants that are similar to those contained in the 8 3/4% senior notes indenture. The term loan contains customary events of default.

Loan Related to Tax-Exempt Bonds and Letter of Credit

In December 1997, one of our subsidiaries entered into a $10.9 million loan agreement with Calcasieu Parish Public Trust Authority that matures in 2027. The loan was made with proceeds from the sale of tax-exempt revenue bonds by the trust authority. Our subsidiary is obligated to make payments to the bond trustee equal to the principal and interest payments due to the bondholders, for any premium resulting from redemption of the bonds and for other fees and expenses. Our subsidiary’s payment obligations under the loan agreement are backed by an $11.3 million letter of credit in favor of the trustee for the benefit of the bondholders. As of March 31, 2004, the total principal outstanding under the loan was $10.9 million. The current letter of credit is issued under our credit facility and expires in March 2005.

Bank Loan

DESCRIPTION OF CAPITAL STOCK

General

The following descriptions are summaries of material terms of our common stock, preferred stock, restated certificate of incorporation and bylaws. Copies of our restated certificate of incorporation and bylaws have been filed as exhibits to the registration statement of which this prospectus is a part, and you are urged to review these documents.

As of the date of this prospectus, our authorized capital stock consists of (1) shares of common stock, par value $0.01 per share, and (2) shares of preferred stock, par value $0.01 per share. Of the authorized shares of common stock, shares are being offered in this offering. Immediately following this offering, shares of our common stock will be outstanding and there will be no outstanding shares of preferred stock.

Immediately prior to this offering, there was no public market for our common stock. Although we have applied to list our common stock on the New York Stock Exchange, a market for our common stock may not develop, and if one develops, it may not be sustained.

Common Stock

Each share of common stock entitles the holder to one vote on all matters on which holders are permitted to vote, including the election of directors. There are no cumulative voting rights. Accordingly, holders of a majority of the total votes entitled to vote in an election of directors will be able to elect all of the directors standing for election. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of the common stock will share equally on a per share basis any dividends when, as and if declared by the board of directors out of funds legally available for that purpose. If we are liquidated, dissolved or wound up, the holders of our common stock will be entitled to a ratable share of any distribution to stockholders, after satisfaction of all of our liabilities and of the prior rights of any outstanding class of our preferred stock. Our common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our common stock. All outstanding shares of our common stock are fully paid and nonassessable.

Preferred Stock

Our board of directors has the authority, without stockholder approval, to issue shares of preferred stock from time to time in one or more series, and to fix the number of shares and terms of each such series. The board may determine the designation and other terms of each series, including the following:

• dividend rates,

• whether dividends will be cumulative or non-cumulative,

• redemption rights,

• liquidation rights,

• sinking fund provisions,

• conversion or exchange rights, and

• voting rights.

The issuance of preferred stock, while providing us with flexibility in connection with possible acquisitions and other transactions, could adversely affect the voting power of holders of our common stock. It could also affect the likelihood that holders of our common stock will receive dividend payments and payments upon liquidation. We have no present plans to issue any preferred stock.

The issuance of shares of preferred stock, or the issuance of rights to purchase shares of preferred stock, could be used to discourage an attempt to obtain control of our company. For example, if, in the

exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal was not in the best interest of our shareholders, the board could authorize the issuance of a series of preferred stock containing class voting rights that would enable the holder or holders of this series to prevent a change of control transaction or make it more difficult. Alternatively, a change of control transaction deemed by the board to be in the best interest of our shareholders could be facilitated by issuing a series of preferred stock having sufficient voting rights to provide a required percentage vote of the stockholders.

Charter and Bylaw Provisions


	*Election and Removal of Directors*

Our board of directors will consist of between one and 12 directors, excluding any directors elected by holders of preferred stock pursuant to provisions applicable in the case of defaults. The exact number of directors will be fixed from time to time by resolution of the board. Our directors will be divided into three classes serving staggered three-year terms, with only one class being elected each year by our stockholders. At each annual meeting of stockholders, directors will be elected to succeed the class of directors whose terms have expired. Please read “Management — Board Structure and Compensation of Directors” above. This system of electing and removing directors may discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors. In addition, no director may be removed except for cause, and directors may be removed for cause by an affirmative vote of shares representing a majority of the shares then entitled to vote at an election of directors. Any vacancy occurring on the board of directors and any newly created directorship may only be filled by a majority of the remaining directors in office.


	*Stockholder Meetings*

Our restated certificate of incorporation and our bylaws provide that special meetings of our stockholders may be called only by the chairman of our board of directors or a majority of the directors. Our restated certificate of incorporation and our bylaws specifically deny any power of any other person to call a special meeting.


	*Stockholder Action by Written Consent*

Our restated certificate of incorporation and our bylaws provide that holders of our common stock will not be able to act by written consent without a meeting.


	*Amendment of Restated Certificate of Incorporation*

The provisions of our restated certificate of incorporation described above under “— Election and Removal of Directors,” “— Stockholder Meetings” and “— Stockholder Action by Written Consent” may be amended only by the affirmative vote of holders of at least 75% of the voting power of our outstanding shares of voting stock, voting together as a single class. The affirmative vote of holders of at least a majority of the voting power of our outstanding shares of stock is generally required to amend other provisions of our restated certificate of incorporation.


	*Amendment of Bylaws*

Our bylaws may generally be altered, amended or repealed, and new bylaws may be adopted, with:


	•	the affirmative vote of a majority of directors present at any regular or special meeting of the board of directors called for that purpose, provided that any alteration, amendment or repeal of, or adoption of any bylaw inconsistent with specified provisions of the bylaws, including those related to special and annual meetings of stockholders, action of stockholders by written consent, classification of the board of directors, nomination of directors, special meetings of directors, removal of directors, committees of the board of directors and indemnification of directors and officers requires the affirmative vote of at least 75% of all directors in office at a meeting called for that purpose, or

• the affirmative vote of holders of 75% of the voting power of our outstanding shares of voting stock, voting together as a single class.


	*Other Limitations on Stockholder Actions*

Our bylaws also impose some procedural requirements on stockholders who wish to:

• make nominations in the election of directors,

• propose that a director be removed,

• propose any repeal or change in our bylaws, or

• propose any other business to be brought before an annual or special meeting of stockholders.

Under these procedural requirements, in order to bring a proposal before a meeting of stockholders, a stockholder must deliver timely notice of a proposal pertaining to a proper subject for presentation at the meeting to our corporate secretary along with the following:

• a description of the business or nomination to be brought before the meeting and the reasons for conducting such business at the meeting,

• the stockholder’s name and address,

• the number of shares beneficially owned by the stockholder and evidence of such ownership, and

• the names and addresses of all persons with whom the stockholder is acting in concert and a description of all arrangements and understandings with those persons, and the number of shares such persons beneficially own.

To be timely, a stockholder must generally deliver notice:

• in connection with an annual meeting of stockholders, not less than 120 nor more than 180 days prior to the date on which the annual meeting of stockholders was held in the immediately preceding year, but in the event that the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary date of the preceding annual meeting of stockholders, a stockholder notice will be timely if received by us not later than the close of business on the later of (1) the 120th day prior to the annual meeting and (2) the 10th day following the day on which we first publicly announce the date of the annual meeting, or

• in connection with the election of a director at a special meeting of stockholders, not less than 40 nor more than 60 days prior to the date of the special meeting, but in the event that less than 55 days’ notice or prior public disclosure of the date of the special meeting of the stockholders is given or made to the stockholders, a stockholder notice will be timely if received by us not later than the close of business on the 10th day following the day on which a notice of the date of the special meeting was mailed to the stockholders or the public disclosure of that date was made.

In order to submit a nomination for our board of directors, a stockholder must also submit any information with respect to the nominee that we would be required to include in a proxy statement, as well as some other information. If a stockholder fails to follow the required procedures, the stockholder’s proposal or nominee will be ineligible and will not be voted on by our stockholders.


	*Limitation on Liability of Directors*

Our restated certificate of incorporation provides that no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duties as a director, except as required by

applicable law, as in effect from time to time. Currently, Delaware law requires that liability be imposed for the following:

• any breach of the director’s duty of loyalty to our company or our stockholders,

• any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law,

• unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law, and

• any transaction from which the director derived an improper personal benefit.

Our bylaws provide that, to the fullest extent permitted by law, we will indemnify any officer or director of our company against all damages, claims and liabilities arising out of the fact that the person is or was our director or officer, or served any other enterprise at our request as a director, officer, employee, agent or fiduciary. We will reimburse the expenses, including attorneys’ fees, incurred by a person indemnified by this provision when we receive an undertaking to repay such amounts if it is ultimately determined that the person is not entitled to be indemnified by us. Amending this provision will not reduce our indemnification obligations relating to actions taken before an amendment.


	*Anti-Takeover Effects of Some Provisions*

Some provisions of our restated certificate of incorporation and bylaws could make the following more difficult:

• acquisition of control of us by means of a proxy contest or otherwise, or

• removal of our incumbent officers and directors.

These provisions, as well as our ability to issue preferred stock, are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because negotiation of those proposals could result in an improvement of their terms.

Transactions and Corporate Opportunities

Our restated certificate of incorporation includes provisions that regulate and define the conduct of specified aspects of the business and affairs of our company. These provisions serve to determine and delineate the respective rights and duties of our company, the selling stockholder and its direct and indirect equity owners (the “Selling Stockholder Affiliates”) and some of our directors and officers in anticipation of the following:

• the Selling Stockholder Affiliates or their directors, officers and/or employees serving as our directors and/or officers,

• the Selling Stockholder Affiliates engaging in lines of business that are the same as, or similar to, our lines of business,

• the Selling Stockholder Affiliates having an interest in the same areas of corporate opportunity as we have, and

• we and the Selling Stockholder Affiliates engaging in material business transactions.

We may enter into agreements with the Selling Stockholder Affiliates to engage in any transaction. We may also enter into agreements with the Selling Stockholder Affiliates to compete or not to compete with each other, including agreements to allocate, or to cause our and their respective directors, officers

and employees to allocate, opportunities between the Selling Stockholder Affiliates and us. Our restated certificate of incorporation provides that no such agreement will be considered contrary to any fiduciary duty of the Selling Stockholder Affiliates, as the direct and indirect controlling stockholders of our company, or of a director, officer or employee of our company or the Selling Stockholder Affiliates. Neither the Selling Stockholder Affiliates nor any of our directors, officers or employees who are also directors, officers or employees of the Selling Stockholder Affiliates are under any fiduciary duty to us to refrain from acting on our behalf or on behalf of the Selling Stockholder Affiliates in respect of any such agreement or transaction. These provisions are generally subject to the corporate opportunity obligations described below with which the Selling Stockholder Affiliates and our officers and directors who are also the Selling Stockholder Affiliates’ directors, officers or employees must comply.

Under our restated certificate of incorporation, the Selling Stockholder Affiliates have no duty to refrain from engaging in activities or lines of business similar to ours or from doing business with any of our clients, customers or vendors and, except as discussed in the above paragraph, neither the Selling Stockholder Affiliates nor any of their officers, directors or employees will be liable to us or our stockholders for breach of any fiduciary duty as a stockholder by reason of any of these activities. In addition, if the Selling Stockholder Affiliates or a director or officer of our company who is also a director, officer or employee of the Selling Stockholder Affiliates acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both our company and the Selling Stockholder Affiliates, then neither the Selling Stockholder Affiliates nor any such person will have a duty to communicate or offer this corporate opportunity to us and will not be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that the Selling Stockholder Affiliates pursue or acquire the corporate opportunity for themselves, directs the corporate opportunity to another person or do not communicate information regarding the corporate opportunity to us, so long as the Selling Stockholder Affiliates or a director or officer of the Selling Stockholder Affiliates, as the case may be, acts in a manner consistent with the following policy: A corporate opportunity offered to the Selling Stockholder Affiliates or to any person who is an officer or director of our company and who is also an officer, director or employee of the Selling Stockholder Affiliates will belong to the Selling Stockholder Affiliates, unless the opportunity was expressly offered in writing to the Selling Stockholder Affiliates solely in their capacity as direct and indirect stockholders of our company or to that person solely in his or her capacity as a director or officer of our company.

By becoming a stockholder in our company, you will be deemed to have notice of and consented to these provisions of our restated certificate of incorporation. These provisions may not be amended or repealed except by the vote of the holders of 75% of the voting power of our outstanding shares of voting stock.

Delaware Business Combination Statute

We are subject to Section 203 of the Delaware General Corporation Law, which is described below. Section 203 provides that, subject to specified exceptions, an interested stockholder of a Delaware corporation is not permitted to engage in any business combination, including mergers or consolidations or acquisitions of additional shares of the corporation, with the corporation for a three-year period following the time that stockholder became an interested stockholder, unless one of the following conditions is met:

• prior to the time the stockholder became an interested stockholder, the board of directors approved either the business combination or the transaction that resulted in the stockholder’s becoming an interested stockholder,

• upon consummation of the transaction that resulted in the stockholder’s becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than statutorily excluded shares, or

• on or subsequent to the time the stockholder became an interested stockholder, the business combination is approved by the board of directors and authorized at an annual or special meeting of

stockholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.

Except as otherwise set forth in Section 203, “interested stockholder” means:

• any person that is the owner of 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the date of determination, and

• the affiliates and associates of any such person.

Because we are subject to Section 203, it may be more difficult for a person who is an interested stockholder to effect various business combinations with us for the applicable three-year period. Section 203 also may have the effect of preventing changes in our management. It is possible that Section 203 could make it more difficult to accomplish transactions which our stockholders may otherwise deem to be in their best interests. The provisions of Section 203 may cause persons interested in acquiring us to negotiate in advance with our board of directors. The restrictions on business combinations set forth in Section 203 are not applicable to the selling stockholder so long as the selling stockholder holds 15% or more of our common stock.

Listing of Common Stock

We have applied to list our common stock on the New York Stock Exchange under the symbol “WLK.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is .

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common stock. The market price of our common stock could drop because of sales of a large number of shares in the open market following this offering or the perception that those sales may occur. These factors also could make it more difficult for us to raise capital through future offerings of common stock.

After this offering, we will have shares of our common stock outstanding. All of the shares of our common stock sold in this offering will be freely tradable without restriction under the Securities Act, except for any shares that may be acquired by an affiliate of ours, as that term is defined in Rule 144 under the Securities Act. Affiliates are individuals or entities that directly, or indirectly through one or more intermediaries, control, are controlled by, or are under common control with, us and may include our directors and officers as well as our significant stockholders, if any. The selling stockholder has entered into a lock-up agreement as described under “Underwriting.”

The shares of our common stock held by the selling stockholder following this offering are deemed “restricted securities” as defined in Rule 144, and may not be sold other than through registration under the Securities Act or under an exemption from registration, such as the one provided by Rule 144.

In general, a stockholder subject to Rule 144 who has owned common stock of an issuer for at least one year may, within any three-month period, sell up to the greater of:

• 1% of the total number of shares of common stock then outstanding; and

• the average weekly trading volume of the common stock during the four weeks preceding the stockholder’s required notice of sale is filed with the SEC.

Rule 144 requires stockholders to aggregate their sales with other affiliated stockholders for purposes of complying with this volume limitation. A stockholder who has owned common stock for at least two years, and who has not been an affiliate of the issuer for at least 90 days, may sell common stock free from the volume limitation and notice requirements of Rule 144.

Immediately after this offering, we intend to file a registration statement on Form S-8 covering all shares issuable under our omnibus incentive plan. Shares of our common stock registered under this registration statement will be available for sale in the open market, subject to vesting restrictions. Any sales of these shares by an affiliate will be subject to the volume limitations of Rule 144 described above.

We have granted the selling stockholder registration rights with respect to our shares it will hold after this offering. Please read “Principal and Selling Stockholder.”

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

TO NON-UNITED STATES HOLDERS

The following is a general discussion of the material United States federal income tax consequences of the ownership and disposition of our common stock to a non-United States holder, but is not a complete analysis of all the potential tax consequences relating thereto. For the purposes of this discussion, a non-United States holder is any beneficial owner of our common stock that for United States federal income tax purposes is not a “United States person.” For purposes of this discussion, the term United States person means:

• an individual citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation) created or organized in the United States or under the laws of the United States or any political subdivision thereof;

• an estate whose income is subject to United States federal income tax regardless of its source; or

• a trust (x) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust or (y) which has made a valid election to be treated as a United States person.

If a partnership holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and upon the activities of the partnership. Accordingly, partnerships which hold our common stock and partners in such partnerships should consult their own tax advisors.

This discussion does not address all aspects of United States federal income taxation that may be relevant in light of a non-United States holder’s special tax status or special circumstances. United States expatriates, insurance companies, tax-exempt organizations, dealers in securities, banks or other financial institutions, “controlled foreign corporations,” “passive foreign investment companies,” “foreign personal holding companies,” corporations that accumulate earnings to avoid United States federal income tax and investors that hold our common stock as part of a hedge, straddle or conversion transaction are among those categories of potential investors that are subject to special rules not covered in this discussion. This discussion does not address any tax consequences arising under the laws of any state, local or non-United States taxing jurisdiction. Furthermore, the following discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, and Treasury Regulations and administrative and judicial interpretations thereof, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. Accordingly, each non-United States holder should consult its own tax advisors regarding the United States federal, state, local and non-United States income and other tax consequences of acquiring, holding and disposing of shares of our common stock.


	Dividends

Payments on our common stock will constitute dividends for United States federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under United States federal income tax principles. Amounts not treated as dividends for United States federal income tax purposes will constitute a return of capital and will first be applied against and reduce a holder’s adjusted basis in the common stock, but not below zero, and then the excess, if any, will be treated as gain from the sale of the common stock.

Amounts treated as dividends paid to a non-United States holder of common stock generally will be subject to United States withholding tax either at a rate of 30% of the gross amount of the dividends or such lower rate as may be specified by an applicable tax treaty. In order to receive a reduced treaty rate, a non-United States holder must provide a valid Internal Revenue Service (“IRS”) Form W-8BEN or other successor form certifying qualification for the reduced rate.

Dividends received by a non-United States holder that are effectively connected with a United States trade or business conducted by the non-United States holder are exempt from such withholding tax. In

order to obtain this exemption, a non-United States holder must provide a valid IRS Form W-8ECI or other successor form properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are generally taxed at the same graduated rates applicable to United States persons, net of allowable deductions and credits.

In addition to the graduated tax described above, dividends received by a corporate non-United States holder that are effectively connected with a United States trade or business of such holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.

A non-United States holder may obtain a refund of any excess amounts currently withheld if an appropriate claim for refund is filed timely with the IRS. If a non-United States holder holds our common stock through a foreign partnership or a foreign intermediary, the foreign partnership or foreign intermediary will also be required to comply with additional certification requirements.


	Gain on Disposition of Common Stock

A non-United States holder generally will not be subject to United States federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

• the gain is effectively connected with a United States trade or business of the non-United States holder or, if a tax treaty applies, is attributable to a United States permanent establishment maintained by such non-United States holder;

• the non-United States holder is an individual who holds his or her common stock as a capital asset (generally, an asset held for investment purposes) and who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the sale or disposition occurs and other conditions are met; or

• our common stock constitutes a United States real property interest by reason of our status as a “United States real property holding corporation” (a “USRPHC”) for United States federal income tax purposes at any time within the shorter of the five-year period preceding the disposition or the holder’s holding period for our common stock.

We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our United States real property interests relative to the fair market value of our other business assets, there can be no assurance that we are not currently and will not become a USRPHC in the future. Even if we are currently or become a USRPHC, as long as our common stock is regularly traded on an established securities market, such common stock will not be treated as United States real property interests as to a non-United States holder who has never actually or constructively held more than 5 percent of such regularly traded common stock.

Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to the United States federal income tax imposed on net income on the same basis that applies to United States persons generally and, for corporate holders under certain circumstances, the branch profits tax, but will generally not be subject to withholding. Gain described in the second bullet point above (which may be offset by United States source capital losses) will be subject to a flat 30% United States federal income tax. Non-United States holders should consult any applicable income tax treaties that may provide for different rules.


	Backup Withholding and Information Reporting

Generally, we must report annually to the IRS the amount of dividends paid, the name and address of the recipient, and the amount, if any, of tax withheld, together with other information. A similar report is sent to the holder. These information reporting requirements apply even if withholding was not required because the dividends were effectively connected dividends or withholding was reduced or eliminated by an

applicable tax treaty. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in the recipient’s country of residence.

Backup withholding (currently at a rate of 28%) will generally not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-United States holder of our common stock if the holder has provided a certification that it is not a United States person or has otherwise established an exemption.

Payments of the proceeds from a disposition effected outside the United States by a non-United States holder of our common stock made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) will apply to such a payment if the broker is a United States person, a controlled foreign corporation for United States federal income tax purposes, a foreign person 50% or more of whose gross income is effectively connected with a United States trade or business for a specified three-year period, or a foreign partnership if (1) at any time during its tax year, one or more of its partners are United States persons who, in the aggregate hold more than 50 percent of the income or capital interest in such partnership or (2) at any time during its tax year, it is engaged in the conduct of a trade or business in the United States, unless the broker has documentary evidence that the beneficial owner is a non-United States holder and specified conditions are met or an exemption is otherwise established.

Payment of the proceeds from a disposition by a non-United States holder of common stock made by or through the United States office of a broker is generally subject to information reporting and backup withholding unless the non-United States holder certifies as to its non-United States holder status under penalties of perjury or otherwise establishes an exemption from information reporting and backup withholding.

Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-United States holder’s United States federal income tax liability provided the required information is furnished timely to the IRS.

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting agreement dated , 2004, we have agreed to sell to the underwriters named below, for whom Credit Suisse First Boston LLC, J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. are acting as representatives, the following respective number of shares of our common stock:


		Number
Underwriter		of Shares

Credit Suisse First Boston LLC
J.P. Morgan Securities Inc.
Deutsche Bank Securities Inc.
Banc of America Securities LLC
Goldman, Sachs & Co.
UBS Securities LLC

	Total

The underwriting agreement provides that the underwriters are obligated to purchase all of the shares of our common stock in the offering if any are purchased, other than those shares covered by the over-allotment option described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of the non-defaulting underwriters may be increased or this offering may be terminated.

The selling stockholder has granted to the underwriters a 30-day option to purchase on a pro rata basis additional outstanding shares from the selling stockholder at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of common stock.

The underwriters propose to offer the shares of common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of $ per share on sales to other broker/ dealers. The underwriters and selling group members may allow a discount of $ per share on sales to other broker/ dealers. After the initial public offering, the representatives may change the public offering price and concession and discount to broker/ dealers.

The following table summarizes the compensation and estimated expenses we and the selling stockholder will pay:

Per Share

Total

Without

With

Without

With

Over-allotment

Underwriting Discounts and Commissions paid by us

Expenses payable by us

Underwriting Discounts and Commissions paid by selling stockholder

The underwriting agreement provides that the underwriters will reimburse us for certain out-of-pocket expenses included in the table above in connection with this offering, including expenses associated with accounting, printing and legal services, in an amount not to exceed $1.5 million.

The underwriters have informed us that the underwriters do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the shares of common stock being offered.

We have agreed that we will not, for a period of 180 days after the date of this prospectus, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible

into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Credit Suisse First Boston LLC.

The underwriters have reserved for sale at the initial public offering price up to shares of our common stock for employees, directors and other persons associated with us who have expressed an interest in purchasing common stock in the offering. The number of shares available for sale to the general public in the offering will be reduced to the extent these persons purchase the reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares.

We and the selling stockholder have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.

We have applied to list the shares of common stock on the New York Stock Exchange.

In connection with the listing of the common stock on the New York Stock Exchange, the underwriters will undertake to sell round lots of 100 shares or more to a minimum of 2,000 beneficial owners.

Some of the underwriters and their affiliates have engaged in transactions with, and performed commercial and investment banking, financial advisory or lending services for, us and our affiliates from time to time, for which they have received customary compensation and may do so in the future. Credit Suisse First Boston LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and Banc of America Securities LLC were initial purchasers of our senior notes and received customary commissions in connection therewith. Affiliates of Banc of America Securities LLC, Credit Suisse First Boston LLC, Deutsche Bank Securities Inc. and UBS Securities LLC are lenders, arrangers and agents under our credit facility and receive fees customary for performing these services and interest on such. See “Description of Certain Indebtedness.” In addition, a portion of the net proceeds from this offering may be used to repay a portion of our term loan, in which case lenders under our term loan, including affiliates of some of the underwriters, will receive their proportionate share of the net proceeds used to repay such debt.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock will be determined by negotiation between us and the underwriters. The principal factors to be considered in determining the initial public offering price include the following:

• the information included in this prospectus and otherwise available to the underwriters;

• market conditions for initial public offerings;

• the history of and prospects for our business and our past and present operations;

• the history and prospects for the industry in which we compete;

• our past and present earnings and current financial position;

• an assessment of our management;

• the market of securities of companies in businesses similar to ours; and

• the general condition of the securities markets.

The initial public offering price may not correspond to the price at which our common stock will trade in the public market subsequent to this offering, and an active trading market may not develop and continue after this offering.

In connection with the offering the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Securities Exchange Act of 1934 (the “Exchange Act”).

• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

• Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market.

• Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over- allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

• Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the New York Stock Exchange or otherwise and, if commenced, may be discontinued at any time.

A prospectus in electronic format may be made available on the Web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make Internet distributions on the same basis as other allocations.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of our common stock in Canada is being made only on a private placement basis exempt from the requirement that we and the selling stockholders prepare and file a prospectus with the securities regulatory authorities in each province where trades of common stock are made. Any resale of the common stock in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock.

Representations of Purchasers

By purchasing common stock in Canada and accepting a purchase confirmation a purchaser is representing to us, the selling stockholders and the dealer from whom the purchase confirmation is received that:

• the purchaser is entitled under applicable provincial securities laws to purchase the common stock without the benefit of a prospectus qualified under those securities laws,

• where required by law, that the purchaser is purchasing as principal and not as agent, and

• the purchaser has reviewed the text above under “— Resale Restrictions.”

Rights of Action – Ontario Purchasers Only

Under Ontario securities legislation, a purchaser who purchases a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the common stock, for rescission against us and the selling stockholders in the event that this prospectus contains a misrepresentation. A purchaser will be deemed to have relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the common stock. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the common stock. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us or the selling stockholder. In no case will the amount recoverable in any action exceed the price at which the common stock was offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we and the selling stockholder, will have no liability. In the case of an action for damages, we and the selling stockholder, will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the common stock as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

Enforcement of Legal Rights

All of our directors and officers as well as the experts named herein and the selling stockholder may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.

Taxation and Eligibility for Investment

Canadian purchasers of common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common stock in their particular circumstances and about the eligibility of the common stock for investment by the purchaser under relevant Canadian legislation.

LEGAL MATTERS

Certain legal matters in connection with the offering will be passed on for us by Baker Botts L.L.P., Houston, Texas and for the underwriters by Latham & Watkins LLP, New York, New York.

EXPERTS

The consolidated financial statements as of December 31, 2002 and 2003 and for each of the three years in the period ended December 31, 2003 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the securities offered by this prospectus. In this prospectus we refer to that registration statement, together with all amendments, exhibits and schedules to that registration statement, as “the registration statement.”

As is permitted by the rules and regulations of the SEC, this prospectus, which is part of the registration statement, omits some information, exhibits, schedules and undertakings set forth in the registration statement. For further information with respect to us, and the securities offered by this prospectus, please refer to the registration statement.

Following this offering, we will be subject to the information and periodic reporting requirements of the Exchange Act. The indenture governing our 8 3/4% senior notes due 2011 requires Westlake Chemical Corporation to file current reports, quarterly reports, annual reports and other information with the SEC. Prior to the effective date of the Transactions, these filings do not reflect the Transactions. You may read and copy those reports and other information at the public reference facility maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this material may also be obtained from the Public Reference Room of the SEC at 450 Fifth Street, N.W. Washington, D.C. 20549 at prescribed rates. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1 (800) 732-0330. The SEC maintains a Web site at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that make electronic filings with the SEC using its EDGAR system.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page

Unaudited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2003 and March 31, 2004		F-2
Consolidated Statements of Operations for the Three Months Ended March 31, 2003 and 2004		F-3
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2004		F-4
Notes to Consolidated Financial Statements		F-5
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm		F-18
Consolidated Balance Sheets as of December 31, 2002 and 2003		F-19
Consolidated Statements of Operations for the Years Ended December 31, 2001, 2002 and 2003		F-20
Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income (Loss) for the Years Ended December 31, 2001, 2002 and 2003		F-21
Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2002 and 2003		F-22
Notes to Consolidated Financial Statements		F-23

F-1

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


			December 31,			March 31,
			2003			2004


			(In thousands of dollars,
			except par values and share
			amounts)
ASSETS
Current assets
	Cash and cash equivalents		$	37,381		$	36,839
	Accounts receivable, net			178,633			177,136
	Inventories, net			180,760			198,300
	Prepaid expenses and other current assets			7,994			7,098
	Deferred income taxes			8,079			8,079

		Total current assets		412,847			427,452
Property, plant and equipment, net				879,688			870,718
Equity investment				17,101			17,633
Other assets, net				60,477			59,039

		Total assets	$	1,370,113		$	1,374,842


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
	Accounts payable		$	93,404		$	94,442
	Accrued liabilities (includes $5,477 of related party notes in 2003 and 2004)			93,528			81,371
	Current portion of long-term debt			28,200			28,200

		Total current liabilities		215,132			204,013
Long-term debt				509,089			508,789
Deferred income taxes				136,524			141,668
Other liabilities (includes $226 of related party note in 2003 and 2004)				41,665			42,126

		Total liabilities		902,410			896,596

Commitments and contingencies (Notes 8 and 11)

Minority interest				22,100			22,100
Stockholders’ equity
	Preferred stock, nonvoting, noncumulative, no par value, 1,000 shares authorized; 120 shares issued and outstanding			12,000			12,000
	Common stock, $1 par value, 10,000 shares authorized; 1,115 shares issued and outstanding			1			1
	Additional paid-in capital			205,505			205,505
	Retained earnings			229,346			240,031
	Minimum pension liability, net of tax			(1,547	)		(1,547	)
	Cumulative translation adjustment			298			156

		Total stockholders’ equity		445,603			456,146

		Total liabilities and stockholders’ equity	$	1,370,113		$	1,374,842

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

F-2

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	Three Months Ended
	March 31,

	2003			2004


	(In thousands of dollars,
	except share and per
	share data)
Net sales	$	380,573		$	400,894
Cost of sales		335,734			362,087

Gross profit		44,839			38,807
Selling, general and administrative expenses		18,986			11,892

Income from operations		25,853			26,915
Interest expense		(8,855	)		(10,752	)
Other income (expense), net		3,511			(73	)

Income before income taxes		20,509			16,090
Provision for income taxes		7,633			5,405

Net income	$	12,876		$	10,685

Basic and diluted earnings per share	$	11,548		$	9,583

Weighted average basic and diluted shares outstanding		1,115			1,115

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

F-3

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



				Three Months Ended
				March 31,

				2003			2004


				(In thousands of dollars)
Cash flows from operating activities
Net income				$	12,876		$	10,685

Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization				22,248			20,898
	Provision for bad debts				3,990			(778	)
	Amortization of debt issue costs				—			552
	Gain from disposition of fixed assets				(2,949	)		(231	)
	Deferred tax expense				8,584			5,144
	Equity in income of unconsolidated subsidiary				(612	)		(532	)
	Changes in operating assets and liabilities
		Accounts receivable			(17,933	)		2,275
		Inventories			(23,756	)		(17,540	)
		Prepaid expenses and other current assets			9,116			896
		Accounts payable			20,621			1,038
		Accrued liabilities			11,938			(12,157	)
		Other, net			478			(453	)

			Total adjustments		31,725			(888	)

			Net cash provided by operating activities		44,601			9,797

Cash flows from investing activities
Additions to property, plant and equipment					(8,372	)		(11,045	)
Other					3,192			1,006

			Net cash used for investing activities		(5,180	)		(10,039	)

Cash flows from financing activities
Proceeds from borrowings					45,500			—
Repayments of borrowings					(78,000	)		(300	)

			Net cash used for financing activities		(32,500	)		(300	)

Net increase (decrease) in cash and cash equivalents					6,921			(542	)
Cash and cash equivalents at beginning of period					11,123			37,381

Cash and cash equivalents at end of period				$	18,044		$	36,839

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

F-4

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(dollars in thousands, except per share data)


1.	Basis of Financial Statements

During 2004, Westlake Chemical Corporation (WCC) determined to undertake a reorganization designed to simplify its ownership structure. Westlake Polymer & Petrochemical, Inc. (WPPI) and Gulf Polymer & Petrochemical, Inc. (GPPI), WCC’s direct and indirect parent companies, respectively, both will merge into WCC, which will survive the mergers (collectively, the “Transactions”).

In the mergers, all of the currently outstanding common and preferred stock of WCC, GPPI and WPPI, as well as the currently outstanding preferred stock of a subsidiary of GPPI, will be exchanged for common stock of WCC. Additionally, WCC intends to execute a stock split of its common stock in conjunction with the mergers. The preferred shares of WPPI are classified as minority interest. TTWF LP, a Delaware limited partnership, will become the sole stockholder of the restructured WCC, and members of the Chao family and related trusts and other entities, which are currently the stockholders of WCC, WPPI and GPPI, will own all of the partnership interests in TTWF LP.

The accompanying consolidated financial statements reflect the mergers described above (but not the exchange of preferred stock for common stock) as if they had occurred prior to January 1, 2001. The “Company” refers to the entity resulting from the Transactions.

The accompanying unaudited consolidated interim financial statements were prepared with generally accepted accounting principles and in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnotes required for complete financial statements under generally accepted accounting principles in the United States have not been included pursuant to such rules and regulations. These interim consolidated financial statements should be read in conjunction with the December 31, 2003 financial statements and notes thereto of the Company presented elsewhere in this prospectus. These financial statements have been prepared in conformity with the accounting principles and practices as disclosed in the financial notes thereto of the Company for the year ended December 31, 2003.

In the opinion of the Company’s management, the accompanying unaudited interim financial statements reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of the Company’s financial position as of March 31, 2004, the results of operations for the three months ended March 31, 2003 and 2004 and the changes in its cash position for the three months ended March 31, 2003 and 2004.

Results of operations and changes in cash position for the interim periods presented are not necessarily indicative of the results that will be realized for the year ending December 31, 2004 or any other interim period. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

F-5

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)


2.	Accounts Receivable

Accounts receivable consist of the following:


	December 31,			March 31,
	2003			2004

Accounts receivable – trade	$	177,396		$	177,538
Accounts receivable – affiliates		1,264			1,004
Allowance for doubtful accounts		(6,901	)		(5,926	)

		171,759			172,616
Taxes receivable		1,129			265
Accounts receivable – other		5,745			4,255

	$	178,633		$	177,136


3.	Inventories

Inventories consist of the following:


	December 31,			March 31,
	2003			2004

Finished product	$	107,928		$	120,124
Feedstock, additives and chemicals		56,281			61,522
Materials and supplies		24,840			24,874

		189,049			206,520
Allowance for inventory obsolescence		(8,289	)		(8,220	)

Net inventory	$	180,760		$	198,300


4.	Property, Plant and Equipment

Depreciation expense on property, plant and equipment of $18,579 and $17,483 is included in cost of sales in the consolidated statement of operations for the three months ended March 31, 2003 and 2004, respectively.


5.	Other Assets

Amortization expense on other assets of $3,669 and $3,967 is included in the consolidated statement of operations for the three months ended March 31, 2003 and 2004, respectively.


6.	Derivative Commodity Instruments

The Company recognized a net loss of $1,628 and $1,164 in connection with commodity derivatives and inventory repurchase obligations for the three months ended March 31, 2003 and March 31, 2004, respectively. Risk management asset balances of $3,040 and $825 were included in prepaid expenses and other current assets and risk management liability balances of $-0- and $1,001 were included in accrued liabilities in the Company’s balance sheets as of December 31, 2003 and March 31, 2004, respectively.

F-6

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)


7.	Pension and Post Retirement Benefits

Components of Net Periodic Costs are as follows:



	Three Months Ended March 31,


	Pension Benefits						Other Benefits

	2003			2004			2003		2004

Service cost	$	207		$	258		$	100	$	102
Interest cost		382			405			100		105
Expected return on plan assets		(315	)		(352	)		—		—
Amortization of transition obligation		—			—			28		28
Amortization of prior service cost		81			56			67		67
Amortization of net (gain) loss		34			65			50		54

Net periodic benefit cost	$	389		$	432		$	345	$	356

In the first quarter of 2004, the Company contributed $225 and $165 to the salaried and wage pension plans, respectively. It is scheduled to contribute an additional $675 to the salaried pension plan and $495 to the wage pension plan during the fiscal year ended December 31, 2004.


8.	Commitments and Contingencies

The Company has various purchase commitments for materials, supplies and services incident to the ordinary conduct of business. Such commitments are at prices not in excess of market prices. Certain feedstock purchase commitments require taking delivery of minimum volumes at market-determined prices.


	*Environmental Matters*

The Company is subject to environmental laws and regulations that can impose civil and criminal sanctions and that may require it to remove or mitigate the effects of the disposal or release of chemical substances at various sites. Under some of these laws and regulations, a current or previous owner or operator of property may be held liable for the costs of removal or remediation of hazardous substances on, under, or in its property, without regard to whether the owner or operator knew of, or caused the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time they occurred. Because several of the Company’s production sites have a history of industrial use, it is impossible to predict precisely what effect these laws and regulations will have on the Company in the future. As is typical for chemical businesses, soil and groundwater contamination has occurred in the past at some of the Company’s sites and might occur or be discovered at other sites in the future. The Company has typically conducted extensive soil and groundwater assessments either prior to acquisitions or in connection with subsequent permitting requirements. The Company’s investigations have not revealed any contamination caused by the Company’s operations that would likely require the Company to incur material long-term remediation efforts and associated liabilities

F-7

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

Calvert City, had been extensively contaminated by Goodrich’s operations. In 1993, the Geon Corporation was spun off from Goodrich, and Geon assumed the responsibility to operate the site-wide remediation system and the indemnification obligations for any liabilities arising from pre-existing contamination at the site. Subsequently, Geon’s name was changed to PolyOne. Part of the former Goodrich facility, which the Company did not acquire and on which it does not operate and that it believes is still owned by either Goodrich or PolyOne, is listed on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA. The investigation and remediation of contamination at the Company’s manufacturing complex is currently being coordinated by PolyOne.

Given the scope and extent of the underlying contamination at the Company’s manufacturing complex, the remediation will likely take a number of years. The costs incurred to treat contaminated groundwater collected from beneath the site were $2,560 in 2003, and the Company expects this level of expenditures to continue for the life of the remediation. For the past three years, PolyOne has suggested that the Company’s actions after its acquisition of the complex have contributed to or otherwise exacerbated the contamination at the site. The Company has denied those allegations and has retained technical experts to evaluate its position. Goodrich has also asserted claims similar to those of PolyOne. In addition, Goodrich has asserted that the Company is responsible for a portion of the ongoing costs of treating contaminated groundwater being pumped from beneath the site and, since May 2003, has withheld payment of 45% of the costs that the Company incurs to operate Goodrich’s pollution control equipment located on the property. The Company met with Goodrich representatives in July and August of 2003 to discuss Goodrich’s assertions.

In October 2003, the Company filed suit against Goodrich in the United States District Court for the Western District of Kentucky for unpaid invoices related to the groundwater treatment, which totaled approximately $900 as of March 31, 2004. Goodrich has filed an answer and counterclaim in which it alleges that the Company is responsible for contamination at the facility. The Company has denied those allegations and has filed a motion to dismiss Goodrich’s counterclaim. The court has recently ruled on the Company’s motion to dismiss and has dismissed part of Goodrich’s counterclaim while retaining the remainder. Goodrich also filed a third-party complaint against PolyOne, which in turn has filed motions to dismiss, counterclaims against Goodrich and third-party claims against the Company. On April 28, 2004, the parties agreed on discovery procedures. Further, on June 8, 2004, the Company filed a motion for summary judgment on its claim against Goodrich.

In addition, the Company has intervened in administrative proceedings in Kentucky in which both Goodrich and PolyOne are seeking to shift Goodrich’s cleanup responsibilities under its Resource Conservation and Recovery Act, or RCRA, permit to other parties, including the Company. Those proceedings are currently in mediation.

In January 2004, the State of Kentucky notified the Company by letter that, due to the ownership of a closed landfill (known as Pond 4) at the manufacturing complex, the Company would be required to submit a post-closure permit application under RCRA. This could require the Company to bear the responsibility and cost of performing remediation work on the pond and solid waste management units and areas of concern located on property adjacent to the pond that is owned by the Company. The Company acquired Pond 4 from Goodrich in 1997 as part of the acquisition of other facilities. Under the contract, the Company has the right to require Goodrich to retake title to Pond 4 in the event that ownership of Pond 4 requires the Company to be added to Goodrich’s permit associated with the facility clean-up issued under RCRA. The Company believes that the letter sent by the State of Kentucky triggers the right to tender ownership of Pond 4 back to Goodrich. The Company has notified Goodrich of its obligation to accept ownership and has tendered title to Pond 4 back to Goodrich. The Company has also filed an

F-8

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

appeal with the State of Kentucky regarding its letter. Goodrich and PolyOne have both filed motions to intervene in this appeal.

None of the parties involved in the proceedings relating to the disputes with Goodrich and PolyOne and the State of Kentucky described above has formally quantified the amount of monetary relief that they are seeking from the Company (except Goodrich, which is withholding 45% of the groundwater treatment costs that are being charged to them), nor has the court or the State of Kentucky proposed or established an allocation of the costs of remediation among the various participants. As of March 31, 2004, the aggregate amount withheld by Goodrich was approximately $900. Any monetary liabilities that the Company might incur with respect to the remediation of contamination at the manufacturing complex in Calvert City would likely be spread out over an extended period. While the Company has denied responsibility for any such remediation costs and is actively defending its position, the Company is not in a position at this time to state what effect, if any, these proceedings could have on the Company’s financial condition, results of operations, or cash flows.

In March and June 2002, the EPA’s National Enforcement Investigations Center, or NEIC, conducted an environmental investigation of the Company’s manufacturing complex in Calvert City consisting of the ethylene dichloride (EDC)/ vinyl chloride monomer (VCM), ethylene and chlor-alkali plants. In May 2003, the Company received a report prepared by the NEIC summarizing the results of that investigation. Among other things, the NEIC concluded that the requirements of several regulatory provisions had not been met. The Company has analyzed the NEIC report and has identified areas where it believes that erroneous factual or legal conclusions, or both, may have been drawn by the NEIC. The Company has held a number of discussions with the EPA concerning its conclusions. In February 2004, representatives of the EPA orally informed the Company that the agency proposed to assess monetary penalties against it and to require it to implement certain injunctive relief to ensure compliance. In addition, the EPA’s representatives informed the Company that the EPA, the NEIC and the State of Kentucky would conduct an inspection of its PVC facility in Calvert City, which is separate from the manufacturing complex and was not visited during the 2002 inspection. That additional inspection took place in late February 2004. The Company has not yet received a written report from the agencies regarding the actions that they propose to take in response to that visit. The EPA has recently submitted to the Company an information request under Section 114 of the Clean Air Act and has issued a Notice of Violation, both pertaining to the inspection of the EDC/ VCM plant. The Notice of Violation does not propose any specific penalties. The Company met with the EPA on June 8 and 9, 2004 and is engaged in settlement discussions. The EPA has also issued to the Company information requests under Section 3007 of RCRA and Section 114 of the Clean Air Act regarding the PVC plant inspection. It is likely that monetary penalties will be imposed, that capital expenditures for installation of environmental controls will be required, or that other relief will be sought, or all or some combination of the preceding, by either the EPA or the State of Kentucky as a result of the environmental investigations in Calvert City. In such case, the Company expects that, based on the EPA’s past practices, the amount of any monetary penalties would be reduced by a percentage of the expenditures that the Company would agree to make for certain “supplemental environmental projects.” The Company is not in a position at this time to state what effect, if any, these proceedings could have on the Company’s financial condition, results of operations, or cash flows. However, the Company has recorded an accrual for a probable loss related to monetary penalties. Although the ultimate amount of liability is not ascertainable, the Company believes that any amounts exceeding the recorded accruals should not materially affect the Company’s financial condition. It is possible, however, that the ultimate resolution of this matter could result in a material adverse effect on the Company’s results of operations for a particular reporting period.

F-9

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)


	*Legal Matters*

In connection with the purchase of the Company’s Calvert City facilities in 1997, it acquired 10 barges that it uses to transport chemicals on the Mississippi, Ohio and Illinois Rivers. In April 1999, the U.S. Coast Guard issued a forfeiture order permanently barring the use of the Company’s barges in coastwise trade due to an alleged violation of a federal statute regarding the citizenship of the purchaser. The Company appealed the forfeiture order with the Coast Guard and, in June 1999, it filed suit in the U.S. Court of Appeals for the D.C. Circuit seeking a stay of the order pending resolution of the Coast Guard appeal. The D.C. Circuit granted the stay and the Company is able to use the barges pending resolution of its appeal with the Coast Guard. In October 2003, the Coast Guard issued notice that it would not change its regulations. As a result, the Company is now seeking legislative relief through a private bill from the U.S. Congress, and the Coast Guard has stated that it will not oppose such efforts. The D.C. Circuit is holding further proceedings in abeyance pending the outcome of those efforts. The Company does not believe that the ultimate outcome of this matter will have a material adverse effect on the Company’s business, although there can be no assurance in this regard.

In October 2003, the Company filed suit against CITGO Petroleum Corporation in state court in Lake Charles, Louisiana, asserting that CITGO had failed to take sufficient hydrogen under two successive contracts pursuant to which the Company supplied and the Company supplies to CITGO hydrogen that the Company generates as a co-product in its ethylene plants in Lake Charles. In December 2003, CITGO responded with an answer and a counterclaim against the Company, asserting that CITGO had overpaid the Company for hydrogen due to a faulty sales meter and that the Company is obligated to reimburse CITGO for the overpayments. In January 2004, the Company filed a motion to compel arbitration of CITGO’s counterclaim and to stay all court proceedings relating to the counterclaim. In May 2004, the parties filed a joint motion with the court to provide for CITGO’s counterclaim to be resolved by arbitration. The Company’s claim against CITGO is approximately $8,100 plus $1,400 in interest, for a total of about $9,500. CITGO’s claim against the Company is approximately $7,800 plus $1,500 in interest, for a total of about $9,300. The parties held a mediation conference in April 2004 at which they agreed to conduct further discovery with a view towards holding another mediation conference to attempt to settle their disputes. The Company can offer no assurance that a settlement can be achieved, and it is vigorously pursuing its claim against CITGO and its defense of CITGO’s counterclaim. The Company has not recorded any liabilities related to these claims and counterclaims because the amount of loss, if any, cannot be reasonably estimated.

In December 2003, the Company was served with a petition as a defendant in a suit in state court in Denver, Colorado, brought by International Window – Colorado, Inc., or IWC, against several other parties. As the suit relates to the Company, IWC claims that the Company breached an exclusive license agreement by supplying window-profiles products into a restricted territory and that the Company improperly assisted a competitor of IWC, resulting in lost profits to IWC and a collapse of IWC’s business. IWC has claimed damages of approximately $5,400. The case is in the early discovery phase. The Company is vigorously defending its position in this case and is unable to determine the probability of loss related to this claim.

The Company is involved in various other legal proceedings in the ordinary course of business. In management’s opinion, none of these other proceedings will have a material adverse effect on the Company’s financial condition, results of operations and cash flows.

In 2003, the Company received and recognized in income $3,200 resulting from a legal settlement with a software vendor. In January 2004, the Company received and recognized in income $1,529 relating

F-10

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

to a lawsuit filed by Taita Chemical Corp. in which the Company prevailed. This amount was awarded as a reimbursement of attorney fees incurred by the Company.


9.	Segment Information

The Company operates in two principal business segments: Olefins and Vinyls. These segments are strategic business units that offer a variety of different products. The Company manages each segment separately as each business requires different technology and marketing strategies.



			Three Months Ended
			March 31,

			2003			2004

Sales to external customers
Olefins			$	241,066		$	259,876
Vinyls
	Fabricated finished products			66,480			73,523
	Resin, intermediate products and other			73,027			67,495

		Total vinyls		139,507			141,018

			$	380,573		$	400,894

Intersegment sales
Olefins			$	10,007		$	10,640
Vinyls				142			141

			$	10,149		$	10,781

Income (loss) from operations
Olefins			$	26,232		$	30,974
Vinyls				1,362			(3,261	)
Corporate and other				(1,741	)		(798	)

			$	25,853		$	26,915

Capital expenditures
Olefins			$	4,240		$	2,590
Vinyls				4,132			8,437
Corporate and other				—			18

			$	8,372		$	11,045

A reconciliation of total segment income from operations to consolidated income before taxes is as follows:



	Three Months Ended
	March 31,

	2003			2004

Income from operations	$	25,853		$	26,915
Interest expense		(8,855	)		(10,752	)
Other income (expense), net		3,511			(73	)

Income before taxes	$	20,509		$	16,090

F-11

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)


10.	Comprehensive Income Information



		Three Months Ended
		March 31,

		2003		2004


		(In thousands of
		dollars)
Net income		$	12,876	$	10,685
Other comprehensive income (loss):
	Change in foreign currency translation		552		(142	)

Comprehensive income		$	13,428	$	10,543


11.	Long-Term Debt

Indebtedness consists of the following:


		December 31,			March 31,
		2003			2004

8 3/4% Senior Notes due 2011		$	380,000		$	380,000
Term loan			119,400			119,100
Bank loan			27,000			27,000
Loan related to tax-exempt revenue bonds			10,889			10,889

	Total debt		537,289			536,989
Less current portion			(28,200	)		(28,200	)

	Long -term debt	$	509,089		$	508,789


12.	Guarantor Disclosures

The Company’s payment obligations under its 8 3/4% senior notes are fully and unconditionally guaranteed by each of its current and future domestic restricted subsidiaries (the “Guarantor Subsidiaries”). Each Guarantor Subsidiary is 100% owned by the parent company. These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following unaudited condensed consolidating financial information presents the financial condition, results of operations and cash flows of Westlake Chemical Corporation, the Guarantor Subsidiaries and the remaining subsidiaries that do not guarantee the notes (the “Non-Guarantor Subsidiaries”), together with consolidating adjustments necessary to present the Company’s results on a consolidated basis.

F-12

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information as of December 31, 2003


			Westlake
			Chemical		Guarantor		Non-Guarantor
			Corporation		Subsidiaries		Subsidiaries			Eliminations			Consolidated

Balance Sheet
Current assets
	Cash and cash equivalents		$	32,101	$	44	$	5,236		$	—		$	37,381
	Accounts receivable, net			486,745		176,583		7,566			(492,261	)		178,633
	Inventories, net			—		176,337		4,423			—			180,760
	Prepaid expenses and other current assets			118		6,949		927			—			7,994
	Deferred income taxes			8,079		—		—			—			8,079

		Total current assets		527,043		359,913		18,152			(492,261	)		412,847
Property, plant and equipment, net				—		873,240		6,448			—			879,688
Investment in subsidiaries				732,954		—		17,101			(732,954	)		17,101
Other assets, net				88,115		39,567		7,075			(74,280	)		60,477

		Total assets	$	1,348,112	$	1,272,720	$	48,776		$	(1,299,495	)	$	1,370,113

Current liabilities
	Accounts payable		$	10,403	$	82,874	$	127		$	—		$	93,404
	Accrued liabilities			30,106		59,113		4,324			(15	)		93,528
	Current portion of long-term debt			28,200		—		—			—			28,200

		Total current liabilities		68,709		141,987		4,451			(15	)		215,132
Long-term debt				498,200		577,426		(8	)		(566,529	)		509,089
Deferred income taxes				135,409		—		1,115			—			136,524
Other liabilities				11,680		29,985		—			—			41,665
Minority interest				22,100		—		—			—			22,100
Stockholders’ equity				612,014		523,322		43,218			(732,951	)		445,603

		Total liabilities and stockholders’ equity	$	1,348,112	$	1,272,720	$	48,776		$	(1,299,495	)	$	1,370,113

F-13

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information as of March 31, 2004


			Westlake
			Chemical		Guarantor		Non-Guarantor
			Corporation		Subsidiaries		Subsidiaries		Eliminations			Consolidated

Balance Sheet
Current assets
	Cash and cash equivalents		$	33,598	$	88	$	3,153	$	—		$	36,839
	Accounts receivable, net			471,679		173,161		7,251		(474,955	)		177,136
	Inventories, net			—		193,089		5,211		—			198,300
	Prepaid expenses and other current assets			10		5,909		1,179		—			7,098
	Deferred income taxes			8,079		—		—		—			8,079

		Total current assets		513,366		372,247		16,794		(474,955	)		427,452
Property, plant and equipment, net				—		862,760		7,958		—			870,718
Equity investment				732,964		15,300		17,633		(748,264	)		17,633
Other assets, net				87,666		38,774		6,882		(74,283	)		59,039

		Total assets	$	1,333,996	$	1,289,081	$	49,267	$	(1,297,502	)	$	1,374,842

Current liabilities
	Accounts payable		$	7,356	$	87,085	$	1	$	—		$	94,442
	Accrued liabilities			24,976		52,212		4,356		(173	)		81,371
	Current portion of long-term debt			28,200		—		—		—			28,200

		Total current liabilities		60,532		139,297		4,357		(173	)		204,013
Long-term debt				497,900		554,867		5,090		(549,068	)		508,789
Deferred income taxes				141,337		—		331		—			141,668
Other liabilities				11,680		30,446		—		—			42,126
Minority interest				22,100		—		—		—			22,100
Stockholders’ equity				600,447		564,471		39,489		(748,261	)		456,146

		Total liabilities and stockholders’ equity	$	1,333,996	$	1,289,081	$	49,267	$	(1,297,502	)	$	1,374,842

F-14

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Three Months Ended March 31, 2003


	Westlake
	Chemical			Guarantor			Non-Guarantor
	Corporation			Subsidiaries			Subsidiaries		Eliminations			Consolidated

Statement of Operations
Net sales	$	—		$	376,657		$	5,513	$	(1,597	)	$	380,573
Cost of sales		—			332,468			4,863		(1,597	)		335,734

		—			44,189			650		—			44,839
Selling, general and administrative expenses		1,609			16,886			491		—			18,986

Income (loss) from operations		(1,609	)		27,303			159		—			25,853
Interest expense		(8,581	)		(5,862	)		—		5,588			(8,855	)
Other income, net		5,520			3,042			537		(5,588	)		3,511

Income (loss) before income taxes		(4,670	)		24,483			696		—			20,509
Provision for (benefit from) income taxes		(1,649	)		9,263			19		—			7,633

Net income (loss)	$	(3,021	)	$	15,220		$	677	$	—		$	12,876

Condensed Consolidating Financial Information for the Three Months Ended March 31, 2004


	Westlake
	Chemical			Guarantor			Non-Guarantor
	Corporation			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Statement of Operations
Net sales	$	—		$	396,553		$	5,459		$	(1,118	)	$	400,894
Cost of sales		—			358,624			4,581			(1,118	)		362,087

		—			37,929			878			—			38,807
Selling, general and administrative expenses		332			10,896			664			—			11,892

Income (loss) from operations		(332	)		27,033			214			—			26,915
Interest expense		(10,526	)		(5,534	)		—			5,308			(10,752	)
Other income (expense), net		5,352			(761	)		644			(5,308	)		(73	)

Income (loss) before income taxes		(5,506	)		20,738			858			—			16,090
Provision for (benefit from) income taxes		(1,971	)		7,995			(619	)		—			5,405

Net income (loss)	$	(3,535	)	$	12,743		$	1,477		$	—		$	10,685

F-15

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Three Months Ended March 31, 2003


			Westlake
			Chemical			Guarantor			Non-Guarantor
			Corporation			Subsidiaries			Subsidiaries			Eliminations		Consolidated

Statement of Cash Flows
Net income (loss)			$	(3,021	)	$	15,220		$	677		$	—	$	12,876
Adjustments to reconcile net income (loss) to net cash provided by operating activities
	Depreciation and amortization			1,101			20,596			551			—		22,248
	Provision for bad debts			—			3,990			—			—		3,990
	Gain from disposition of fixed assets			—			(2,949	)		—			—		(2,949	)
	Deferred income taxes			(1,649	)		10,233			—			—		8,584
	Equity in income of unconsolidated subsidiary			—			—			(612	)		—		(612	)
	Net changes in working capital and other			44,178			(43,676	)		(38	)		—		464

		Net cash provided by operating activities		40,609			3,414			578			—		44,601
Additions to property, plant and equipment				—			(7,893	)		(479	)		—		(8,372	)
Proceeds from insurance claims				—			3,192			—			—		3,192

		Net cash used for investing activities		—			(4,701	)		(479	)		—		(5,180	)
Intercompany financing				(517	)		1,220			(703	)		—		—
Proceeds from borrowings				45,500			—			—			—		45,500
Repayments of borrowings				(78,000	)		—			—			—		(78,000	)

		Net cash provided by (used for) financing activities		(33,017	)		1,220			(703	)		—		(32,500	)
Net increase (decrease) in cash and cash equivalents				7,592			(67	)		(604	)		—		6,921
Cash and cash equivalents at beginning of period				7,949			424			2,750			—		11,123

Cash and cash equivalents at end of period			$	15,541		$	357		$	2,146		$	—	$	18,044

F-16

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Unaudited)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Three Months Ended March 31, 2004


			Westlake
			Chemical			Guarantor			Non-Guarantor
			Corporation			Subsidiaries			Subsidiaries			Eliminations		Consolidated

Statement of Cash Flows
Net income (loss)			$	(3,535	)	$	12,743		$	1,477		$	—	$	10,685
Adjustments to reconcile net income (loss) to net cash provided by operating activities
	Depreciation and amortization			552			20,356			542			—		21,450
	Provision for bad debts			—			(778	)		—			—		(778	)
	Gain from disposition of fixed assets			—			(231	)		—			—		(231	)
	Deferred income taxes			1,971			2,389			784			—		5,144
	Equity in income of unconsolidated subsidiary						—			(532	)		—		(532	)
	Net changes in working capital and other			(12,248	)		(11,432	)		(2,261	)		—		(25,941	)

		Net cash provided by (used for) operating activities		(13,260	)		23,047			10			—		9,797
Additions to property, plant and equipment				—			(8,952	)		(2,093	)				(11,045	)
Proceeds from insurance claims				—			1,006			—			—		1,006

		Net cash used for investing activities		—			(7,946	)		(2,093	)		—		(10,039	)
Intercompany financing				15,057			(15,057	)		—			—		—
Repayments of borrowings				(300	)		—			—			—		(300	)

		Net cash provided by (used for) financing activities		14,757			(15,057	)		—			—		(300	)
Net increase (decrease) in cash and cash equivalents				1,497			44			(2,083	)		—		(542	)
Cash and cash equivalents at beginning of period				32,101			44			5,236			—		37,381

Cash and cash equivalents at end of period			$	33,598		$	88		$	3,153		$	—	$	36,839

F-17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

of Westlake Chemical Corporation:

The Transactions described in Note 1 to the consolidated financial statements have not been consummated at May 24, 2004. When they have been consummated, we will be in a position to furnish the following report:

“In our opinion, the consolidated financial statements listed in the accompanying index appearing on page F-1 present fairly, in all material respects, the financial position of Westlake Chemical Corporation and its subsidiaries (the “Company”) at December 31, 2002 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). These 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.”

PRICEWATERHOUSECOOPERS LLP

Houston, Texas

May 24, 2004

F-18

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED BALANCE SHEETS



				December 31,

				2002			2003


				(In thousands of dollars,
				except par values
				and share amounts)
ASSETS
Current assets
	Cash and cash equivalents			$	11,123		$	37,381
	Accounts receivable, net				123,235			178,633
	Inventories, net				170,866			180,760
	Prepaid expenses and other current assets				14,297			7,994
	Deferred income taxes				17,052			8,079

		Total current assets			336,573			412,847
Property, plant and equipment, net					910,874			879,688
Equity investment					14,990			17,101
Other assets, net					46,808			60,477

		Total assets		$	1,309,245		$	1,370,113


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
	Accounts payable			$	68,207		$	93,404
	Accrued liabilities (includes $0 and $5,477 of related party notes in 2002 and 2003, respectively)				67,700			93,528
	Current portion of long-term debt				41,673			28,200

		Total current liabilities			177,580			215,132
Long-term debt					491,677			509,089
Deferred income taxes					139,293			136,524
Other liabilities (includes $6,041 and $226 of related party notes in 2002 and 2003, respectively)					50,076			41,665

			Total liabilities		858,626			902,410

Commitments and contingencies (Notes 7 and 15)

Minority interest					22,100			22,100
Stockholders’ equity
	Preferred stock, nonvoting, noncumulative, no par value; 120 shares issued and outstanding				12,000			12,000
	Common stock, $1.00 par value, 10,000 shares authorized; 1,115 shares issued and outstanding				1			1
	Additional paid-in capital				205,505			205,505
	Retained earnings				214,590			229,346
	Minimum pension liability, net of tax				(2,006	)		(1,547	)
	Cumulative translation adjustment				(1,571	)		298

		Total stockholders’ equity			428,519			445,603

		Total liabilities and stockholders’ equity		$	1,309,245		$	1,370,113

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

F-19

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS



	Year Ended December 31,

	2001			2002			2003


	(In thousands of dollars,
	except per share data)
Net sales	$	1,087,033		$	1,072,627		$	1,423,034
Cost of sales		1,116,954			997,368			1,301,082

		(29,921	)		75,259			121,952
Selling, general and administrative expenses		53,203			58,948			53,852
Impairment of long-lived assets		7,677			2,239			2,285

Income (loss) from operations		(90,801	)		14,072			65,815
Other income (expense)
Interest expense		(35,454	)		(35,044	)		(38,589	)
Debt retirement cost		—			—			(11,343	)
Other income, net		8,916			6,769			7,620

Income (loss) before income taxes		(117,339	)		(14,203	)		23,503
Provision for (benefit from) income taxes		(45,353	)		(7,141	)		8,747

Net income (loss)	$	(71,986	)	$	(7,062	)	$	14,756

Basic and diluted earnings (loss) per common share	$	(64,561	)	$	(6,334	)	$	13,234

Weighted average basic and diluted shares outstanding		1,115			1,115			1,115

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

F-20

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND

COMPREHENSIVE INCOME (LOSS)



													Accumulated Other
													Comprehensive Income
													(Loss)

				Common Stock									Minimum			Cumulative
								Additional					Pension			Foreign
		Preferred		Number of				Paid-In		Retained			Liability			Currency
		Stock		Shares		Amount		Capital		Earnings			Net of Tax			Translation			Total


		(In thousands of dollars, except for per share data)
Balances at December 31, 2000		$	12,000		1,115	$	1	$	199,505	$	293,638		$	—		$	(941	)	$	504,203
Net loss			—		—		—		—		(71,986	)		—			—			(71,986	)
Other comprehensive loss			—		—		—		—		—			(671	)		(794	)		(1,465	)

	Total comprehensive loss																			(73,451	)

Balances at December 31, 2001			12,000		1,115		1		199,505		221,652			(671	)		(1,735	)		430,752
Net loss			—		—		—		—		(7,062	)		—			—			(7,062	)
Other comprehensive loss			—		—		—		—		—			(1,335	)		164			(1,171	)

	Total comprehensive loss																			(8,233	)
Capital contribution from stockholders			—		—		—		6,000		—			—			—			6,000

Balances at December 31, 2002			12,000		1,115		1		205,505		214,590			(2,006	)		(1,571	)		428,519
Net income			—		—		—		—		14,756			—			—			14,756
Other comprehensive income			—		—		—		—		—			459			1,869			2,328

	Total comprehensive income																			17,084

Balances at December 31, 2003		$	12,000		1,115	$	1	$	205,505	$	229,346		$	(1,547	)	$	298		$	445,603

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

F-21

WESTLAKE CHEMICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS



			Year Ended December 31,

			2001			2002			2003


			(In thousands of dollars)
Cash flows from operating activities
Net income (loss)			$	(71,986	)	$	(7,062	)	$	14,756

Adjustments to reconcile net income (loss) to net cash provided by operating activities
	Depreciation and amortization			81,690			88,018			87,293
	Provision for doubtful accounts			3,817			10,379			1,872
	Amortization of debt issue costs			—			—			887
	Gain from disposition of fixed assets			—			(2,259	)		(2,903	)
	Write off of debt issuance cost			—			—			7,343
	Impairment of long-lived assets			7,677			2,239			2,285
	Deferred income taxes			(45,779	)		(4,716	)		7,112
	Equity in income of unconsolidated subsidiary			(1,138	)		(770	)		(1,510	)
Changes in operating assets and liabilities
	Accounts receivable			29,653			(54,196	)		(42,170	)
	Inventories			77,007			(42,639	)		(9,894	)
	Prepaid expenses and other current assets			491			(11,884	)		6,303
	Accounts payable			(29,915	)		14,475			25,197
	Accrued liabilities			(14,627	)		(1,650	)		25,828
	Other, net			(10,520	)		(11,261	)		(29,212	)

		Total adjustments		98,356			(14,264	)		78,431

		Net cash provided by (used for) operating activities		26,370			(21,326	)		93,187

Cash flows from investing activities
Additions to property, plant and equipment				(76,500	)		(43,587	)		(44,931	)
Proceeds from insurance claims				—			4,901			3,350

		Net cash used for investing activities		(76,500	)		(38,686	)		(41,581	)

Cash flows from financing activities
Repurchase of securitization receivables				—			—			(15,100	)
Proceeds from sale of subsidiary preferred stock				2,400			—			—
Equity contribution from affiliates				—			6,000			—
Proceeds from affiliate borrowings				—			3,388			32
Repayments of affiliate borrowings				—			(2,213	)		(370	)
Proceeds from borrowings				240,335			113,890			723,975
Repayments of borrowings				(125,039	)		(119,648	)		(719,783	)
Capitalized debt costs				—			(9,377	)		(14,102	)

		Net cash provided by (used for) financing activities		117,696			(7,960	)		(25,348	)

Net increase (decrease) in cash and cash equivalents				67,566			(67,972	)		26,258
Cash and cash equivalents at beginning of period				11,529			79,095			11,123

Cash and cash equivalents at end of the year			$	79,095		$	11,123		$	37,381

Supplemental cash flow information
Interest paid			$	39,320		$	32,077		$	20,849
Income taxes paid				2,723			95			566

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

F-22

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)


1.	Description of Business and Significant Accounting Policies

In the mergers, all of the currently outstanding common and preferred stock of WCC, GPPI and WPPI, as well as the currently outstanding preferred stock of a subsidiary of GPPI, will be exchanged for common stock of WCC. Additionally, WCC intends to execute a stock split of its common stock in conjunction with the mergers. The preferred shares of WPPI are classified as minority interest (see note 8). TTWF LP, a Delaware limited partnership, will become the sole stockholder of the restructured WCC, and members of the Chao family and related trusts and other entities, which are currently the stockholders of WCC, WPPI and GPPI, will own all of the partnership interests in TTWF LP.

The Company operates as an integrated petrochemical manufacturer and plastics fabricator. The Company’s customers range from large chemical processors and plastic fabricators to small construction contractors, municipalities and supply warehouses primarily throughout North America. The petrochemical industry is subject to price fluctuations and volatile feedstock pricing typical of a commodity-based industry, which may not be rapidly passed to all customers.


	*Principles of Consolidation*

The consolidated financial statements include the accounts of WCC and subsidiaries in which the Company directly or indirectly owns more than a 50% voting interest. Investments in entities in which the Company has a significant ownership interest, generally 20% to 50%, and in entities in which the Company has greater than 50% ownership, but due to contractual agreement or otherwise does not exercise control, are accounted for using the equity method. Intercompany balances and transactions are eliminated. The Company owns a 43% interest in a PVC joint venture in China. This joint venture is accounted for using the equity method.


	*Cash and Cash Equivalents*

Cash equivalents consist of highly liquid investments that are readily convertible into cash and have a maturity of three months or less at the date of acquisition.


	*Inventories*

Inventories primarily include product, material and supplies. Inventories are stated at lower of cost or market. Cost is determined using the first-in, first-out (“FIFO”) or average method.

F-23

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)


	*Property, Plant and Equipment*

Property, plant and equipment is carried at cost, net of accumulated depreciation. Cost includes expenditures for improvements and betterments which extend the useful lives of the assets and interest capitalized on significant capital projects. Capitalized interest was $1,607 and $398 in 2001 and 2002, respectively. No interest was capitalized in 2003. Repair and maintenance costs are charged to operations as incurred. Depreciation is provided by utilizing the straight-line method over the estimated useful lives of the assets as follows:


Classification	Years

Buildings and improvements		25
Plant and equipment		25
Other		3-7


	*Impairment of Long-Lived Assets*

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. Assets are considered to be impaired if the carrying amount of an asset exceeds the future undiscounted cash flows. The impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or estimated fair value less costs to sell. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) 144, Accounting for the Impairment or Disposal of Long-Lived Assets , which superseded SFAS 121. Adoption of SFAS 144 did not have a material effect on the consolidated results of operations, cash flows or financial position of the Company.


	*Impairment of Intangible Assets*

Effective January 1, 2002, the Company adopted SFAS 142, Goodwill and Other Intangible Assets. In accordance with this statement, goodwill and indefinite-lived intangible assets are no longer amortized, but are tested for impairment at least annually. Other intangible assets with finite lives are amortized over their estimated useful life and reviewed for impairment in accordance with the provisions of SFAS 144. The Company has no reported goodwill at December 31, 2002 and 2003. Adoption of SFAS 142 did not have a material effect on consolidated results of operations, cash flows or financial position of the Company.


	*Turnaround Costs*

Turnaround costs are deferred at the time of the turnaround and amortized (within depreciation and amortization) on a straight-line basis until the next planned turnaround, which ranges from 3-5 years. Deferred turnaround costs are presented as a component of other assets, net.


	*Exchanges*

The Company enters into inventory exchange transactions with third parties, which involve fungible commodities. These exchanges are settled in like-kind quantities and are valued at lower of cost or market. Cost is determined using the FIFO method. As of December 31, 2002 and 2003, the net exchange balances payable of $2,197 and $2,182, respectively, are included in accrued liabilities.

F-24

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)


	*Income Taxes*

The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets or liabilities are recorded based upon temporary differences between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities during the period. Valuation allowances are recorded against deferred tax assets when it is considered more likely than not that the deferred tax assets will not be realized.


	*Foreign Currency Translation*

Assets and liabilities of foreign subsidiaries are translated to U.S. dollars at the exchange rate as of the end of the year. Statement of operations items are translated at the average exchange rate for the year. The resulting translation adjustment is recorded as a separate component of stockholders’ equity.


	*Concentration of Credit Risk*

Financial instruments which potentially subject the Company to concentration of risk consist principally of trade receivables from customers engaged in manufacturing polyethylene products, polyvinyl chloride products and utilizing polyvinyl chloride pipe. The Company performs periodic credit evaluations of the customers’ financial condition and generally does not require collateral. The Company maintains reserves for potential losses.


	*Revenue Recognition*

Revenues associated with sales of chemical products are recorded when title and risk passes to the customer upon delivery under executed customer purchase orders or contracts. Title and risk generally passes to customers when goods are shipped to the customers. For export contracts, the title and risk passes to customers at the time specified by each contract. Provisions for discounts, rebates and returns are provided for in the same period as the related sales are recorded.


	*Earnings Per Share*

The Company applies the provisions of Financial Accounting Standards Board SFAS 128, Earnings Per Share (EPS) , which requires companies to present basic earnings per share and diluted earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of shares outstanding for the period. Diluted earnings per share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock.


	*Price Risk Management*

Commencing January 1, 2001, the Company adopted SFAS 133, Accounting for Derivative Instruments and Hedging Activities , as amended by SFAS 138. SFAS 133 requires that the Company recognize all derivative instruments on the balance sheet at fair value, and changes in the derivative’s fair value must be currently recognized in earnings or comprehensive income, depending on the designation of the derivative. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portion of the change in the fair value of the derivative is recorded in comprehensive income and is recognized in the income statement when the

F-25

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in earnings currently.

The Company does not enter into derivative instruments for trading purposes; however, the Company utilizes commodity price swaps to reduce price risks by entering into price swaps with counterparties and by purchasing or selling futures on established exchanges. The Company takes both fixed and variable positions, depending upon anticipated future physical purchases and sales of these commodities. Open positions are accounted for as hedges with gains or losses deferred until corresponding physical transactions occur or until corresponding positions expire or close. The fair value of derivative financial instruments is estimated using current market quotes. See note 9 for a summary of the carrying value and fair value of derivative instruments.

During 2001, 2002 and 2003, due to the short-term nature of the commitments and associated derivative instruments, the Company did not designate any of its derivative instruments as hedges under the provisions of SFAS 133. As such, gains and losses from changes in the fair value of all the derivative instruments used in 2001, 2002, and 2003 were included in earnings.


	*Environmental Costs*

Environmental costs relating to current operations are expensed or capitalized, as appropriate, depending on whether such costs provide future economic benefits. Remediation liabilities are recognized when the costs are considered probable and can be reasonably estimated. Measurement of liabilities is based on currently enacted laws and regulations, existing technology and undiscounted site-specific costs. Environmental liabilities in connection with properties that are sold or closed are realized upon such sale or closure, to the extent they are probable and estimable and not previously reserved. In assessing environmental liabilities, no set-off is made for potential insurance recoveries. Recognition of any joint and several liabilities is based upon the Company’s best estimate of its final pro rata share of the liability.


	*Transfers of Financial Assets*

The Company has historically accounted for the transfers of financial assets, including transfers to a qualified special purpose entity (“QSPE”), in accordance with SFAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement No. 125. In accordance with SFAS 140, the Company recognizes transfers of financial assets as sales provided that control has been relinquished. Control is deemed to be relinquished only when all of the following conditions have been met: (i) the assets have been isolated from the transferor, even in bankruptcy or other receivership (true sale opinions are required); (ii) the transferee has the right to pledge or exchange the assets received and (iii) the transferor has not maintained effective control over the transferred assets ( e.g. , a unilateral ability to repurchase a unique or specific asset). Additionally, the Company is also required to follow the accounting guidance under SFAS 140 and Emerging Issues Task Force (“EITF”) Topic No. D-14, Transactions Involving Special-Purpose Entities, to determine whether or not a special purpose entity (“SPE”) is required to be consolidated.

The Company’s transfer of financial assets relate to securitization transactions with a special purpose entity meeting the SFAS 140 definition of a QSPE. A QSPE can generally be described as an entity with significantly limited powers which are intended to limit it to passively holding financial assets and distributing cash flows based upon pre-set terms. Based upon the guidance in SFAS 140, the Company was not required to and did not consolidate such QSPE. Rather, the Company accounted for its involvement with QSPEs under a financial components approach in which the Company recognized only its retained interest in assets transferred to the QSPE. The Company accounted for such retained interests

F-26

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

at fair value with changes in fair value reported in earnings. In July 2003, the Company terminated its accounts receivable securitization facility (see note 3).


	*Other*

Amortization of debt issue costs is computed on a basis which approximates the interest method over the term of the related debt. Certain other assets (Note 6) are amortized over periods ranging from 3 to 15 years using the straight-line method.


	*Fair Value of Financial Instruments*

The carrying amounts reported in the balance sheet for cash and cash equivalents, receivables, and accounts payable approximate their fair value due to the short maturities of these instruments. The fair value of the Company’s debt as of December 31, 2003 differs from the carrying value due to the issuance of fixed rate senior notes in 2003. See note 9 for a summary of financial instruments where fair value differs from carrying amounts. The fair value of financial instruments is estimated using current market quotes from external sources.


	*Use of Estimates*

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, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.


	*Recent Accounting Pronouncements*

In August 2002, the FASB issued SFAS 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. This statement requires: (a) an existing legal obligation associated with the retirement of a tangible long-lived asset must be recognized as a liability when incurred and the amount of the liability be initially measured at fair value, (b) an entity must recognize subsequent changes in the liability that result from the passage of time and revisions in either the timing or amount of estimated cash flows and (c) upon initially recognizing a liability for an asset retirement obligation, an entity must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. As of December 31, 2003, the Company did not have legal or contractual obligations to close any of its facilities. The Company’s adoption of SFAS 143 on January 1, 2003 did not have a material impact on its consolidated results of operations, cash flows or financial position.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. SFAS 145 rescinds SFAS 4, Reporting Gains and Losses from Extinguishment of Debt. By rescinding SFAS 4, gains or losses from extinguishment of debt that do not meet the criteria of APB No. 30 should not be reported as an extraordinary item and should be reclassified to income from continuing operations in all periods presented. APB No. 30 states that extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of their occurrence. SFAS 145 is effective for fiscal years beginning after May 15, 2002. The Company’s adoption of SFAS 145 on January 1, 2003 did not have a material impact on its consolidated results of operations, cash flow or financial position. As discussed in Note 7, the Company completed a refinancing of substantially all of its outstanding long-term debt on July 31, 2003. As a result of the refinancing, the Company recognized $11,343 in non-operating expense in the third quarter of 2003.

F-27

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

In December 2003, the FASB issued Interpretation No. 46R, Consolidations of Variable Interest Entities, an interpretation of ARB No. 51. The Company is required to comply with the consolidation requirements of FIN No. 46R. The Company has determined that application of FIN No. 46R will not have a material impact on the consolidated results of operations, cash flows or financial position.

In March 2003, the FASB issued SFAS 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 149 was effective for contracts entered into, modified or designated as hedges after June 30, 2003. The Company adopted this standard as of July 1, 2003 and it did not have a significant effect on its consolidated results of operations, cash flows or financial position.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as equity and requires that those instruments be classified as liabilities in statements of financial position. This statement is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted SFAS 150 as of July 1, 2003 and it did not have a significant effect on the Company’s consolidated results of operations, cash flows or financial position.


2.	Accounts Receivable

Accounts receivable consist of the following at December 31, 2002 and 2003:


	2002			2003

Accounts receivable – trade	$	51,924		$	177,396
Accounts receivable – affiliates		80,623			1,264
Allowance for doubtful accounts		(13,382	)		(6,901	)

		119,165			171,759
Taxes receivable		1,235			1,129
Accounts receivable – other		2,835			5,745

Accounts receivable, net	$	123,235		$	178,633

Accounts receivable from affiliates decreased between December 31, 2002 and December 31, 2003 due to termination of the accounts receivables securitization facility in connection with the debt refinancing the Company completed on July 31, 2003. The termination of the accounts receivable securitization facility is discussed in note 3 and the debt refinancing is discussed in note 7.


3.	Westlake AR Corporation

In August 1997, the Company established Westlake AR Corporation (“WARC”), an unconsolidated subsidiary and QSPE. WARC’s activities were legally limited to purchasing the Company’s accounts receivable, selling undivided ownership interests in the accounts receivable and collecting and distributing proceeds related to the receivables. In July 2003, in conjunction with the refinancing of the Company’s debt (see note 7), the Company terminated its accounts receivable securitization facility by repurchasing all accounts receivable previously sold to its unconsolidated accounts receivable securitization subsidiary.

F-28

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

In October 1997, the Company entered into a Receivable Transfer Agreement to sell accounts receivable to WARC, which, under a separate agreement, agreed to sell up to $49,500 of revolving undivided ownership interests in those accounts receivable to an unrelated financial institution (the “receivable securitization”). As a result of certain of the Company’s subsidiaries merging into Delaware limited liability partnerships, an amended and restated Receivable Transfer Agreement was executed on February 12, 2001. As of December 31, 2002, the undivided ownership interest in the receivables was $15,100. At December 31, 2002, $91,059 had been sold under this agreement. These sales were reflected as reductions of trade accounts receivable. The Company retained a beneficial interest in those receivables. The fair value of the beneficial interests approximated the carrying value of the receivables. The amount of receivables sold fluctuated based upon the availability of the receivables and was directly affected by changing business volume and credit risks. The Company guaranteed certain amounts due by WARC under its agreement with the financial institution. The carrying amount of the Company’s exposure related to guarantees for WARC’s loan was $15,100 as of December 31, 2002.

The Company sold receivables to WARC at a discount of approximately 2% and received certain servicing fees from WARC. During the years ended December 31, 2001, 2002, and 2003, the Company recognized discount expense of $7,480, $5,632 and $3,600, respectively, and servicing fees of $6,251, $6,724, and $4,732, respectively, within other income, net in the statement of operations.

In addition to purchasing receivables from the Company and utilizing the Company to service and collect its receivables, as well as fund the expenditures, WARC had an agreement with the Company whereby WARC’s cash balance in excess of $250 was swept nightly into an account controlled by the Company. At December 31, 2002, the receivable from WARC, net of payable to WARC, was $25,456. This amount was included in receivables from affiliates on the balance sheet.


4.	Inventories

Inventories consist of the following at December 31, 2002 and 2003:


	2002			2003

Finished product	$	103,646		$	107,928
Feedstock, additives and chemicals		49,534			56,281
Materials and supplies		26,428			24,840

		179,608			189,049
Allowance for inventory obsolescence		(8,742	)		(8,289	)

Inventory, net	$	170,866		$	180,760

In December 2002, the Company entered into an agreement to sell 15 million pounds of finished product inventory during 2003 at a fixed price. In accordance with the agreement, the Company was required to repurchase this inventory during 2003 at market prices at the time of repurchase after certain agreed upon adjustments. Due to the terms of the agreement, cash received from the sale of the inventory was recorded as a liability, and adjusted to market value of the inventory to reflect repurchase obligations. As of December 31, 2002, the Company had $4,279 in inventory separately identified and restricted for use in accordance with this agreement.

F-29

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)


5.	Property, Plant and Equipment

Property, plant and equipment consists of the following at December 31, 2002 and 2003:


	2002			2003

Land	$	11,050		$	11,159
Buildings and improvements		71,568			75,126
Plant and equipment		1,294,615			1,315,163
Other		76,223			79,084

		1,453,456			1,480,532
Less: Accumulated depreciation		(561,507	)		(630,726	)

		891,949			849,806
Construction in progress		18,925			29,882

Property, plant and equipment, net	$	910,874		$	879,688

Depreciation expense on plant and equipment of $72,944, $74,040 and $73,868 is included in cost of sales in the consolidated statement of operations in 2001, 2002 and 2003, respectively.

During 2001, 2002 and 2003, the Company recognized write-downs of plant and equipment amounting to $7,677, $2,239 and $2,285, respectively. The write-downs have been reflected in the consolidated statements of operations. The write-downs represent the amount necessary to adjust the carrying value of certain plant and equipment to its net realizable value. Of the impairments in 2001, approximately $4,862 relates to assets for future expansion that were acquired but never placed in service. As the equipment was never placed in service, the equipment was included in the corporate segment. When the Company decided to sell the equipment, its value was adjusted to fair market value based on estimated sales value less commissions. An additional $2,025 was included in the corporate segment related to costs to implement a software system that did not function as intended. In the vinyls segment, $800 in impairment relates to equipment that was taken out of service and written down to its estimated sales value less commissions, as determined by third party valuation, and is being held for sale. The impairments in 2002 relate to the vinyls segment. During the fourth quarter of 2002, the Company announced plans to address the changing market conditions impacting the polyethylene pipe business and recognized an asset impairment charge of $1,783 to reflect the property and equipment associated with this business at its estimated fair value. In addition, $457 of obsolete tooling equipment was retired in 2002. The impairments in 2003 relate primarily to idled styrene and ethylene assets charged to the olefins segment of approximately $1,544, which were replaced. An additional $741 charged to the corporate segment relates to equipment held for sale that was adjusted to fair market value.

Property, plant and equipment included nonoperating assets of $4,061 and $2,369 at December 31, 2002 and 2003, respectively.

F-30

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)


6.	Other Assets

Other assets consist of the following:



		December 31, 2002							December 31, 2003
																Weighted
				Accumulated							Accumulated					Average
		Cost		Amortization			Net		Cost		Amortization			Net		Life

Intangible Assets:
	Technology Licenses	$	37,738	$	(17,458	)	$	20,280	$	42,618	$	(20,904	)	$	21,714		13
	Debt Issuance Cost		21,141		(11,172	)		9,989		14,102		(887	)		13,215		7
	Turnaround Costs		16,229		(10,648	)		5,581		23,409		(7,875	)		15,534		4
	Other		8,659		(6,664	)		1,995		5,191		(2,881	)		2,510		3

	Total Intangible Assets		83,767		(45,942	)		37,825		85,320		(32,347	)		52,973
Note receivable from affiliate			7,150		—			7,150		6,292		—			6,292
Other			1,833		—			1,833		1,212		—			1,212

Total Other Assets		$	92,750	$	(45,942	)	$	46,808	$	92,824	$	(32,347	)	$	60,477

Amortization expense on other assets of $8,746, $13,978 and $14,312 is included in the consolidated statement of operations in 2001, 2002 and 2003, respectively.

Scheduled amortization of these intangible assets for the next five years is as follows: $13,117, $10,746, $7,751, $6,203 and $5,764 in 2004, 2005, 2006, 2007 and 2008, respectively.


7.	Long-Term Debt

Indebtedness consists of the following at December 31, 2002 and 2003:


	2002			2003

8 3/4% Senior Notes due 2011	$	—		$	380,000
Revolving line of credit – maximum aggregate availability of $200,000 and $291,610 at December 31, 2003 and 2002, respectively		172,500			—
Term loan		113,957			119,400
Series A notes, interest at 9.50%		58,750			—
Series B notes, interest at 9.50%		150,000			—
Bank loan		27,000			27,000
Loan related to tax-exempt revenue bonds		10,889			10,889
Other		254			—

		533,350			537,289
Less: Current portion of long-term debt		(41,673	)		(28,200	)

	$	491,677		$	509,089

On July 31, 2003, the Company completed a refinancing of substantially all of its outstanding long-term debt. The Company used net proceeds from the refinancing of $506,900 to:

• repay in full all outstanding amounts under its then-existing revolving credit facility, term loan and the Series A and Series B notes, including accrued and unpaid interest, fees and a $4,000 make-whole premium to the noteholders; and

• provide $2,428 in cash collateral for outstanding letter of credit obligations of $2,208.

F-31

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

In conjunction with the refinancing, the Company terminated its accounts receivable securitization facility by repurchasing all accounts receivable previously sold to its unconsolidated accounts receivables securitization subsidiary. The net accounts receivable repurchased totaled $15,100. No gain or loss was recognized as a result of the accounts receivable repurchase. The Company also obtained a $12,395 letter of credit to secure its obligations under a letter of credit reimbursement agreement related to outstanding tax-exempt revenue bonds in the amount of $10,889. As a result of the refinancing, the Company recognized $11,343 in non-operating expense in the third quarter of 2003 consisting of the $4,000 make-whole premium and a write-off of $7,343 in previously capitalized debt issuance expenses.

The refinancing consisted of:

• $380,000 in aggregate principal amount of 8 3/4% senior notes due 2011;

• $120,000 senior collateralized term loan due in 2010; and

• $21,000 in borrowings under a new $200,000 senior collateralized working capital revolving credit facility due in 2007.

The Company incurred approximately $14,102 in costs associated with the refinancing that were capitalized and that will be amortized over the term of the new debt.

The 8 3/4% senior notes are unsecured. There is no sinking fund and no scheduled amortization of the notes prior to maturity. The notes are subject to redemption, and holders may require the Company to repurchase the notes upon a change of control. All domestic restricted subsidiaries are guarantors of the senior notes. See note 17.

The term loan bears interest at either LIBOR plus 3.75% or prime rate plus 2.75%. Quarterly principal payments of $300 are due on the term loan beginning on September 30, 2003, with the balance due in four equal quarterly installments in the seventh year of the loan. Mandatory prepayments are due on the term loan with the proceeds of asset sales and casualty events subject, in some instances, to reinvestment provisions. Beginning in 2004, the term loan will require prepayment with 50% of excess cash flow as determined under the term loan agreement. The term loan is collateralized by the Company’s Lake Charles and Calvert City facilities and some related intangible assets.

The revolving credit facility bears interest at either LIBOR plus 2.25% or prime rate plus 0.25%, subject to a grid pricing adjustment based on a fixed charge coverage ratio after the first year and subject to a 0.5% unused line fee. The revolving credit facility is also subject to a termination fee if terminated during the first two years. The revolving credit facility is collateralized by accounts receivable and contract rights, inventory, chattel paper, instruments, documents, deposit accounts and related intangible assets. The revolving credit facility matures in 2007.

The agreements governing the 8 3/4% senior notes, the term loan and the revolving credit facility each contain customary covenants and events of default. Accordingly, these agreements impose significant operating and financial restrictions on the Company. These restrictions, among other things, provide limitations on incurrence of additional indebtedness, the payment of dividends, significant investments and sales of assets. These limitations are subject to a number of important qualifications and exceptions. The 8 3/4% senior notes indenture and the term loan do not allow dividend distributions unless, after giving pro forma effect to the distribution, the Company’s fixed charge coverage ratio is at least 2.0 and such payment, together with the aggregate amount of all other restricted payments since July 31, 2003 is less than the sum of 50% of the Company’s consolidated net income for the period from the fourth quarter of 2003 to the end of the most recent quarter for which financial statements have been delivered (the percentage will be increased to 100% after the 8 3/4% senior notes are rated investment grade), plus 100% of net cash proceeds received after July 31, 2003 as a contribution to the Company’s common equity capital

F-32

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

or from the issuance or sale of equity securities, plus $25,000. The revolving credit facility also restricts dividend payments unless, after giving effect to such payment, the availability equals or exceeds $100,000. None of the agreements require the Company to maintain specified financial ratios, except that the Company’s revolving credit facility requires the Company to maintain a minimum fixed charge coverage ratio when availability falls below a specified minimum level.

In December 1997, the Company entered into a loan agreement with a public trust established for public purposes for the benefit of Parish of Calcasieu, Louisiana. The public trust issued $10,889 in tax-exempt waste disposal revenue bonds (revenue bonds) in order to finance the Company’s construction of waste disposal facilities for its new ethylene plant. The revenue bonds expire in December 2027 and are subject to redemption and mandatory tender for purchase prior to maturity under certain conditions. Interest on the revenue bonds accrues at a rate determined by a remarketing agent and is payable quarterly. The interest rate on the revenue bonds at December 31, 2002 and 2003 was 1.70% and 1.18%, respectively. In conjunction with the loan agreement, the Company entered into a letter of credit reimbursement agreement and obtained a letter of credit from a bank in the amount of $11,268. The letter of credit was replaced as part of the 2003 refinancing, and will expire in March 2005.

On December 8, 2001, the Company entered into a $27,000 loan with a bank. The loan has been renewed annually and will mature on December 31, 2004. The loan bears interest at LIBOR plus 0.6%. Interest is payable on the last day of each applicable interest period or quarterly if the interest period is longer than three months.

The Company entered into a $300,000 revolving credit facility in 1996 with a syndicate of banks. As discussed below, the agreement was amended in June 2002. Prior to the amendment, at the Company’s option, interest with respect to this revolving credit agreement accrued at a rate equal to the adjusted Eurodollar rate, or the higher of the adjusted federal funds rate or adjusted prime rate, as defined, and was payable at the end of each interest period or quarterly. The weighted-average interest rate under the revolving credit facility, as of December 31, 2002, was 5.44%. As discussed above, this revolving credit facility was refinanced in July 2003.

In March 1998, the Company entered into a $150,000 term loan with a group of banks. As discussed below, the agreement was amended in June 2002. Prior to the amendment, at the Company’s option, interest on the debt accrued at the adjusted Eurodollar rate or at a rate equal to the higher of the adjusted federal funds rate or prime rate, as defined, and was payable at the end of each interest period or quarterly. The outstanding term loan as of December 31, 2002 was $113,957. The weighted-average interest rate as of December 31, 2002 was 5.62%. As discussed above, this term loan was refinanced in July 2003.

The Company issued $85,000 of senior notes (Series A Notes) to a group of private investors in 1994. In accordance with the original terms the Series A Notes were due in four equal annual installments beginning February 14, 2001. Interest accrued at the fixed rate of 8.51% and was payable semi-annually. As discussed above, these notes were repaid in connection with the refinancing in July 2003.

The Company issued $150,000 of senior notes (Series B Notes) to a group of private investors in 1995. Interest accrued at the fixed rate of 7.51% and was payable semi-annually. In accordance with the original terms, principal was due in six equal semiannual payments beginning November 30, 2004. As discussed above, these notes were repaid in connection with the refinancing in July 2003.

The Company obtained a series of waivers for noncompliance with certain of the covenants related to its $300,000 revolving credit facility, $150,000 term loan, $11,268 letter of credit reimbursement agreement, the Series A Notes agreement and the Series B Notes agreement. As part of the waiver agreement, the Company agreed to pay interest monthly, and postponed the repayment of all principal

F-33

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

maturing on long term debt pending the completion of negotiations with the lenders. On June 26, 2002, the Company and the lenders under these agreements formalized amended and restated agreements. The new amendments resulted in the Company providing security in most of its assets to its lenders, with a relaxation of financial covenants and an increase in interest rates and limitations on capital spending. As part of and through the date of these amendments, the Company obtained waivers of all known covenant noncompliance with the previous agreements.

The amended revolver, which was refinanced in July 2003, was divided into three tranches: a $7,274 Tranche A1 priced at prime plus 2.25%, a $126,114 Tranche A2 priced at LIBOR plus 3.25% or prime plus 2.25% and a $158,223 Tranche B priced at LIBOR plus 3.25% plus 0.5% utilization fee or prime plus 2.25% plus 0.5% utilization fee. Amounts drawn were attributed first to Tranche B to the extent of its availability, then to Tranche A2 and then to Tranche A1. The amended term loan of $113,957 was priced at LIBOR plus 3.75% or prime plus 2.75%. Both the Series A Notes and Series B Notes were repriced to 9.50% with interest payable quarterly. All of the loan agreements were amended to mature on March 31, 2005. As of December 31, 2002, the balance outstanding for Tranches A1, A2 and B were $0, $16,485 and $156,015, respectively.

On June 26, 2002, at the closing of the amendment, the Company paid retroactive interest to July 1, 2001 of $5,116, fees of $9,574 and accrued interest of $1,775. Costs paid to the creditors at closing and fees paid to third parties in connection with the amendment of $9,377 were capitalized and are amortized over the term of the amended agreements. The Company also paid at closing a total of $20,000 consisting of a permanent pay down of $8,390 on the revolver, principal repayment of $6,043 on its term loan, principal repayment of $5,000 on its Series A Notes, and deposited $567 into a restricted cash account as collateral under the letter of credit reimbursement agreement.

The weighted average interest rate on the borrowings at December 31, 2002 and 2003 was 6.63% and 7.07%, respectively.

The aggregate maturities of long-term debt are as follows:


2004	$	28,200
2005		1,200
2006		1,200
2007		1,200
2008		1,200
Thereafter		504,289

	$	537,289


8.	Stockholders’ Equity

During 2004, as part of the reorganization described in note 1, all of the common stock and preferred stock of WCC, GPPI and WPPI was exchanged for common stock of the Company. Prior to the reorganization, WPPI had preferred stock outstanding which was owned by third parties outside the consolidated group, and which has been presented in these consolidated financial statements as minority interest.

Series A Non-Voting Preferred Stock

The Company currently has outstanding to affiliates Series A non-voting preferred stock. Holders of the preferred stock are entitled to receive such dividends as may be declared by the board of directors of

F-34

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

the Company (although none have ever been declared). The preferred stock has a liquidation value over the common stock of $100,000 per share plus all declared but unpaid dividends and is redeemable at the option of the Company at $100,000 per share plus declared and unpaid dividends. The preferred stock is not convertible into common stock.


	*Common Stock*

After the mergers described in note 1, each share of the newly issued common stock entitles the holder to one vote on all matters on which holders are permitted to vote, including the election of directors. There are no cumulative voting rights. Accordingly, holders of a majority of the total votes entitled to vote in an election of directors will be able to elect all of the directors standing for election. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of the common stock will share equally on a per share basis any dividends when, as and if declared by the board of directors out of funds legally available for that purpose. If the Company liquidated, dissolved or wound up, the holders of the Company’s common stock will be entitled to a ratable share of any distribution to stockholders, after satisfaction of all the Company’s liabilities and of the prior rights of any outstanding class of the Company’s preferred stock. The Company’s common stock has no preemptive or conversion rights or other subscription rights. There are no redemption of sinking fund provisions applicable to our common stock. All outstanding shares are fully paid and nonassessable.


	*Preferred Stock*

In connection with the mergers described in note 1, the Company’s charter will be amended to authorize the issuance of shares of preferred stock. The Company’s board of directors has the authority, without shareholder approval, to issue shares from time to time in one or more series, and to fix the number of shares and terms of each such series. The board may determine the designations and other terms of each series including dividend rates, whether dividends will be cumulative or non-cumulative, redemption rights, liquidation rights, sinking fund provisions, conversion or exchange rights and voting rights.


9.	Derivative Commodity Instruments and Fair Value of Financial Instruments

The Company uses derivative instruments to reduce price volatility risk on commodities, primarily natural gas and ethane. Generally, the Company’s strategy is to hedge its exposure to price variance by locking in prices for future purchases and sales. Usually, such derivatives are for terms of less than one year. In 2001, 2002 and 2003, due to the short-term nature of the commitments and associated derivative instruments, the Company did not designate any of its derivative instruments as hedges under the provisions of SFAS 133. As such, gains and losses from changes in the fair value of all the derivative instruments used in 2001, 2002, and 2003 were included in earnings.

The exposure on commodity derivatives used for price risk management includes the risk that the counterparty will not pay if the market declines below the established fixed price. In such case, the Company would lose the benefit of the derivative differential on the volume of the commodities covered. In any case, the Company would continue to receive the market price on the actual volume hedged. The Company also bears the risk that it could lose the benefit of market improvements over the fixed derivative price for the term and volume of the derivative securities (as such improvements would accrue to the benefit of the counterparty).

The Company had a net gain of $36 in connection with commodity derivatives and inventory repurchase obligations for the year ended December 31, 2003 compared to a net loss of $800 and $737 for the years ended December 31, 2001 and 2002. Risk management asset balances of $185 and $3,040 were

F-35

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

included in accounts receivable, and risk management liability balances of $326 and $-0- were included in accrued liabilities in the Company’s balance sheets as of December 31, 2002 and December 31, 2003, respectively.

At December 31, 2003, the fair value of the natural gas futures and propane forward contracts were obtained from a third party. The fair and carrying value of our derivative commodity instruments and financial instruments is summarized below:



	December 31, 2002						December 31, 2003

	Carrying			Fair			Carrying		Fair
	Value			Value			Value		Value

Commodity Instruments:
Natural gas futures contracts	$	(326	)	$	(326	)	$	2,675	$	2,675
Natural gas options contracts		—			—			122		122
Propane forward purchase/swap contracts		185			185			243		243
Financial Instruments:
8 3/4% senior notes due 2011	$	—		$	—		$	380,000	$	416,100


10.	Income Taxes

The components of income (loss) before taxes and minority interest for the years ended December 31, 2001, 2002, 2003 are as follows:


	2001			2002			2003

Domestic	$	(120,782	)	$	(17,191	)	$	19,744
Foreign		3,443			2,988			3,759

	$	(117,339	)	$	(14,203	)	$	23,503

The Company’s income tax provision for the years ended December 31, 2001, 2002 and 2003 consists of the following:


	2001			2002			2003

Current
Federal	$	—		$	—		$	642
State		426			(2,425	)		163
Foreign		—			—			830

		426			(2,425	)		1,635

Deferred
Federal		(43,491	)		(5,385	)		6,602
State		(2,288	)		(283	)		347
Foreign		—			952			163

		(45,779	)		(4,716	)		7,112

Total provision (benefit)	$	(45,353	)	$	(7,141	)	$	8,747

F-36

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

An analysis of the Company’s effective income tax rate for the years ended December 31, 2001, 2002 and 2003, follows:


	2001			2002			2003

Provision (benefit) for federal income tax at statutory rate	$	(41,069	)	$	(4,971	)	$	8,226
State income tax provision (benefit) net of federal income tax effect		(1,525	)		(185	)		306
Foreign tax		—			952			993
Foreign earnings		(1,150	)		(1,105	)		(1,391	)
Environmental assessment		—			596			—
State tax payments		(808	)		—			—
Settlement of outstanding risk obligations		—			(2,206	)		—
Other, net		(801	)		(222	)		613

	$	(45,353	)	$	(7,141	)	$	8,747

The tax effects of the principal temporary differences between financial reporting and income tax reporting at December 31, 2002 and 2003, are as follows:


	2002			2003

AMT credit carryforward	$	28,537		$	28,537
Net operating loss carryforward		95,395			89,065
Investments		1,125			1,125
Accruals		8,007			7,431
Allowance for doubtful accounts		6,365			2,617
Inventory		3,331			—
Other		—			3,008

Deferred taxes assets – total		142,760			131,783
Property, plant and equipment		(262,185	)		(258,764	)
Inventory		—			(1,464	)
Other		(2,816	)		—

Deferred tax liabilities – total		(265,001	)		(260,228	)

Total net deferred tax liabilities	$	(122,241	)	$	(128,445	)

At December 31, 2003, the Company had federal and state tax net operating loss carryforwards of approximately $259,893 and $377,594, respectively, which will expire in varying amounts between 2010 and 2021 and are subject to certain limitations on an annual basis. Management believes the Company will realize the full benefit of the net operating loss carryforwards before they expire. The Company has an AMT carryforward of $28,537 which does not expire. Applicable U.S. deferred income taxes and related foreign dividend withholding taxes have not been provided on approximately $2,558 of undistributed earnings and profits of the Company’s foreign corporate joint venture. The Company considers such earnings to be permanently reinvested outside the United States. It is not practicable to estimate the amount of deferred income taxes associated with these unremitted earnings.

F-37

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)


11.	Employee Benefits

The Company has a defined contribution savings plan covering all regular full-time and part-time employees whereby eligible employees may elect to contribute up to 15% of their annual compensation. The Company matches the first 6% of such employee contributions at rates which vary by subsidiary. The Company may, at its discretion, make an additional contribution in an amount as the Board of Directors may determine. For the years ended December 31, 2001, 2002 and 2003, the Company charged approximately $1,838, $1,905 and $1,875, respectively, to expense for these contributions.

Further, within the defined contribution savings plan the Company also makes an annual retirement contribution to substantially all employees of one subsidiary and certain employees of another subsidiary who have completed one year of service. The Company’s contributions to the plan are determined as a percentage of employees’ base and overtime pay. For the years ended December 31, 2001, 2002 and 2003, the Company charged approximately $2,021, $1,908 and $2,002, respectively, to expense for these contributions.

The Company has noncontributory defined benefit pension plans which cover substantially all salaried and all wage employees of one subsidiary. Benefits for salaried employees under these plans are based primarily on years of service and employees’ pay near retirement. Benefits for wage employees are based upon years of service and a fixed amount as periodically adjusted. The Company recognizes the years of service prior to the Company’s acquisition of the facilities for purposes of determining vesting, eligibility and benefit levels for certain employees of the subsidiary and for determining vesting and eligibility for certain other employees of the subsidiary. The measurement date for these plans is December 31. The Company’s funding policy is consistent with the funding requirements of federal law and regulations. In 2004, the Company expects to contribute $1,560 to these plans. The accumulated benefit obligation was $16,242, $17,564 and $22,100 at December 31, 2001, 2002 and 2003, respectively.

The Company provides post-retirement healthcare benefits to the employees of three subsidiaries who meet certain minimum age and service requirements. The Company has the right to modify or terminate some of these benefits.



	Pension Benefits									Other Benefits

	2001			2002			2003			2001			2002			2003

Change in benefit obligation
Benefit obligation, beginning of year	$	19,386		$	20,492		$	21,689		$	18,071		$	18,155		$	21,396
Service cost		845			807			830			411			403			401
Interest cost		1,299			1,385			1,529			467			446			398
Actuarial gain (loss)		(618	)		(424	)		3,937			(118	)		648			(2,456	)
Benefits paid		(420	)		(571	)		(643	)		(676	)		(569	)		(669	)
Plan amendment		—			—			—			—			2,313			—

Benefit obligation, end of year		20,492			21,689			27,342			18,155			21,396			19,070

Change in plan assets
Fair value of plan assets beginning of year		12,461			12,070			13,074			—			—			—
Actual return		(742	)		(550	)		2,387			—			—			—
Employer contribution		771			2,125			2,415			676			569			669
Benefits paid		(420	)		(571	)		(643	)		(676	)		(569	)		(669	)

Fair value of plan assets end of year		12,070			13,074			17,233			—			—			—

F-38

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)



	Pension Benefits									Other Benefits

	2001			2002			2003			2001			2002			2003

Reconciliation of funded status
Funded status		(8,422	)		(8,615	)		(10,109	)		(18,155	)		(21,396	)		(19,070	)
Unrecognized net actuarial loss		1,562			2,729			5,403			6,221			6,408			3,751
Unamortized transition obligation		—			—			—			1,139			1,025			911
Unamortized prior period service cost		876			549			223			379			2,426			2,160

Net amount recognized	$	(5,984	)	$	(5,337	)	$	(4,483	)	$	(10,416	)	$	(11,537	)	$	(12,248	)

Amount recognized in the statement of financial position consist of
Accrued benefit liability	$	(7,326	)	$	(7,790	)	$	(7,161	)	$	(10,416	)	$	(11,537	)	$	(12,248	)
Intangible asset		671			447			223			—			—			—
Accumulated other comprehensive loss before tax		671			2,006			2,455			—			—			—

	$	(5,984	)	$	(5,337	)	$	(4,483	)	$	(10,416	)	$	(11,537	)	$	(12,248	)

Components of Net Periodic Benefit Cost
Service cost	$	845		$	807		$	830		$	411		$	403		$	401
Interest cost		1,299			1,385			1,529			467			446			398
Expected return on plan assets		(1,126	)		(1,121	)		(1,258	)		—			—			—
Net amortization		330			406			459			665			840			581

Net period benefit cost	$	1,348		$	1,477		$	1,560		$	1,543		$	1,689		$	1,380

Weighted-average assumptions as of year end
Discount rate		7.0	%		7.0	%		6.0	%		5.5	%		5.5	%		5.0	%
Expected return on plan assets		9.0	%		9.0	%		8.0	%		—			—			—
Rate of compensation increase		4.5	%		4.5	%		5.0	%		—			—			—

The Company elected to reduce the return on assets assumption for the defined benefit pension plans from 9.0% to 8.0% effective January 1, 2004. This decision is based on input from our third-party, independent actuary and the pension fund trustee, projecting near-term returns of 12% to 14% from equities, and 3% to 4% from fixed income investments.



	Pension Benefit –									Pension Benefit –
	Salaried									Wage

	2001			2002			2003			2001			2002			2003

Asset Allocation for years ended:
Cash		1	%		1	%		1	%		1	%		2	%		1	%
Fixed income		45	%		48	%		38	%		45	%		44	%		38	%
Equity		54	%		51	%		61	%		54	%		54	%		61	%

		100	%		100	%		100	%		100	%		100	%		100	%

The Company adopted a “balanced” asset allocation model (investment policy) of 50% equities and 50% fixed income in response to the market downturn during 2001 and 2002. As the market improved

F-39

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

during 2003, the pension fund investment policy allowed the pension fund trustee a 10% discretionary range in the asset allocation model, which allows the trustee to shift to approximately 60% equities and 40% fixed income. The Company expects the 50/50 investment policy to remain for the near future.


	*Westlake Chemical Corporation 2004 Omnibus Incentive Plan*

In connection with the Transactions described in note 1, the board of directors of the Company will adopt, and the stockholders will approve, the Westlake Chemical Corporation 2004 Omnibus Incentive Plan. The plan will be effective upon the closing of a planned initial public offering of the Company’s common stock.

Under the plan, all employees of the Company, as well as individuals who have agreed to become the Company’s employees within six months of the date of grant, will be eligible for awards. Shares of common stock may be issued as authorized in the 2004 Omnibus Incentive Plan. At the discretion of the administrator of the plan, employees and non-employee directors may be granted awards in the form of stock options, stock appreciation rights, stock awards or cash awards (any of which may be a performance award). Awards under the plan may be granted singly, in combination, or in tandem.


12.	Related Party Transactions

The Company leases office space for management and administrative services from an affiliated party. For the years ending December 31, 2001, 2002 and 2003, the Company incurred and paid lease payments of approximately $1,671, $1,512 and $1,409 respectively.

The Company utilized Peerless Agency, Inc. (“Peerless”), an affiliated party, as an insurance agent and paid Peerless $520, $1,026, and $93 for the years ended December 31, 2001, 2002 and 2003, respectively. The arrangement was terminated in 2003.

In March 2000, the Company loaned an affiliated party $2,000. Principal and interest payments will be repaid in twelve semi-annual installments which commence in January 2005. Interest on the debt accrues at LIBOR plus 2%. Previously, the Company loaned this same affiliate $5,150. No interest or principal payments were received from the original loan from 1997 through 2001. Principal is scheduled to be repaid in twelve semi-annual installments commencing April 2004. Interest payments of $1,350 and $847 were received in 2002 and 2003, respectively, and included in “other income, net” in the consolidated statement of operations. The loan amounts are included in other assets, net in the accompanying consolidated balance sheet.

During the years ended December 31, 2001, 2002 and 2003, the Company and subsidiaries charged affiliates $2,627, $2,204, and $1,389, respectively, for management services incurred on their behalf. The amounts are included in other income, net in the accompanying consolidated statements of operations. Amounts due for such services and other expenses of $1,056 and $926 as of December 31, 2002 and 2003, respectively, are included in accounts receivable in the accompanying consolidated balance sheets. During the year ended December 31, 2001, the Company purchased product for resale from an affiliate of $2,639.

The Company issued various promissory notes to Gulf United Investments Corporation, an affiliate of the Company, totaling $5,391. Interest on the notes accrues at the prime rate. A principal amount equal to $5,165 matures in 2004, with the remainder maturing in 2005.

The Company issued $312 of promissory notes to Westlake Industries, Inc., an affiliate of the Company. Interest on the notes accrues at the prime rate, and the notes mature in 2004.

In 2000, Westlake International Investments Corporation, one of the Company’s non-guarantor subsidiaries, issued a $2,000 promissory note to Gulf United Investments Corporation, one of the

F-40

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Company’s affiliates. In 2002, accrued interest was added to the principal and a new $2,266 promissory note was issued with a maturity date of August 2004. Interest on this note accrues at the prime rate and is due at maturity. As of December 31, 2002, the principal balance of the note was $253. The balance of the note was paid off on December 4, 2003.

In 2002, a predecessor of Geismar Vinyls Company, LP issued a $117 promissory note to Gulf United Investments Corporation. The loan accrued interest at the prime rate and was repaid in full in July 2003.


13.	Acquisition

In December 2002, the Company acquired an idled vinyls facility in Geismar, Louisiana for $5,000 in cash. In addition, contingent payments equal to a percentage of EBITDA during the first two years of operations, not to exceed $4,000, are to be paid by the Company. As of December 31, 2002, the acquired assets are consolidated in the accompanying financial statements. The EDC portion of the Geismar facility began production in the fourth quarter of 2003. The EDC is used internally for production of VCM at Calvert City. The Company plans to operate the remainder of the Geismar facility when market conditions support utilization of the additional capacity.

14. Other Income, net

Other income, net consists of the following for the years ended December 31, 2001, 2002 and 2003:


	2001			2002			2003

Management services	$	2,627		$	2,204		$	1,389
Interest income		1,755			1,978			1,123
Insurance proceeds, net		2,878			1,965			2,961
WARC servicing fees, net of discount expense		(1,229	)		1,092			772
Equity in income of unconsolidated subsidiary		1,138			770			1,510
WARC interest		481			244			97
Derivative gain (loss)		(800	)		(737	)		36
Other		2,066			(747	)		(268	)

	$	8,916		$	6,769		$	7,620


15.	Commitments and Contingencies


	*Environmental Matters*

F-41

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

not revealed any contamination caused by the Company’s operations that would likely require the Company to incur material long-term remediation efforts and associated liabilities.

Calvert City. In connection with the 1990 and 1997 acquisitions of the Goodrich Corporation chemical manufacturing complex in Calvert City, Goodrich agreed to indemnify the Company for any liabilities related to pre-existing contamination at the site. In addition, the Company agreed to indemnify Goodrich for contamination attributable to the ownership, use or operation of the plant after the closing date. The soil and groundwater at the manufacturing complex, which does not include the PVC facility in Calvert City, had been extensively contaminated by Goodrich’s operations. In 1993, the Geon Corporation was spun off from Goodrich, and Geon assumed the responsibility to operate the site-wide remediation system and the indemnification obligations for any liabilities arising from pre-existing contamination at the site. Subsequently, Geon’s name was changed to PolyOne. Part of the former Goodrich facility, which the Company did not acquire and on which it does not operate and that it believes is still owned by either Goodrich or PolyOne, is listed on the National Priorities List under the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA. The investigation and remediation of contamination at the Company’s manufacturing complex is currently being coordinated by PolyOne.

F-42

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

acquired Pond 4 from Goodrich in 1997 as part of the acquisition of other facilities. Under the contract, the Company has the right to require Goodrich to retake title to Pond 4 in the event that ownership of Pond 4 requires the Company to be added to Goodrich’s permit associated with the facility clean-up issued under RCRA. The Company believes that the letter sent by the State of Kentucky triggers the right to tender ownership of Pond 4 back to Goodrich. The Company has notified Goodrich of its obligation to accept ownership and has tendered title to Pond 4 back to Goodrich. The Company has also filed an appeal with the State of Kentucky regarding its letter. Goodrich and PolyOne have both filed motions to intervene in this appeal.

In March and June 2002, the EPA’s National Enforcement Investigations Center, or NEIC, conducted an environmental investigation of the Company’s manufacturing complex in Calvert City consisting of the ethylene dichloride (EDC)/ vinyl chloride monomer (VCM), ethylene and chlor-alkali plants. In May 2003, the Company received a report prepared by the NEIC summarizing the results of that investigation. Among other things, the NEIC concluded that the requirements of several regulatory provisions had not been met. The Company has analyzed the NEIC report and has identified areas where it believes that erroneous factual or legal conclusions, or both, may have been drawn by the NEIC. The Company has held a number of discussions with the EPA concerning its conclusions. In February 2004, representatives of the EPA orally informed the Company that the agency proposed to assess monetary penalties against it and to require it to implement certain injunctive relief to ensure compliance. In addition, the EPA’s representatives informed the Company that the EPA, the NEIC and the State of Kentucky would conduct an inspection of its PVC facility in Calvert City, which is separate from the manufacturing complex and was not visited during the 2002 inspection. That additional inspection took place in late February 2004. The Company has not yet received a written report from the agencies regarding the actions that they propose to take in response to that visit. The EPA has recently submitted to the Company an information request under Section 114 of the Clean Air Act and has issued a Notice of Violation, both pertaining to the inspection of the EDC/ VCM plant. The Notice of Violation does not propose any specific penalties. The EPA has also issued to the Company information requests under Section 3007 of RCRA and Section 114 of the Clean Air Act regarding the PVC plant inspection. It is likely that monetary penalties will be imposed, that capital expenditures for installation of environmental controls will be required, or that other relief will be sought, or all or some combination of the preceding, by either the EPA or the State of Kentucky as a result of the environmental investigations in Calvert City. In such case, the Company expects that, based on the EPA’s past practices, the amount of any monetary penalties would be reduced by a percentage of the expenditures that the Company would agree to make for certain “supplemental environmental projects.” The Company is not in a position at this time to state what effect, if any, these proceedings could have on the Company’s financial condition, results of operations, or cash flows. However, the Company has recorded an accrual for a probable loss related to monetary penalties. Although the ultimate amount of liability is not ascertainable, the Company believes

F-43

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

that any amounts exceeding the recorded accruals should not materially affect the Company’s financial condition. It is possible, however, that the ultimate resolution of this matter could result in a material adverse effect on the Company’s results of operations for a particular reporting period.


	*Legal Matters*

F-44

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

In 2003, the Company received and recognized in income $3,200 resulting from a legal settlement with a software vendor. In January 2004, the Company received and recognized in income $1,529 relating to a lawsuit filed by Taita Chemical Corp. in which the Company prevailed. This amount was awarded as a reimbursement of attorney fees incurred by the Company.


	*Other Commitments*

The Company is obligated under various long-term and short-term noncancelable operating leases. Several of the leases provide for renewal terms. At December 31, 2003, future minimum lease commitments were as follows:


2004	$	17,615
2005		15,063
2006		14,083
2007		12,829
2008		12,076
Thereafter		66,928

	$	138,594

Rental expense, net of railcar mileage credits, was approximately $19,990, $18,079, and $17,530 for the years ended December 31, 2001, 2002 and 2003, respectively.

In addition, in 1996 a subsidiary of the Company entered into an agreement with BP Chemical Ltd. to license technology used to produce LLDPE and HDPE. Under the agreement the Company makes annual payments to BP Chemical Ltd. of $3,140 through May 2007. As of December 31, 2002 and 2003, the net present value of these payments was $13,119 and $10,896, of which $10,896 and $8,488 is classified as other long-term liabilities and $2,223 and $2,408 is classified as accrued expenses, respectively.


16.	Segment and Geographic Information


	*Segment Information*

The Company’s Olefins segment manufactures and markets ethylene, polyethylene, styrene monomer and various ethylene co-products. The majority of the Company’s ethylene production is used in the Company’s polyethylene, styrene and VCM operations. The remainder of ethylene is sold to third parties. In addition, the Company sells its ethylene co-products to third parties. The Company’s primary ethylene co-products are propylene, crude butadiene and hydrogen.

F-45

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

The majority of sales in the Company’s olefins business are made under long-term agreements. Contract volumes are established within a range. The terms of these contracts are fixed for a period (typically more than one year), although earlier terminations may occur if the parties fail to agree on price and deliveries are suspended for a period of several months. In most cases, these contracts also contemplate extension of the term unless specifically terminated by one of the parties. No single external Olefins customer accounted for more than 10% of segment net sales during 2003, 2002 or 2001.

The Company’s Vinyls business manufactures and markets PVC, VCM, chlorine, caustic soda and ethylene. The Company also manufactures and sells products fabricated from the PVC that the Company produces, including pipe, window and patio door profile and fence. The Company’s main manufacturing complex is located in Calvert City, Kentucky. It includes an ethylene plant, a chlor-alkali plant, a VCM plant and a PVC plant. The Company also owns a 43% interest in a PVC joint venture in China. As discussed in note 13, in 2002, the Company acquired a PVC and VCM manufacturing facility in Geismar, Louisiana.

The Company uses a majority of its chlorine, VCM and PVC production to manufacture fabricated products at the Company’s eight regional plants. The remainder of the VCM production is sold pursuant to a contract that requires the Company to supply a minimum of 400 million pounds of VCM per year. During 2001, 2002 and 2003, one customer accounted for 15.2%, 17.5%, and 18.9%, respectively, of net sales in the Vinyls segment.

F-46

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

The accounting policies of the individual segments are the same as those described in note 1.



			Year Ended December 31,

			2001			2002			2003

Sales to external customers
Olefins			$	631,694		$	599,035		$	876,968
Vinyls
	Fabricated finished products			220,112			241,308			263,518
	Resin, intermediate products and other			225,227			232,284			282,548

		Total vinyls		455,339			473,592			546,066

			$	1,087,033		$	1,072,627		$	1,423,034

Intersegment sales
Olefins			$	34,009		$	28,459		$	34,665
Vinyls				—			503			753

			$	34,009		$	28,962		$	35,418

Income (loss) from operations
Olefins			$	(39,929	)	$	12,599		$	55,298
Vinyls				(32,857	)		10,482			13,583
Corporate and other				(18,015	)		(9,009	)		(3,066	)

			$	(90,801	)	$	14,072		$	65,815

Capital expenditures
Olefins			$	20,471		$	21,098		$	23,457
Vinyls				53,302			22,036			21,182
Corporate and other				2,727			453			292

			$	76,500		$	43,587		$	44,931



	December 31,

	2002		2003

Total assets
Olefins	$	886,764	$	898,865
Vinyls		355,684		380,726
Corporate and other		66,797		90,522

	$	1,309,245	$	1,370,113

F-47

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

A reconciliation of total segment income (loss) from operations to consolidated income (loss) before taxes and minority interest is as follows:



	Year Ended December 31,

	2001			2002			2003

Income (loss) from operations for reportable segments	$	(90,801	)	$	14,072		$	65,815
Interest expense		(35,454	)		(35,044	)		(38,589	)
Debt retirement costs		—			—			(11,343	)
Other income, net		8,916			6,769			7,620

Income (loss) before taxes	$	(117,339	)	$	(14,203	)	$	23,503


	*Geographic Information*



		Year Ended December 31,

		2001		2002		2003

Sales to external customers
United States		$	955,450	$	916,386	$	1,226,008
Foreign (a)
	Canada		130,885		153,798		196,255
	Other		698		2,443		771

		$	1,087,033	$	1,072,627	$	1,423,034

Long-lived assets
United States		$	939,413	$	905,551	$	873,240
Foreign			5,306		5,323		6,448

		$	944,719	$	910,874	$	879,688


(a)		Revenues are attributed to countries based on location of customer.


17.	Guarantor Disclosures

The Company’s payment obligations under its 8 3/4% senior notes, senior collateralized term loan and senior collateralized working capital revolving credit facility are fully and unconditionally guaranteed by each of its current and future domestic restricted subsidiaries (the “Guarantor Subsidiaries”). Each Guarantor Subsidiary is 100% owned by the parent company. These guarantees are the joint and several obligations of the Guarantor Subsidiaries. The following condensed consolidating financial information presents the financial condition, results of operations and cash flows of WCC, the Guarantor Subsidiaries and the remaining subsidiaries that do not guarantee the notes (the “Non-Guarantor Subsidiaries”), together with consolidating adjustments necessary to present the Company’s results on a consolidated basis.

F-48

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information as of December 31, 2002


			Westlake
			Chemical		Guarantor		Non-Guarantor
			Corporation		Subsidiaries		Subsidiaries		Eliminations			Consolidated

Balance Sheet
Current assets
	Cash and cash equivalents		$	7,949	$	424	$	2,750	$	—		$	11,123
	Accounts receivable, net			470,269		136,945		6,582		(490,561	)		123,235
	Inventories, net			—		167,310		3,556		—			170,866
	Prepaid expenses and other current assets			412		13,758		127		—			14,297
	Deferred income taxes			17,052		—		—		—			17,052

		Total current assets		495,682		318,437		13,015		(490,561	)		336,573
Property, plant and equipment, net				—		905,551		5,323		—			910,874
Equity investment				728,047		—		14,990		(728,047	)		14,990
Other assets, net				151,964		28,789		8,103		(142,048	)		46,808

		Total assets	$	1,375,693	$	1,252,777	$	41,431	$	(1,360,656	)	$	1,309,245

Current liabilities
	Accounts payable		$	—	$	67,894	$	313	$	—		$	68,207
	Accrued liabilities			19,364		46,037		2,299		—			67,700
	Current portion of long-term debt			41,673		—		—		—			41,673

		Total current liabilities		61,037		113,931		2,612		—			177,580
Long-term debt				480,535		643,506		245		(632,609	)		491,677
Deferred income taxes				138,341		—		952		—			139,293
Other liabilities				16,381		33,695		—		—			50,076
Minority interest				22,100		—		—		—			22,100
Stockholders’ equity				657,299		461,645		37,622		(728,047	)		428,519

		Total liabilities and stockholders’ equity	$	1,375,693	$	1,252,777	$	41,431	$	(1,360,656	)	$	1,309,245

F-49

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information as of December 31, 2003


			Westlake
			Chemical		Guarantor		Non-Guarantor
			Corporation		Subsidiaries		Subsidiaries			Eliminations			Consolidated

Balance Sheet
Current assets
	Cash and cash equivalents		$	32,101	$	44	$	5,236		$	—		$	37,381
	Accounts receivable, net			486,745		176,583		7,566			(492,261	)		178,633
	Inventories, net			—		176,337		4,423			—			180,760
	Prepaid expenses and other current assets			118		6,949		927			—			7,994
	Deferred income taxes			8,079		—		—			—			8,079

		Total current assets		527,043		359,913		18,152			(492,261	)		412,847
Property, plant and equipment, net				—		873,240		6,448			—			879,688
Investment in subsidiaries				732,954		—		17,101			(732,954	)		17,101
Other assets, net				88,115		39,567		7,075			(74,280	)		60,477

		Total assets	$	1,348,112	$	1,272,720	$	48,776		$	(1,299,495	)	$	1,370,113

Current liabilities
	Accounts payable		$	10,403	$	82,874	$	127		$	—		$	93,404
	Accrued liabilities			30,106		59,113		4,324			(15	)		93,528
	Current portion of long-term debt			28,200		—		—			—			28,200

		Total current liabilities		68,709		141,987		4,451			(15	)		215,132
Long-term debt				498,200		577,426		(8	)		(566,529	)		509,089
Deferred income taxes				135,409		—		1,115			—			136,524
Other liabilities				11,680		29,985		—			—			41,665
Minority interest				22,100		—		—			—			22,100
Stockholders’ equity				612,014		523,322		43,218			(732,951	)		445,603

		Total liabilities and stockholders’ equity	$	1,348,112	$	1,272,720	$	48,776		$	(1,299,495	)	$	1,370,113

F-50

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Year Ended December 31, 2001


	Westlake
	Chemical			Guarantor			Non-Guarantor
	Corporation			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Statement of Operations
Net sales	$	—		$	1,069,423		$	20,755		$	(3,145	)	$	1,087,033
Cost of sales		—			1,103,247			16,852			(3,145	)		1,116,954

		—			(33,824	)		3,903			—			(29,921	)
Selling, general and administrative expenses		7,362			43,890			1,951			—			53,203
Impairment of long-lived assets		3,636			4,041			—			—			7,677

Income (loss) from operations		(10,998	)		(81,755	)		1,952			—			(90,801	)
Interest expense		(35,264	)		(60,516	)		(152	)		60,478			(35,454	)
Other income, net		63,300			4,643			1,451			(60,478	)		8,916

Income (loss) before income taxes		17,038			(137,628	)		3,251			—			(117,339	)
Provision for (benefit from) income taxes		4,073			(50,424	)		998			—			(45,353	)

Net income (loss)	$	12,965		$	(87,204	)	$	2,253		$	—		$	(71,986	)

Condensed Consolidating Financial Information for the Year Ended December 31, 2002


	Westlake
	Chemical			Guarantor			Non-Guarantor
	Corporation			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Statement of Operations
Net sales	$	—		$	1,055,873		$	21,871		$	(5,117	)	$	1,072,627
Cost of sales		—			985,162			17,323			(5,117	)		997,368

		—			70,711			4,548			—			75,259
Selling, general and administrative expenses		6,727			50,210			2,011			—			58,948
Impairment of long-lived assets		—			1,783			456			—			2,239

Income (loss) from operations		(6,727	)		18,718			2,081			—			14,072
Interest expense		(33,770	)		(14,499	)		(101	)		13,326			(35,044	)
Other income, net		13,980			3,931			2,184			(13,326	)		6,769

Income (loss) before income taxes		(26,517	)		8,150			4,164			—			(14,203	)
Provision for (benefit from) income taxes		(5,882	)		(2,786	)		1,527			—			(7,141	)

Net income (loss)	$	(20,635	)	$	10,936		$	2,637		$	—		$	(7,062	)

F-51

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Year Ended December 31, 2003


	Westlake
	Chemical			Guarantor			Non-Guarantor
	Corporation			Subsidiaries			Subsidiaries		Eliminations			Consolidated

Statement of Operations
Net sales	$	—		$	1,401,441		$	27,548	$	(5,955	)	$	1,423,034
Cost of sales		—			1,284,304			22,733		(5,955	)		1,301,082

		—			117,137			4,815		—			121,952
Selling, general and administrative expenses		1,647			49,988			2,217		—			53,852
Impairment of long-lived assets		—			2,285			—		—			2,285

Income (loss) from operations		(1,647	)		64,864			2,598		—			65,815
Interest expense		(37,445	)		(21,908	)		—		20,764			(38,589	)
Other income (expense), net		9,463			5,453			2,125		(20,764	)		(3,723	)

Income (loss) before income taxes		(29,629	)		48,409			4,723		—			23,503
Provision for (benefit from) income taxes		(10,639	)		18,018			1,368		—			8,747

Net income (loss)	$	(18,990	)	$	30,391		$	3,355	$	—		$	14,756

F-52

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Year Ended December 31, 2001


			Westlake
			Chemical			Guarantor			Non-Guarantor
			Corporation			Subsidiaries			Subsidiaries			Eliminations		Consolidated

Statement of Cash Flows
Net income (loss)			$	12,965		$	(87,204	)	$	2,253		$	—	$	(71,986	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
	Depreciation and amortization			1,454			77,964			2,272			—		81,690
	Provision for bad debts			—			3,804			13			—		3,817
	Impairment of long-lived assets			3,636			4,041			—			—		7,677
	Deferred income taxes			(385	)		(45,394	)		—			—		(45,779	)
	Equity in income of unconsolidated subsidiary			—			—			(1,138	)		—		(1,138	)
	Net changes in working capital and other			23,596			31,097			(2,604	)		—		52,089

		Net cash provided by (used for) operating activities		41,266			(15,692	)		796			—		26,370
Additions to property, plant and equipment				—			(74,760	)		(1,740	)		—		(76,500	)

		Net cash used for investing activities		—			(74,760	)		(1,740	)		—		(76,500	)
Intercompany financing				(90,654	)		90,654			—			—		—
Proceeds from sale of subsidiary preferred stock				2,400			—			—			—		2,400
Proceeds from borrowings				240,335			—			—			—		240,335
Repayments of borrowings				(125,039	)		—			—			—		(125,039	)

		Net cash used for financing activities		27,042			90,654			—			—		117,696
Net increase (decrease) in cash and cash equivalents				68,308			202			(944	)		—		67,566
Cash and cash equivalents at beginning of period				7,616			—			3,913			—		11,529

Cash and cash equivalents at end of period			$	75,924		$	202		$	2,969		$	—	$	79,095

F-53

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Year Ended December 31, 2002


			Westlake
			Chemical			Guarantor			Non-Guarantor
			Corporation			Subsidiaries			Subsidiaries			Eliminations		Consolidated

Statement of Cash Flows
Net income (loss)			$	(20,635	)	$	10,936		$	2,637		$	—	$	(7,062	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities
	Depreciation and amortization			3,135			82,686			2,197			—		88,018
	Provision for bad debts			—			10,379			—			—		10,379
	Gain from disposition of fixed assets			—			(2,259	)		—			—		(2,259	)
	Impairment of long-lived assets			—			1,783			456			—		2,239
	Deferred income taxes			(5,882	)		214			952			—		(4,716	)
	Equity in income of unconsolidated subsidiary			—			—			(770	)		—		(770	)
	Net changes in working capital and other			(30,613	)		(75,374	)		(1,168	)		—		(107,155	)

		Net cash provided by (used for) operating activities		(53,995	)		28,365			4,304			—		(21,326	)
Additions to property, plant and equipment				—			(41,420	)		(2,167	)				(43,587	)
Proceeds from insurance claims				—			4,901			—			—		4,901

		Net cash used for investing activities		—			(36,519	)		(2,167	)		—		(38,686	)
Intercompany financing				(7,916	)		8,259			(343	)		—		—
Equity contribution from affiliates				6,000			—			—					6,000
Proceeds from affiliate borrowings				3,271			117			—					3,388
Repayments of affiliate borrowings				(200	)		—			(2,013	)				(2,213	)
Proceeds from borrowings				113,890			—			—			—		113,890
Repayments of borrowings				(119,648	)		—			—			—		(119,648	)
Capitalized debt costs				(9,377	)		—			—			—		(9,377	)

		Net cash provided by (used for) financing activities		(13,980	)		8,376			(2,356	)		—		(7,960	)
Net increase (decrease) in cash and cash equivalents				(67,975	)		222			(219	)		—		(67,972	)
Cash and cash equivalents at beginning of period				75,924			202			2,969			—		79,095

Cash and cash equivalents at end of period			$	7,949		$	424		$	2,750		$	—	$	11,123

F-54

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)

Condensed Consolidating Financial Information for the Year Ended December 31, 2003


			Westlake
			Chemical			Guarantor			Non-Guarantor
			Corporation			Subsidiaries			Subsidiaries			Eliminations		Consolidated

Statement of Cash Flows
Net income (loss)			$	(18,990	)	$	30,391		$	3,355		$	—	$	14,756
Adjustments to reconcile net income (loss) to net cash provided by operating activities
	Depreciation and amortization			3,457			82,472			2,251			—		88,180
	Provision for bad debts			—			1,872			—			—		1,872
	Gain from disposition of fixed assets			—			(2,903	)		—			—		(2,903	)
	Impairment of long-lived assets			—			2,285			—			—		2,285
	Deferred income taxes			(10,636	)		17,941			(193	)		—		7,112
	Equity in income of unconsolidated subsidiary			—			—			(1,510	)		—		(1,510	)
	Net changes in working capital and other			7,777			(26,427	)		2,045			—		(16,605	)

		Net cash provided by (used for) operating activities		(18,392	)		105,631			5,948			—		93,187
Additions to property, plant and equipment				—			(42,425	)		(2,506	)		—		(44,931	)
Proceeds from insurance claims				—			3,350			—			—		3,350

		Net cash used for investing activities		—			(39,075	)		(2,506	)		—		(41,581	)
Intercompany financing				67,522			(66,819	)		(703	)		—		—
Repurchase of securitization receivables				(15,100	)		—			—			—		(15,100	)
Proceeds from affiliate borrowings				32			—			—			—		32
Repayment of affiliate borrowings				—			(117	)		(253	)		—		(370	)
Proceeds from borrowings				723,975			—			—			—		723,975
Repayments of borrowings				(719,783	)		—			—			—		(719,783	)
Capitalized debt costs				(14,102	)		—			—			—		(14,102	)

		Net cash provided by (used for) financing activities		42,544			(66,936	)		(956	)		—		(25,348	)
Net increase (decrease) in cash and cash equivalents				24,152			(380	)		2,486			—		26,258
Cash and cash equivalents at beginning of period				7,949			424			2,750			—		11,123

Cash and cash equivalents at end of period			$	32,101		$	44		$	5,236		$	—	$	37,381

F-55

WESTLAKE CHEMICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(dollars in thousands, except per share data)


18.	Quarterly Financial Information (Unaudited)



	Three Months Ended

	March 31,			June 30,			September 30,		December 31,
	2002			2002			2002		2002

Net sales	$	203,144		$	282,480		$	304,987	$	282,016
Gross profit		(9,732	)		16,037			52,189		16,765
Income from operations		(21,550	)		1,111			37,329		(2,818	)
Net income (loss)		(13,908	)		(1,607	)		13,038		(4,585	)
Basic and diluted earnings (loss) per common share	$	(12,474	)	$	(1,441	)	$	11,693	$	(4,112	)



	Three Months Ended

	March 31,		June 30,		September 30,			December 31,
	2003		2003		2003			2003

Net sales	$	380,573	$	317,984	$	358,598		$	365,879
Gross profit		44,839		21,034		20,436			35,643
Income from operations		25,853		6,713		8,334			24,915
Net income (loss)		12,876		577		(9,332	)		10,635
Basic and diluted earnings (loss) per common share	$	11,548	$	517	$	(8,369	)	$	9,538

F-56

Efficient Modern Asset Base

(PHOTO)

Lake Charles, Louisiana

(PHOTO)

Calvert City, Kentucky

(WESTLAKE CHEMICAL CORP.LOGO)

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS


Item 13.	*Other Expenses of Issuance and Distribution*

The expenses to be paid in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions, are as follows:


SEC registration fee	$	29,141
NASD filing fee		23,500
NYSE listing fee		*
Printing and engraving expenses		*
Accounting fees and expenses		*
Legal fees and expenses		*
Blue sky fees and expenses (including legal fees)		*
Transfer agent and registrar fees		*
Miscellaneous		*

Total	$	*

* To be furnished by amendment.


Item 14.	*Indemnification of Directors and Officers*

Delaware law permits a corporation to adopt a provision in its certificate of incorporation eliminating or limiting the personal liability of a director, but not an officer in his or her capacity as such, to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except that such provision shall not eliminate or limit the liability of a director for (1) any breach of the director’s duty of loyalty to the corporation or its stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) liability under section 174 of the Delaware General Corporation Law (the “DGCL”) for unlawful payment of dividends or stock purchases or redemptions or (4) any transaction from which the director derived an improper personal benefit.

The amended and restated certificate of incorporation of Westlake Chemical Corporation (“Westlake”) provides that, to the fullest extent of Delaware law, no Westlake director shall be liable to Westlake or its stockholders for monetary damages for breach of fiduciary duty as a director.

Under Delaware law, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any type of proceeding, other than an action by or in the right of the corporation, because he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation a director, officer, employee or agent of another corporation or other entity, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such proceeding if: (1) he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and (2) with respect to any criminal proceeding, he or she had no reasonable cause to believe that his or her conduct was unlawful. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit brought by or in the right of the corporation because he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other entity, against expenses, including attorneys’ fees, actually and reasonably incurred in connection with such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification will be made if the person is found liable to the corporation unless, in such a case, the court determines the person is nonetheless entitled to indemnification for such expenses. A corporation must also indemnify a

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present or former director or officer has been successful on the merits or otherwise in defense of any proceeding, or in defense of any claim, issue or matter therein, against expenses, including attorneys’ fees, actually and reasonably incurred by him or her. Expenses, including attorneys’ fees, incurred by a director or officer, or any employees or agents as deemed appropriate by the board of directors, in defending civil or criminal proceedings may be paid by the corporation in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. The Delaware law regarding indemnification and the advancement of expenses is not exclusive of any other rights a person may be entitled to under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

Under the DGCL, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that a person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal proceeding, had reasonable cause to believe that his or her conduct was unlawful.

Delaware law also provides that a corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or other entity, against any liability asserted against and incurred by such person, whether or not the corporation would have the power to indemnify such person against such liability.


Item 15.	*Recent Sales of Unregistered Securities*

On July 31, 2003, we issued $380 million aggregate principal amount of 8 3/4% senior notes due 2011 to Credit Suisse First Boston LLC, Banc of America Securities LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Scotia Capital (USA) Inc., Credit Lyonnais Securities (USA) Inc. and CIBC World Markets Corp., who were the initial purchasers of the senior notes. We issued the senior notes to the initial purchasers in transactions exempt from or not subject to registration under the Securities Act, pursuant to Section 4(2) under the Securities Act. The initial purchasers then offered and resold the notes to qualified institutional buyers and non-U.S. persons initially at 100.0% of the principal amount. We exchanged the existing senior notes for new registered senior notes with substantially identical terms in January 2004.


Item 16.	*Exhibits*

(a) The following exhibits are filed as part of this Registration Statement:


Exhibit
Number			Description

	1	.1*	Form of Underwriting Agreement.
	3	.1	Form of Amended and Restated Certificate of Incorporation of Westlake.
	3	.2	Form of Bylaws of Westlake.
	4	.1	Form of Specimen Stock Certificate.
	5	.1	Form of Opinion of Baker Botts L.L.P.
	10	.1**	Indenture dated as of July 31, 2003 by and among Westlake, the guarantors named therein and JPMorgan Chase Bank, as trustee, relating to 8 3/4% Senior Notes due 2011.
	10	.2**	Form of 8 3/4% Senior Notes due 2011 (included in Exhibit 10.1).
			Westlake is a party to other long-term debt instruments not filed herewith under which the total amount of securities authorized does not exceed 10% of the total assets of Westlake and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Westlake agrees to furnish a copy of such instruments to the SEC upon request.

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Exhibit
Number			Description

	10	.3**	Credit Agreement dated as of July 31, 2003 (the “Revolving Credit Agreement”) by and among the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, Westlake and certain of its domestic subsidiaries, as borrowers relating to a $200 million senior secured revolving credit facility.
	10	.4**	Credit Agreement dated as of July 31, 2003 by and among Westlake, as borrower, certain of its subsidiaries, as guarantors, Bank of America, N.A., as agent and the lenders party thereto relating to a $120 million senior secured term loan.
	10	.5**	Westlake Group Performance Unit Plan effective January 1, 1991.
	10	.6**	Agreement with Warren Wilder dated December 10, 1999.
	10	.7**	Amendment, Assignment and Acceptance Agreement dated as of September 22, 2003 among Bank of America, N.A., the financial institutions party thereto, Westlake and certain of its domestic subsidiaries, amending the Revolving Credit Agreement.
	10	.8**	Agreement with Ruth I. Dreessen dated June 5, 2003.
	10	.9**	EVA Incentive Plan.
	10	.10***	Agreement with Stephen Wallace dated November 5, 2003.
	10	.11***	Second Amendment and Waiver, dated February 24, 2004, to Revolving Credit Agreement.
	10	.12****	Agreement with Wayne D. Morse effective January 1, 2004.
	10	.13	Form of Registration Rights Agreement.
	10	.14	Form of Westlake Chemical Corporation 2004 Omnibus Incentive Plan.
	21	.1	Subsidiaries of the Registrant.
	23	.1	Consent of PricewaterhouseCoopers LLP.
	23	.2	Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
	24	.1****	Powers of Attorney.

* To be filed by amendment.

** Incorporated by reference to Westlake’s Registration Statement on Form S-4 filed on November 21, 2003 under Registration No. 333-108982.

*** Incorporated by reference to Westlake’s Annual Report on Form 10-K for the year ended December 31, 2003.

**** Previously filed.

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(b) Financial Statement Schedule

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

FINANCIAL STATEMENT SCHEDULE

To the Board of Directors

of Westlake Chemical Corporation:

“Our audits of the consolidated financial statements referred to in our report dated May 24, 2004, included in this Registration Statement on Form S-1, also included an audit of the financial statement schedule included under Item 16 of this Registration Statement on Form S-1. In our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.”


	PRICEWATERHOUSECOOPERS LLP

Houston, Texas

May 24, 2004

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Financial Statement Schedule

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

(dollars in thousands, except per share data)


	Balance at							Balance at
Accounts Receivable	Beginning		Charged to		Additions/			End of
Allowance for Doubtful Accounts	of Year		Expense		(Deductions)(1)			Year

2001	$	2,031	$	3,817	$	(935	)	$	4,913
2002		4,913		10,379		(1,910	)		13,382
2003		13,382		1,872		(8,353	)		6,901


(1)	Accounts receivable written off during the period.


	Balance at							Balance at
Inventory	Beginning		Charged to		Additions/			End of
Allowance for Inventory Obsolescence	of Year		Expense		(Deductions)(1)			Year

2001	$	5,209	$	5,122	$	(1,009	)	$	9,322
2002		9,322		1,287		(1,867	)		8,742
2003		8,742		1,206		(1,659	)		8,289


(1)	Inventory written off during the period.

All other schedules are omitted, because the required information is inapplicable, or the information is presented in the consolidated financial statements or related notes.

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Item 17.	*Undertakings*

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Houston, Texas, on the 1st day of July, 2004.

WESTLAKE CHEMICAL CORPORATION

/s/ ALBERT CHAO

Albert Chao

Chief Executive Officer and President

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on July 1, 2004.



Signature		Title


/s/ ALBERT CHAO Albert Chao		Chief Executive Officer, President and Director (Principal Executive Officer)

/s/ RUTH I. DREESSEN Ruth I. Dreessen		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

/s/ GEORGE J. MANGIERI George J. Mangieri		Vice President and Controller (Principal Accounting Officer)

* T. T. Chao		Chairman of the Board

* James Chao		Vice Chairman of the Board

* Wei Fong Chao		Director

* Dorothy C. Jenkins		Director

*By:	/s/ ALBERT CHAO Albert Chao Attorney-in-Fact

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INDEX TO EXHIBITS


Exhibit
Number			Description

	1	.1*	Form of Underwriting Agreement.
	3	.1	Form of Amended and Restated Certificate of Incorporation of Westlake.
	3	.2	Form of Bylaws of Westlake.
	4	.1	Form of Specimen Stock Certificate.
	5	.1	Form of Opinion of Baker Botts L.L.P.
	10	.1**	Indenture dated as of July 31, 2003 by and among Westlake, the guarantors named therein and JPMorgan Chase Bank, as trustee, relating to 8 3/4% Senior Notes due 2011.
	10	.2**	Form of 8 3/4% Senior Notes due 2011 (included in Exhibit 10.1).
			Westlake is a party to other long-term debt instruments not filed herewith under which the total amount of securities authorized does not exceed 10% of the total assets of Westlake and its subsidiaries on a consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of Regulation S-K, Westlake agrees to furnish a copy of such instruments to the SEC upon request.
	10	.3**	Credit Agreement dated as of July 31, 2003 (the “Revolving Credit Agreement”) by and among the financial institutions party thereto, as lenders, Bank of America, N.A., as agent, Westlake and certain of its domestic subsidiaries, as borrowers relating to a $200 million senior secured revolving credit facility.
	10	.4**	Credit Agreement dated as of July 31, 2003 by and among Westlake, as borrower, certain of its subsidiaries, as guarantors, Bank of America, N.A., as agent and the lenders party thereto relating to a $120 million senior secured term loan.
	10	.5**	Westlake Group Performance Unit Plan effective January 1, 1991.
	10	.6**	Agreement with Warren Wilder dated December 10, 1999.
	10	.7**	Amendment, Assignment and Acceptance Agreement dated as of September 22, 2003 among Bank of America, N.A., the financial institutions party thereto, Westlake and certain of its domestic subsidiaries, amending the Revolving Credit Agreement.
	10	.8**	Agreement with Ruth I. Dreessen dated June 5, 2003.
	10	.9**	EVA Incentive Plan.
	10	.10***	Agreement with Stephen Wallace dated November 5, 2003.
	10	.11***	Second Amendment and Waiver, dated February 24, 2004, to Revolving Credit Agreement.
	10	.12****	Agreement with Wayne D. Morse effective January 1, 2004.
	10	.13	Form of Registration Rights Agreement.
	10	.14	Form of Westlake Chemical Corporation 2004 Omnibus Incentive Plan.
	21	.1	Subsidiaries of the Registrant.
	23	.1	Consent of PricewaterhouseCoopers LLP.
	23	.2	Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
	24	.1****	Powers of Attorney.

EXHIBIT 3.1

FORM OF

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

WESTLAKE CHEMICAL CORPORATION

FIRST: The name of the Corporation is Westlake Chemical Corporation (hereinafter, the "Corporation").

SECOND: The address of the registered office of the Corporation in the State of Delaware is The Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Zip Code 19801, and the name of the registered agent of the Corporation at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "DGCL").

FOURTH: The aggregate number of shares of capital stock that the Corporation shall have authority to issue is [ ], of which [ ] shares are classified as common stock, par value $0.01 per share ("Common Stock"), and [ ] shares are classified as preferred stock, par value $0.01 per share ("Preferred Stock").

The Corporation may issue shares of any class or series of its capital stock from time to time for such consideration and for such corporate purposes as the Board of Directors of the Corporation (the "Board of Directors") may from time to time determine.

The following is a statement of the powers, preferences and rights, and the qualifications, limitations or restrictions, of the Preferred Stock and the Common Stock:

DIVISION A. PREFERRED STOCK

The shares of Preferred Stock may be divided into and issued in one or more series, the relative rights, powers and preferences of which series may vary in any and all respects. The Board of Directors is expressly vested with the authority to fix, by resolution or resolutions adopted prior to and providing for the issuance of any shares of each particular series of Preferred Stock and incorporate in a certificate of designations filed with the Secretary of State of the State of Delaware, the designations, powers, preferences, rights, qualifications, limitations and restrictions thereof, of the shares of each series of Preferred Stock, to the extent not provided for in this Amended and Restated Certificate of Incorporation, and with the authority to increase or decrease the number of shares within each such series; provided,

however, that the Board of Directors may not decrease the number of shares within a series of Preferred Stock below the number of shares within such series that is then outstanding. The authority of the Board of Directors with respect to fixing the designations, powers, preferences, rights, qualifications, limitations and restrictions of each such series of Preferred Stock shall include, but not be limited to, determination of the following:

(1) the distinctive designation and number of shares of that series;

(2) the rate of dividends (or the method of calculation thereof) payable with respect to shares of that series, the dates, terms and other conditions upon which such dividends shall be payable, and the relative rights of priority of such dividends to dividends payable on any other class or series of capital stock of the Corporation;

(3) the nature of the dividend payable with respect to shares of that series as cumulative, noncumulative or partially cumulative, and if cumulative or partially cumulative, from which date or dates and under what circumstances;

(4) whether shares of that series shall be subject to redemption, and, if made subject to redemption, the times, prices, rates, adjustments and other terms and conditions of such redemption (including the manner of selecting shares of that series for redemption if fewer than all shares of such series are to be redeemed);

(5) the rights of the holders of shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation (which rights may be different if such action is voluntary than if it is involuntary), including the relative rights of priority in such event as to the rights of the holders of any other class or series of capital stock of the Corporation;

(6) the terms, amounts and other conditions of any sinking or similar purchase or other fund provided for the purchase or redemption of shares of that series;

(7) whether shares of that series shall be convertible into or exchangeable for shares of capital stock or other securities of the Corporation or of any other corporation or entity, and, if provision be made for conversion or exchange, the times, prices, rates, adjustments, and other terms and conditions of such conversion or exchange;

(8) the extent, if any, to which the holders of shares of that series shall be entitled (in addition to any voting rights required by law) to vote as a class or otherwise with respect to the election of directors or otherwise;

(9) the restrictions and conditions, if any, upon the issue or reissue of any additional Preferred Stock ranking on a parity with or prior to shares of that series as to dividends or upon liquidation, dissolution or winding up;

(10) any other repurchase obligations of the Corporation, subject to any limitations of applicable law; and

(11) any other designations, powers, preferences, rights, qualifications, limitations or restrictions of shares of that series.

Any of the designations, powers, preferences, rights, qualifications, limitations or restrictions of any series of Preferred Stock may be dependent on facts ascertainable outside this Amended and Restated Certificate of Incorporation, or outside the resolution or resolutions providing for the issue of such series of Preferred Stock adopted by the Board of Directors pursuant to authority expressly vested in it by this Amended and Restated Certificate of Incorporation. Except as applicable law or this Amended and Restated Certificate of Incorporation otherwise may require, the terms of any series of Preferred Stock may be amended without consent of the holders of any other series of Preferred Stock or any class of capital stock of the Corporation.

The relative powers, preferences and rights of each series of Preferred Stock in relation to the powers, preferences and rights of each other series of Preferred Stock shall, in each case, be as fixed from time to time by the Board of Directors in the resolution or resolutions adopted pursuant to the authority granted in this Division A of this Article FOURTH, and the consent, by class or series vote or otherwise, of holders of Preferred Stock of such series of Preferred Stock as are from time to time outstanding shall not be required for the issuance by the Board of Directors of any other series of Preferred Stock, whether or not the powers, preferences and rights of such other series shall be fixed by the Board of Directors as senior to, or on a parity with, the powers, preferences and rights of such outstanding series, or any of them; provided, however, that the Board of Directors may provide in such resolution or resolutions adopted with respect to any series of Preferred Stock that the consent of holders of at least a majority (or such greater proportion as shall be therein fixed) of the outstanding shares of such series voting thereon shall be required for the issuance of shares of any or all other series of Preferred Stock.

Shares of any series of Preferred Stock shall have no voting rights except as required by law or as provided in the relative powers, preferences and rights of such series.

DIVISION B. COMMON STOCK

1. Dividends. Dividends may be paid on the Common Stock, as the Board of Directors shall from time to time determine, out of any assets of the Corporation available for such dividends after full cumulative dividends on all outstanding shares of capital stock of all series ranking senior to the Common Stock in respect of dividends and liquidation rights (referred to in this Division B as "stock ranking senior to the Common Stock") have been paid, or declared and a sum sufficient for the payment thereof set apart, for all past quarterly dividend periods, and after or concurrently with making payment of or provision for dividends on the stock ranking senior to the Common Stock for the then current quarterly dividend period.

2. Distribution of Assets. In the event of any liquidation, dissolution or winding up of the Corporation, or any reduction or decrease of its capital stock resulting in a distribution of assets to the holders of the Common Stock, after there shall have been paid to or set aside for the holders of the stock ranking senior to the Common Stock the full preferential amounts to which they are respectively entitled, the holders of the Common Stock shall be

entitled to receive, pro rata, all of the remaining assets of the Corporation available for distribution to its stockholders. The Board of Directors may distribute in kind to the holders of the Common Stock such remaining assets of the Corporation, or may sell, transfer or otherwise dispose of all or any of the remaining property and assets of the Corporation to any other corporation or other purchaser and receive payment therefor wholly or partly in cash or property, and/or in stock of any such corporation, and/or in obligations of such corporation or other purchaser, and may sell all or any part of the consideration received therefor and distribute the same or the proceeds thereof to the holders of the Common Stock.

3. Voting Rights. Subject to the voting rights expressly conferred under prescribed conditions upon the stock ranking senior to the Common Stock, the holders of the Common Stock shall exclusively possess full voting power for the election of directors and for all other purposes.

DIVISION C. OTHER PROVISIONS APPLICABLE TO THE CORPORATION'S CAPITAL STOCK

1. Preemptive Rights. No holder of any stock of the Corporation shall be entitled as of right to purchase or subscribe for any part of any unissued or treasury stock of the Corporation, or of any additional stock of any class, to be issued by reason of any increase of the authorized capital stock of the Corporation, or to be issued from any unissued or additionally authorized stock, or of bonds, certificates of indebtedness, debentures or other securities convertible into stock of the Corporation, but any such unissued or treasury stock, or any such additional authorized issue of new stock or securities convertible into stock, may be issued and disposed of by the Board of Directors to such persons, firms, corporations or associations, and upon such terms as the Board of Directors may, in its discretion, determine, without offering to the stockholders then of record, or any class of stockholders, any thereof, on the same terms or any terms.

2. Votes Per Share. Any holder of Common Stock of the Corporation having the right to vote at any meeting of the stockholders or of any class or series thereof, shall be entitled to one vote for each share of stock held by him, provided that no holder of Common Stock shall be entitled to cumulate his votes for the election of one or more directors or for any other purpose.

FIFTH: (a) Directors. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the authority and powers conferred on the Board of Directors by the DGCL or by the other provisions of this Amended and Restated Certificate of Incorporation, the Board of Directors is authorized and empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the DGCL, this Amended and Restated Certificate of Incorporation and the Bylaws of the Corporation; provided, however, that no Bylaws hereafter adopted, or any amendments thereto, shall invalidate any prior act of the Board of Directors that would have been valid if such Bylaws or amendment had not been adopted.

(b) Number, Election and Terms of Directors. The number of directors that shall constitute the whole Board of Directors shall be fixed from time to time by a majority of the

directors then in office, subject to an increase in the number of directors by reason of any provisions contained in or established pursuant to Article FOURTH, but in any event shall not be less than one nor more than 12, plus that number of directors who may be elected by the holders of any one or more series of Preferred Stock voting separately as a class pursuant to the provisions applicable in the case or arrearages in the payment of dividends or other defaults contained in this Amended and Restated Certificate of Incorporation or the Board of Directors' resolution providing for the establishment of any series of Preferred Stock. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes:
Class I, Class II and Class III. Each director shall serve for a term ending on the third annual meeting of stockholders following the annual meeting of stockholders at which that director was elected; provided, however, that the directors first designated as Class I directors shall serve for a term expiring at the annual meeting of stockholders next following the date of their designation as Class I directors, the directors first designated as Class II directors shall serve for a term expiring at the second annual meeting of stockholders next following the date of their designation as Class II directors, and the directors first designated as Class III directors shall serve for a term expiring at the third annual meeting of stockholders next following the date of their designation as Class III directors. Each director shall hold office until the annual meeting of stockholders at which that director's term expires and, the foregoing notwithstanding, shall serve until his successor shall have been duly elected and qualified or until his earlier death, resignation or removal.

At each annual election, the directors chosen to succeed those whose terms then expire shall be of the same class as the directors they succeed, unless, by reason of any intervening changes in the authorized number of directors, the Board of Directors shall have designated one or more directorships whose term then expires as directorships of another class in order to more nearly achieve equality of number of directors among the classes.

In the event of any change in the authorized number of directors, each director then continuing to serve as such shall nevertheless continue as a director of the class of which he is a member until the expiration of his current term, or his earlier death, resignation or removal. The Board of Directors shall specify the class to which a newly created directorship shall be allocated.

Election of directors need not be by written ballot unless the Bylaws of the Corporation so provide.

(c) Removal of Directors. No director of the Corporation may be removed from office as a director by vote or other action of the stockholders or otherwise except for cause, and then only by the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class. Except as applicable law otherwise provides, cause for the removal of a director shall be deemed to exist only if the director whose removal is proposed: (i) has been convicted, or has been granted immunity to testify in any proceeding in which another has been convicted, of a felony by a court of competent jurisdiction and that conviction is no longer subject to direct appeal; (ii) has been found to have been

negligent or guilty of misconduct in the performance of his duties to the Corporation in any matter of substantial importance to the Corporation by (A) the affirmative vote of at least eighty percent (80%) of the directors then in office at any meeting of the Board of Directors called for that purpose or (B) a court of competent jurisdiction; or (iii) has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects his ability to serve as a director of the Corporation. Notwithstanding the foregoing, whenever holders of outstanding shares of one or more series of Preferred Stock are entitled to elect members of the Board of Directors voting separately as a class pursuant to the provisions applicable in the case of arrearages in the payment of dividends or other defaults contained in this Amended and Restated Certificate of Incorporation or the Board of Directors' resolution providing for the establishment of any series of Preferred Stock, any such director of the Corporation so elected may be removed in accordance with the provisions of this Amended and Restated Certificate of Incorporation or that Board of Directors' resolution. The foregoing provisions are subject to the terms of any series of Preferred Stock with respect to the directors to be elected solely by the holders of such series of Preferred Stock.

(d) Vacancies. Except as a Board of Directors' resolution providing for the establishment of any series of Preferred Stock may provide otherwise, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, removal, disqualification or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until that director's successor shall have been elected and qualified or until his earlier death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. The foregoing provisions are subject to the terms of any Preferred Stock with respect to the directors to be elected solely by the holders of such Preferred Stock.

(e) Amendment of this Article FIFTH. In addition to any other affirmative vote required by applicable law, this Article FIFTH may not be amended, modified or repealed except by the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class.

SIXTH: (a) Action by Written Consent; Special Meetings. No action required to be taken or that may be taken at any annual or special meeting of the stockholders of the Corporation may be taken without a meeting, and the power of the stockholders of the Corporation to consent in writing to the taking of any action by written consent without a meeting is specifically denied, unless such action without a meeting is taken by unanimous written consent. Unless otherwise provided by the DGCL, by this Amended and Restated Certificate of Incorporation or by any provisions established pursuant to Article FOURTH hereof with respect to the rights of holders of one or more outstanding series of Preferred Stock, special meetings of the stockholders of the Corporation may be called at any time only by the Chairman

of the Board of Directors, if there is one, or by the Board of Directors pursuant to a resolution approved by the affirmative vote of at least a majority of the members of the Board of Directors, and no such special meeting may be called by any other person or persons.

(b) Amendment of this Article SIXTH. In addition to any other affirmative vote required by applicable law, this Article SIXTH may not be amended, modified or repealed except by the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class.

SEVENTH: No director of the Corporation shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director of the Corporation; provided, however, that this Article SEVENTH shall not eliminate or limit the liability of such a director (1) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under
Section 174 of the DGCL, as the same exists or as such provision may hereafter be amended, supplemented or replaced, or (4) for any transactions from which such director derived an improper personal benefit. If the DGCL is amended after the filing of this Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by such law, as so amended. Any repeal or modification of this Article SEVENTH by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.

EIGHTH: (1) Certain Acknowledgments.

In recognition and anticipation (i) that the TTWF Persons may serve as directors and/or officers of the Corporation, (ii) that the TTWF Persons may engage and are expected to continue to engage in the same, similar or related lines of business as those in which the Corporation Persons, directly or indirectly, may engage and/or other business activities, in each case that may overlap with or compete with those in which the Corporation Persons, directly or indirectly, may engage, and that the TTWF Persons may compete with the Corporation Persons in any of such business lines and/or business activities, (iii) that the TTWF Persons may have an interest in the same areas of corporate opportunity as the Corporation Persons, (iv) that the TTWF Persons may engage in material business transactions with the Corporation Persons, and
(v) that, as a consequence of the foregoing, it is in the best interests of the Corporation that the respective rights and duties of the Corporation and of the TTWF Persons, and the duties of any directors, officers or employees of the Corporation who are also TTWF Persons, be determined and delineated in respect of any transactions between, or opportunities that may be suitable for both, the Corporation Persons, on the one hand, and the TTWF Persons, on the other hand, and in recognition of the benefits to be derived by the Corporation through its continual contractual, corporate and business relations with the TTWF Persons (including possible service of TTWF Persons as officers, directors and employees of the Corporation), the provisions of this Article EIGHTH shall to the fullest extent permitted by law regulate and define the conduct of certain of

the businesses and affairs of the Corporation in relation to the TTWF Persons and the conduct of certain affairs of the Corporation as they may involve the TTWF Persons and their officers, directors, employees and equity owners, and the power, rights, duties and liabilities of the Corporation and its officers, directors, employees and stockholders in connection therewith. Any person purchasing or otherwise acquiring any shares of capital stock of the Corporation, or any interest therein, shall be deemed to have notice of and to have consented to the provisions of this Article EIGHTH.

(2) Certain Agreements and Transactions Permitted; Certain Fiduciary Duties of Certain Stockholders, Directors and Officers.

The Corporation may from time to time enter into and perform, and cause or permit any Corporation Person to enter into and perform, one or more agreements (or modifications or supplements to pre-existing agreements) with any TTWF Person pursuant to which the Corporation Person, on the one hand, and the TTWF Person, on the other hand, agree to engage in transactions of any kind or nature with each other and/or agree to compete, or to refrain from competing or to limit or restrict their competition, with each other, including to allocate and to cause their respective directors, officers and employees (including any who are directors, officers or employees of both) to allocate opportunities between or to refer opportunities to each other. Subject to paragraph (4) of this Article EIGHTH, no such agreement, or the performance thereof by any Corporation Person or TTWF Person (or the grant or refusal to grant waivers thereunder) shall to the fullest extent permitted by law be considered contrary to (i) any fiduciary duty that the TTWF Persons may owe to any Corporation Person or to any stockholder or other owner of an equity interest in any Corporation Person by reason of a TTWF Person being a controlling or significant stockholder of any Corporation Person or participating in the control of any Corporation Person or (ii) any fiduciary duty of any director, officer or employee of any Corporation Person who is also a TTWF Person to a Corporation Person, or to any stockholder thereof. Subject to paragraph (4) of this Article EIGHTH, to the fullest extent permitted by law, no TTWF Person, as a stockholder of any Corporation Person, or participant in control of any Corporation Person, shall have or be under any fiduciary duty to refrain from entering into any agreement or participating in any transaction referred to above, and no director, officer or employee of the Corporation who is also a TTWF Person shall have or be under any fiduciary duty to any Corporation Person to refrain from acting on behalf of the Corporation Persons or of the TTWF Persons in respect of any such agreement or transaction or performing any such agreement in accordance with its terms.

(3) Similar Activities or Lines of Business.

Except as otherwise agreed in writing between the Corporation and TTWF, the TTWF Persons shall to the fullest extent permitted by law have no duty to refrain from (i) engaging in the same or similar activities or lines of business as the Corporation Persons and (ii) doing business with any client, customer or vendor of the Corporation Persons, and no TTWF Person (except as provided in paragraph (4) of this Article EIGHTH) shall to the fullest extent permitted by law be deemed to have breached its or his fiduciary duties, if any, to the Corporation by reason of the TTWF Person's engaging in any such activity. In the event that the TTWF Persons acquire knowledge of a potential transaction or matter which may be a corporate

opportunity for both the Corporation Persons and the TTWF Persons, the TTWF Persons shall to the fullest extent permitted by law have fully satisfied and fulfilled their fiduciary duty with respect to such corporate opportunity, and the Corporation to the fullest extent permitted by law renounces its interest in such business opportunity and waives any claim that such business opportunity constituted a corporate opportunity that should have been presented to the Corporation Persons, if the TTWF Persons act in a manner consistent with the following policy: a corporate opportunity offered to a TTWF Person shall belong to the TTWF Persons, unless such opportunity was expressly offered in writing to the TTWF Person solely in its capacity as a stockholder, officer, director or employee of the Corporation (the "Corporate Opportunity Policy"). In the case of any corporate opportunity in which the Corporation has renounced its interest in the previous sentence, the TTWF Persons shall to the fullest extent permitted by law not be liable to the Corporation or its stockholders for breach of any fiduciary duty as a stockholder of the Corporation by reason of the fact that the TTWF Person acquires or seeks such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or otherwise does not communicate information regarding such corporate opportunity to the Corporation.

(4) Duties of Directors, Officers and Employees of the Corporation.

In the event that a director, officer or employee of the Corporation who is also a TTWF Person acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both the Corporation Persons and the TTWF Persons, such director, officer or employee shall to the fullest extent permitted by law have fully satisfied and fulfilled his fiduciary duty with respect to such corporate opportunity, and the Corporation to the fullest extent permitted by law renounces its interest in such business opportunity and waives any claim that such business opportunity constituted a corporate opportunity that should have been presented to the Corporation Persons, if such director, officer or employee acts in a manner consistent with the Corporate Opportunity Policy. In the case of any corporate opportunity in which the Corporation has renounced its interest in the previous sentence, such director, officer or employee shall to the fullest extent permitted by law not be liable to the Corporation or its stockholders for breach of any fiduciary duty as a director, officer or employee of the Corporation by reason of the fact that a TTWF Person acquires or seeks such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or otherwise does not communicate information regarding such corporate opportunity to the Corporation.

(5) Certain Definitions.

For purposes of this Article EIGHTH, "TTWF Persons" shall mean TTWF LP, a Delaware limited partnership, or any successor thereof ("TTWF"), any partner thereof, any person or entity that is controlled by TTWF, controls TTWF or is under common control with TTWF (other than the Corporation and any entity that is controlled by the Corporation) and any director, officer, employee or equity owner of any of the foregoing entities; and "Corporation Persons" shall mean the Corporation and any entities controlled by the Corporation.

(6) Amendment of This Article EIGHTH.

In no event shall any amendment of this Article EIGHTH subject any TTWF Person or any director, officer or employee of the Corporation to liability for any act or omission occurring prior to such amendment for which such person would be deemed not to be liable under this Article EIGHTH prior to such amendment.

NINTH: The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. The Bylaws may be amended, in whole or in part, and new Bylaws may be adopted (i) by action of the Board of Directors; provided, however, that any proposed alteration, amendment or repeal of, or the adoption of any Bylaw inconsistent with, Section 3, 9, 10 or 11 of Article II of the Bylaws, Section 2, 4, 7, 10 or 11 of Article III of the Bylaws, Article V of the Bylaws or Section 1 of Article VII of the Bylaws, by the Board of Directors shall require the affirmative vote of not less than 75% of all directors then in office at a regular or special meeting of the Board of Directors called for that purpose; or (ii) by the affirmative vote of the shares representing not less than 75% of the voting power of all outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class; provided, that in the case of any such stockholder action at a meeting of stockholders, notice of the proposed alteration, amendment, repeal or adoption of the new Bylaw or Bylaws must be contained in the notice of such meeting. In addition to any other affirmative vote required by applicable law, this Article NINTH may not be amended, modified or repealed except by the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class.

TENTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of the DGCL or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of the DGCL, order a meeting of the creditors or class of creditors, and/or the stockholders or a class of stockholders of the Corporation as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agrees to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which said application has been made, be binding on all of the creditors or class of creditors, and/or the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.

EXHIBIT 3.2

FORM OF AMENDED AND RESTATED BYLAWS

WESTLAKE CHEMICAL CORPORATION

Adopted and Amended by Resolution of the Board of Directors on _________ __, 2004

ARTICLE I
CAPITAL STOCK

Section 1. Share Ownership. Shares of the capital stock of the Corporation shall be represented by certificates; provided, however, that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of the Corporation's stock may be uncertificated shares. Owners of shares of the capital stock of the Corporation shall be recorded in the share transfer records of the Corporation, and ownership of such shares shall be evidenced by a certificate or book entry notation in the share transfer records of the Corporation. Any certificates representing such shares shall be signed by the Chairman of the Board, if there is one, the President or a Vice President and by the Treasurer, an Assistant Treasurer, the Corporate Secretary or an Assistant Corporate Secretary. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer at the date of its issuance.

Section 2. Stockholders of Record. The Board of Directors of the Corporation may appoint one or more transfer agents or registrars of any class of stock or other security of the Corporation. The Corporation may be its own transfer agent if so appointed by the Board of Directors. The Corporation shall be entitled to treat the holder of record of any shares of the Corporation as the owner thereof for all purposes, and shall not be bound to recognize any equitable or other claim to, or interest in, such shares or any rights deriving from such shares, on the part of any other person, including (but without limitation) a purchaser, assignee or transferee, unless and until such other person becomes the holder of record of such shares, whether or not the Corporation shall have either actual or constructive notice of the interest of such other person.

Section 3. Transfer of Shares. The shares of the capital stock of the Corporation shall be transferable in the share transfer records of the Corporation by the holder of record thereof, or his duly authorized attorney or legal representative. All certificates representing shares surrendered for transfer, properly endorsed, shall be canceled and new certificates for a like number of shares shall be issued therefor. In the case of lost, stolen, destroyed or mutilated certificates representing shares for which the Corporation has been requested to issue new certificates, new certificates or other evidence of such new shares may be issued upon such conditions as may be required by the Board of Directors or the Corporate Secretary or an Assistant Corporate Secretary for the protection of the Corporation and any transfer agent or registrar. Uncertificated

shares shall be transferred in the share transfer records of the Corporation upon the written instruction originated by the appropriate person to transfer the shares.

Section 4. Stockholders of Record and Fixing of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors may provide that the share transfer records shall be closed for a stated period of not more than 60 days, and in the case of a meeting of stockholders not less than ten days, immediately preceding the meeting, or it may fix in advance a record date for any such determination of stockholders, such date to be not more than 60 days, and in the case of a meeting of stockholders not less than ten days, prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the share transfer records are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, or stockholders entitled to receive a distribution (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, the day next preceding the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such distribution or share dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as herein provided, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of the share transfer records and the stated period of closing has expired.

ARTICLE II
MEETINGS OF STOCKHOLDERS

Section 1. Place of Meetings. All meetings of stockholders shall be held at the principal office of the Corporation, in the City of Houston, Texas, or at such other place within or without the State of Delaware as may be designated by the Board of Directors or officer calling the meeting.

Section 2. Annual Meeting. The annual meeting of the stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors or as may otherwise be stated in the notice of the meeting. Failure to designate a time for the annual meeting or to hold the annual meeting at the designated time shall not work a dissolution of the Corporation.

Section 3. Special Meetings. Unless otherwise provided by the General Corporation Law of the State of Delaware (the "DGCL"), by the Amended and Restated Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on _________ __, 2004 (as it may be further amended or restated from time to time, the "Amended and Restated Certificate of Incorporation") or by any provisions established pursuant thereto with respect to the rights of holders of one or more outstanding series of the Corporation's preferred stock, special meetings of the stockholders of the Corporation may be called at any time only by the Chairman of the Board, if there is one, or by the Board of Directors pursuant to

a resolution approved by the affirmative vote of at least a majority of the members of the Board of Directors, and no such special meeting may be called by any other person or persons.

Section 4. Notice of Meeting. Notice of all meetings stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than 60 days before the date of the meeting, either personally or by mail or in any other manner allowed by the DGCL, by or at the direction of the Chairman of the Board, if there is one, the Chief Executive Officer, if there is one, the President, the Corporate Secretary or the officer or person calling the meeting to each stockholder of record entitled to vote at such meetings. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the stockholder at his address as it appears on the share transfer records of the Corporation, with postage thereon prepaid. To the fullest extent permitted by Section 233 of the DGCL, if the stockholder consents, only one copy of such notice need be delivered to stockholders who share an address. If sent by facsimile, such notice shall be deemed to be delivered when directed to a number at which the stockholder has consented to receive notice. If sent by electronic mail, such notice shall be deemed to be delivered when directed to an electronic mail address at which the stockholder has consented to receive notice.

Any notice required to be given to any stockholder, under any provision of the DGCL, the Amended and Restated Certificate of Incorporation or these Bylaws, need not be given to a stockholder if notice of two consecutive annual meetings and all notices of meetings held during the period between those annual meetings, if any, or all (but in no event less than two) payments (if sent by first class mail) of dividends or interest on securities during a 12-month period have been mailed to that person, addressed to his address as shown on the share transfer records of the Corporation, and have been returned undeliverable. Any action or meeting taken or held without notice to such person shall have the same force and effect as if the notice had been duly given. If such a person delivers to the Corporation a written notice setting forth his then current address, the requirement that notice be given to that person shall be reinstated.

Section 5. Voting List. The officer or agent having charge of the share transfer records of the Corporation shall make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares registered in the name of each stockholder, which list, for a period of ten days prior to such meeting, shall be kept on file at the principal place of business of the Corporation and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original share transfer records shall be prima facie evidence as to who are the stockholders entitled to examine such list or to vote at any meeting of stockholders. Failure to comply with any requirements of this Section 5 shall not affect the validity of any action taken at such meeting.

Section 6. Voting; Proxies. Except as otherwise provided in the Amended and Restated Certificate of Incorporation or as otherwise provided under the DGCL, each holder of shares of capital stock of the Corporation entitled to vote shall be entitled to one vote for each share

standing in his name on the records of the Corporation, either in person or by proxy executed in writing by him or by his duly authorized attorney-in-fact or, if the proxy is not executed in writing, then in a manner approved by the Board of Directors, a duly authorized committee of the Board, the Chairman of the Board, or the Corporate Secretary or by any other proxy allowed under Section 212 of the DGCL. A proxy shall be revocable unless expressly provided therein to be irrevocable, and the proxy is coupled with an interest sufficient in law to support an irrevocable power. At each election of directors, every holder of shares of the Corporation entitled to vote shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected, and for whose election he has a right to vote, but in no event shall he be permitted to cumulate his votes for one or more directors.

Section 7. Quorum and Vote of Stockholders. Except as otherwise provided by law, the Amended and Restated Certificate of Incorporation or these Bylaws, the holders of shares of capital stock entitled to cast a majority of all the votes which could be cast at such meeting by the holders of all of the outstanding shares of capital stock entitled to vote on any matter that is to be voted on at such meeting, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, provided that, where a separate vote by a class or series or classes or series is required, a quorum with respect to such matter shall consist of a majority of the shares of such class or series or classes or series, and in such case the absence of a quorum with respect to such matter shall not affect the existence of a quorum with respect to any other matter. If a quorum is not represented, a majority in interest of those represented may adjourn the meeting from time to time. At all meetings of stockholders for the election of directors, a plurality of the votes cast by holders of shares entitled to vote in the election of directors at the meeting shall be sufficient to elect. In the case of a matter submitted for action by the stockholders at the direction of the Board of Directors as to which a stockholder approval requirement is applicable under a rule or policy of a national stock exchange or quotation system or any provision of the Internal Revenue Code or under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case for which no higher voting requirement is specified by law, the Amended and Restated Certificate of Incorporation or these Bylaws, the vote required for approval shall be the requisite vote specified in such rule or policy or Internal Revenue Code provision or Rule 16b-3, as the case may be (or the highest such requirement if more than one is applicable). Unless otherwise required by applicable law, the Amended and Restated Certificate of Incorporation or these Bylaws, for approval or ratification of any matter approved and recommended by the Board of Directors, including, without limitation, the appointment of independent public accountants (if submitted for a vote at the direction of the Board of Directors), the vote required for approval or ratification shall be a majority of the votes cast on the matter, voted for or against.

Section 8. Presiding Officer and Conduct of Meetings. The Chairman of the Board, if there is one, or in his absence, the Chief Executive Officer, if there is one, or in his absence, the President, shall preside at all meetings of the stockholders or, if such officers are not present at a meeting, by such other person as the Board of Directors shall designate or if no such person is designated by the Board of Directors, the most senior officer of the Corporation present at the meeting. The Corporate Secretary of the Corporation, if present, shall act as secretary of each meeting of stockholders; if he is not present at a meeting, then such person as may be designated by the presiding officer shall act as secretary of the meeting. The conduct of any meeting of

stockholders and the determination of procedure and rules shall be within the discretion of the officer presiding at such meeting (the "Chairman of the Meeting"), and there shall be no appeal from any ruling of the Chairman of the Meeting with respect to procedure or rules. Accordingly, in any meeting of stockholders or part thereof, the Chairman of the Meeting shall have the sole power to determine appropriate rules or to dispense with theretofore prevailing rules.

Section 9. Proper Business -- Annual Meeting of Stockholders. At any annual meeting of stockholders, only such business shall be conducted as shall be a proper subject for the meeting and as shall have been properly brought before the meeting. To be properly brought before an annual meeting of stockholders, business (other than business relating to any nomination of directors, which is governed by Article III, Section 4 of these Bylaws) must (a) be specified in the notice of such meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise be properly brought before the meeting by or at the direction of the Chairman of the Meeting or the Board of Directors (or any duly authorized committee thereof) or (c) otherwise (i) be properly requested to be brought before the meeting by a stockholder of record entitled to vote in the election of directors generally, in compliance with the provisions of this
Section 9 and (ii) constitute a proper subject to be brought before such meeting. For business to be properly brought before an annual meeting of stockholders, any stockholder who intends to bring any matter (other than a matter relating to any nomination of directors, which is governed by Article III, Section 4 of these Bylaws) before an annual meeting of stockholders and is entitled to vote on such matter must deliver written notice of such stockholder's intent to bring such matter before the annual meeting of stockholders, either by personal delivery or by United States mail, postage prepaid, to the Corporate Secretary of the Corporation. Such notice must be received by the Corporate Secretary not less than 120 days nor more than 180 days prior to the date on which the immediately preceding year's annual meeting of stockholders was held; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public disclosure of an adjournment of an annual meeting of stockholders commence a new time period for the giving of a stockholder's notice as described above.

To be in proper written form, a stockholder's notice to the Corporate Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting of stockholders (a) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (b) the name and address, as they appear on the Corporation's books and records, of the stockholder proposing such business, (c) evidence, reasonably satisfactory to the Corporate Secretary of the Corporation, of such stockholder's status as such and of the number of shares of each class of capital stock of the Corporation of which such stockholder is the beneficial owner, (d) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names and the number of shares beneficially owned by them) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (e) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. No business shall be

conducted at an annual meeting of stockholders except in accordance with the procedures set forth in this Section 9. Beneficial ownership shall be determined in accordance with Rule 13d-3 under the Exchange Act. When used in these Bylaws, "person" has the meaning ascribed to such term in Section 2(a)(2) of the Securities Act of 1933, as amended, as the context may require.

The Chairman of the Meeting shall, if the facts warrant, determine and declare to the meeting that a proposal made by a stockholder of the Corporation pursuant to this Section 9 was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare to the meeting and the defective proposal shall be disregarded.

Notwithstanding anything to the contrary set forth herein, the stockholders may, by unanimous written consent, waive the notice procedures of this Section 9.

Nothing in this Section 9 shall be interpreted or construed to require the inclusion of information about any such proposal in any proxy statement distributed by, at the direction of, or on behalf of, the Board of Directors of the Corporation.

Section 10. Proper Business -- Special Meeting of Stockholders. At any special meeting of stockholders, only such business shall be conducted as shall have been set forth in the notice of such meeting or shall otherwise have been properly brought before the meeting by or at the direction of the Chairman of the Board of Directors or the Board of Directors (or any duly authorized committee thereof).

Section 11. Action by Written Consent. Unless otherwise provided by the DGCL or the Amended and Restated Certificate of Incorporation, no action required to be taken or that may be taken at any annual or special meeting of the stockholders of the Corporation may be taken without a meeting, and the power of the stockholders of the Corporation to consent in writing to the taking of any action by written consent without a meeting is specifically denied, unless such action without a meeting is taken by unanimous written consent.

ARTICLE III
DIRECTORS

Section 1. General. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the authority and powers conferred on the Board of Directors by the DGCL or by the Amended and Restated Certificate of Incorporation, the Board of Directors is authorized and empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject to the provisions of the DGCL, the Amended and Restated Certificate of Incorporation and these Bylaws; provided, however, that no Bylaws hereafter adopted, or any amendments thereto, shall invalidate any prior act of the Board of Directors that would have been valid if such Bylaws or amendment had not been adopted.

Section 2. Classification of Board of Directors; Qualifications. Each director elected solely by the holders of Preferred Stock pursuant to Division A of Article FOURTH of the Amended and Restated Certificate of Incorporation (or elected by such directors to fill a vacancy) shall, except as otherwise provided pursuant to the Certificate of Designations for such series of Preferred Stock, serve for a term ending upon the earlier of the election of his successor

or the termination at any time of a right of the holders of Preferred Stock to elect members of the Board of Directors.

The number of directors which shall constitute the whole Board of Directors shall be fixed in the manner provided in the Amended and Restated Certificate of Incorporation. As provided in Article FIFTH of the Amended and Restated Certificate of Incorporation, the directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided into three classes: Class I, Class II and Class III.

At each annual election, the directors chosen to succeed those whose terms then expire shall be of the same class as the directors they succeed, unless, by reason of any intervening changes in the authorized number of directors, the Board of Directors shall designate one or more directorships whose term then expires as directorships of another class in order more nearly to achieve equality of number of directors among the classes.

In the event of any change in the authorized number of directors, each director then continuing to serve as such shall nevertheless continue as a director of the class of which he or she is a member until the expiration of his or her current term, or his or her prior death, resignation, disqualification or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3. Newly Created Directorships and Vacancies. Within the limits specified in the Amended and Restated Certificate of Incorporation, the number of directors that shall constitute the whole Board of Directors shall be fixed by, and may be increased or decreased from time to time by, the affirmative vote of a majority of the members at any time constituting the Board of Directors. Except as provided in the Amended and Restated Certificate of Incorporation, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, removal, disqualification or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until that director's successor shall have been elected and qualified or until his earlier death, resignation or removal.

Notwithstanding the foregoing paragraph of this Section 3, whenever holders of outstanding shares of Preferred Stock are entitled to elect members of the Board of Directors pursuant to the provisions of Division A of Article FOURTH of the Amended and Restated Certificate of Incorporation, any vacancy or vacancies resulting by reason of the death, resignation, disqualification or removal of any director or directors or any increase in the number of directors shall be filled in accordance with the provisions of such Division.

Section 4. Nomination of Directors. Nominations for the election of directors may be made by the Board of Directors or by any stockholder (each, a "Nominator") entitled to vote in the election of directors. Such nominations, other than those made by the Board of Directors, shall be made in writing pursuant to timely notice delivered to or mailed and received by the Corporate Secretary of the Corporation as set forth in this Section 4 and shall include the

information required under this Section 4. To be timely in connection with an annual meeting of stockholders, a Nominator's notice, setting forth the name and address of the person to be nominated, shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 120 days nor more than 180 days prior to the date on which the immediately preceding year's annual meeting of stockholders was held; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. To be timely in connection with any election of a director at a special meeting of the stockholders, a Nominator's notice, setting forth the name of the person to be nominated, shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 40 days nor more than 60 days prior to the date of such meeting; provided, however, that in the event that less than 55 days' notice or prior public disclosure of the date of the special meeting of the stockholders is given or made to the stockholders, the Nominator's notice to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. At such time, the Nominator shall also submit written evidence, reasonably satisfactory to the Corporate Secretary of the Corporation, that the Nominator is a stockholder of the Corporation and shall identify in writing (a) the name and address of the Nominator, (b) the number of shares of each class or series of capital stock of the Corporation owned beneficially by the Nominator, (c) the name and address of each of the persons with whom the Nominator is acting in concert, (d) the number of shares of capital stock beneficially owned by each such person with whom the Nominator is acting in concert and (e) a description of all arrangements or understandings between the Nominator and each nominee and any other persons with whom the Nominator is acting in concert pursuant to which the nomination or nominations are to be made. At such time, the Nominator shall also submit in writing (i) the name, age, business address and residence address of such proposed nominee, (ii) the principal occupation or employment of such proposed nominee, (iii) the number of shares of each class of capital stock of the Corporation beneficially owned by such proposed nominee, (iv) the written consent of such proposed nominee to having such person's name placed in nomination at the meeting and to serve as a director if elected, (v) any other information relating to such proposed nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, pursuant to Regulation 14A under the Exchange Act and (vi) a notarized affidavit executed by each such proposed nominee to the effect that, if elected as a member of the Board of Directors, he will serve and that he is eligible for election as a member of the Board of Directors. Within 30 days (or such shorter time period that may exist prior to the date of the meeting) after the Nominator has submitted the aforesaid items to the Corporate Secretary of the Corporation, the Corporate Secretary of the Corporation shall determine whether the evidence of the Nominator's status as a stockholder submitted by the Nominator is reasonably satisfactory and shall notify the Nominator in writing of his determination. The failure of the Corporate Secretary of the Corporation to find such evidence reasonably satisfactory, or the failure of the Nominator to submit the requisite information in the form or within the time indicated, shall make the person to be nominated ineligible for nomination at the meeting at which such person is proposed to be nominated. The Chairman of the Meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures

prescribed by these Bylaws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Beneficial ownership shall be determined in accordance with Rule 13d-3 under the Exchange Act.

Section 5. Place of Meetings and Meetings by Telephone. Meetings of the Board of Directors may be held either within or without the State of Delaware, at whatever place is specified by the officer calling the meeting. Meetings of the Board of Directors may also be held by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting by means of conference telephone or other communications equipment shall constitute presence in person at such meeting, except where a director participates in a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. In the absence of specific designation by the officer calling the meeting, the meetings shall be held at the principal office of the Corporation.

Section 6. Regular Meetings. The Board of Directors shall meet each year immediately following the annual meeting of the stockholders for the transaction of such business as may properly be brought before the meeting. The Board of Directors shall also meet regularly at such other times as shall be designated by the Board of Directors. No notice of any kind to either existing or newly elected members of the Board of Directors for such annual or regular meetings shall be necessary. The time or place of holding regular meetings of the Board of Directors may be changed by the Chairman of the Board of Directors or the President and Chief Executive Officer by giving written notice thereof as provided in Section 7 hereof.

Section 7. Special Meetings. Special meetings of the Board of Directors may be held at any time upon the call of the Chairman of the Board, if there is one, or a majority of the directors then in office. Written notice of the time and place of, and general nature of the business to be transacted at, all special meetings of the Board of Directors, shall be given to each director and may be given by any of the following methods: (a) by mail or telegram sent to the last known business address of such director at least four days before the meeting, (b) by facsimile to the business facsimile number of such director transmitted at least one day before the meeting or (c) orally at least one day before the meeting. For purposes of the foregoing sentence, notice shall be deemed given (i) by mail, when deposited in the U.S. mail, postage prepaid, or by telegram, when the telegram is delivered to the telegraph company for transmittal, (ii) by facsimile, when transmittal is confirmed by the sending facsimile machine and (iii) orally, when communicated in person or by telephone to the director or to a person at the business telephone number of the director who may reasonably be expected to communicate it to the director. In calculating the number of days notice received by a director, the date the notice is given by any of the foregoing methods shall be counted, but the date of the meeting to which the notice relates shall not be counted. Notice of the time, place and purpose of a meeting may be waived in writing before or after such meeting, and shall be equivalent to the giving of notice. Participation in a meeting of the Board of Directors shall constitute presence in person at such meeting, except when a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Except as otherwise herein provided, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

Section 8. Quorum and Voting. Except as otherwise provided by law, a majority of the number of directors fixed in the manner provided in the Amended and Restated Certificate of Incorporation shall constitute a quorum for the transaction of business. Except as otherwise provided by law, the Amended and Restated Certificate of Incorporation or these Bylaws, the affirmative vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. Any regular or special directors' meeting may be adjourned from time to time by those present, whether a quorum is present or not.

Section 9. Compensation. Directors shall receive such compensation for their services as shall be determined by the Board of Directors.

Section 10. Removal. No director of the Corporation may be removed from office as a director by vote or other action of the stockholders or otherwise except for cause, and then only by the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class.

Except as applicable law otherwise provides, cause for the removal of a director shall be deemed to exist only if the director whose removal is proposed: (i) has been convicted, or has been granted immunity to testify in any proceeding in which another has been convicted, of a felony by a court of competent jurisdiction and that conviction is no longer subject to direct appeal; (ii) has been found to have been negligent or guilty of misconduct in the performance of his duties to the Corporation in any matter of substantial importance to the Corporation by (A) the affirmative vote of at least 80% of the directors then in office at any meeting of the Board of Directors called for that purpose or (B) a court of competent jurisdiction; or
(iii) has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects his ability to serve as a director of the Corporation.

No proposal by a stockholder to remove a director of the Corporation shall be voted upon at a meeting of the stockholders unless such stockholder shall have delivered or mailed in a timely manner (as set forth in this Section 10) and in writing to the Corporate Secretary of the Corporation
(a) notice of such proposal, (b) a statement of the grounds, if any, on which such director is proposed to be removed, (c) evidence, reasonably satisfactory to the Corporate Secretary of the Corporation, of such stockholder's status as such and of the number of shares of each class of the capital stock of the Corporation beneficially owned by such stockholder and (d) a list of the names and addresses of other beneficial owners of shares of the capital stock of the Corporation, if any, with whom such stockholder is acting in concert, and of the number of shares of each class of the capital stock of the Corporation beneficially owned by each such beneficial owner. To be timely in connection with an annual meeting of stockholders, a stockholder's notice and other aforesaid items shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 120 days nor more than 180 days prior to the date on which the immediately preceding year's annual meeting of stockholders was held; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 120th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation. Within 30 days (or such shorter period

that may exist prior to the date of the meeting) after such stockholder shall have delivered the aforesaid items to the Corporate Secretary of the Corporation, the Corporate Secretary and the Board of Directors of the Corporation shall respectively determine whether the items to be ruled upon by them are reasonably satisfactory and shall notify such stockholder in writing of their respective determinations. If such stockholder fails to submit a required item in the form or within the time indicated, or if the Corporate Secretary or the Board of Directors of the Corporation determines that the items to be ruled upon by them are not reasonably satisfactory, then such proposal by such stockholder may not be voted upon by the stockholders of the Corporation at such annual meeting of the stockholders. The Chairman of the Meeting shall, if the facts warrant, determine and declare to the meeting that a proposal to remove a director of the Corporation was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare to the meeting and the defective proposal shall be disregarded. Beneficial ownership shall be determined as specified in accordance with Rule 13d-3 under the Exchange Act.

All of the foregoing provisions of this Section 10 are subject to the terms of any series of Preferred Stock with respect to the directors to be elected solely by the holders of such series of Preferred Stock.

Section 11. Committees. The Board of Directors, by resolution or resolutions adopted by a majority of the full Board of Directors, may designate one or more members of the Board of Directors to constitute one or more committees, which shall in each case be comprised of such number of directors as the Board of Directors may determine from time to time. Subject to such restrictions as may be contained in the Amended and Restated Certificate of Incorporation or that may be imposed by the DGCL, any such committee shall have and may exercise such powers and authority of the Board of Directors in the management of the business and affairs of the Corporation as the Board of Directors may determine by resolution and specify in the respective resolutions appointing them, including, without limitation, the power and authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the DGCL. Each duly authorized action taken with respect to a given matter by any such duly appointed committee of the Board of Directors shall have the same force and effect as the action of the full Board of Directors and shall constitute for all purposes the action of the full Board of Directors with respect to such matter.

The Board of Directors shall have the power at any time to change the membership of any such committee and to fill vacancies in it. A majority of the members of any such committee shall constitute a quorum. The Board of Directors shall name a chairman at the time it designates members to a committee. Each such committee shall appoint such subcommittees and assistants as it may deem necessary. Except as otherwise provided by the Board of Directors, meetings of any committee shall be conducted in accordance with the provisions of Sections 5 and 7 of this Article III as the same shall from time to time be amended. Any member of any such committee elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of a member of a committee shall not of itself create contract rights.

Section 12. Standing Committees. The committees of the Board of Directors may include an audit committee, a compensation committee, a nominating and governance committee and an executive committee and any other committees designated by the Board of Directors.

Section 13. Board and Committee Action Without a Meeting. Unless otherwise restricted by the Amended and Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at a meeting of the Board of Directors or any committee thereof may be taken without a meeting if a consent in writing or by electronic transmission, setting forth the action so taken, is given by all the members of the Board of Directors or such committee, as the case may be, and shall be filed with the Corporate Secretary of the Corporation.

ARTICLE IV
OFFICERS

Section 1. Officers. The officers of the Corporation shall consist of a President and a Corporate Secretary and such other officers and agents as the Board of Directors may from time to time elect or appoint. The Board of Directors may delegate to the Chairman of the Board, if there is one, and/or the Chief Executive Officer, if there is one, the authority to appoint or remove additional officers and agents of the Corporation. Each officer shall hold office until his successor shall have been duly elected or appointed and shall qualify or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Any two or more offices may be held by the same person.

Section 2. Vacancies; Removal. Whenever any vacancies shall occur in any office by death, resignation, increase in the number of offices of the Corporation or otherwise, the officer so elected shall hold office until his successor is chosen and qualified. The Board of Directors may at any time remove any officer of the Corporation, whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

Section 3. Powers and Duties of Officers. The officers of the Corporation shall have such powers and duties as generally pertain to their offices as well as such powers and duties as from time to time shall be conferred by the Board of Directors. The Corporate Secretary shall have the duty to record the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose.

Section 4. Action with Respect to Securities of Other Corporations and Entities. Unless otherwise directed by the Board of Directors, the President, the Chief Executive Officer, any Vice President and the Treasurer of the Corporation shall each have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of security holders of or with respect to any action of security holders of any other corporation or entity in which the Corporation may hold securities and otherwise to exercise any and all rights and powers that the Corporation may possess by reason of its ownership of securities in such other corporation or entity.

ARTICLE V
INDEMNIFICATION

Section 1. General. The Corporation shall, to the fullest extent permitted by applicable law in effect on the date of effectiveness of these Bylaws, and to such greater extent as applicable law may thereafter permit, indemnify and hold the Indemnitee harmless from and against any and all losses, liabilities, claims, damages and, subject to Article V, Section 2 (Expenses), Expenses (as this and all other capitalized words used in this Article V not previously defined in these Bylaws are defined in Article V, Section 16 (Definitions)), whatsoever arising out of any event or occurrence related to the fact that the Indemnitee is or was a director or Officer of the Corporation or is or was serving in another Corporate Status.

Section 2. Expenses. If the Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If the Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to any Matter in such Proceeding, the Corporation shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf relating to such Matter. The termination of any Matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such Matter. To the extent that the Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

Section 3. Advances. In the event of any threatened or pending action, suit or proceeding in which the Indemnitee is a party or is involved and that may give rise to a right of indemnification under this Article V, following written request to the Corporation by the Indemnitee, the Corporation shall promptly pay to the Indemnitee amounts to cover expenses reasonably incurred by Indemnitee in such proceeding in advance of its final disposition upon the receipt by the Corporation of (i) a written undertaking executed by or on behalf of the Indemnitee providing that the Indemnitee will repay the advance if it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as provided in these Bylaws and (ii) satisfactory evidence as to the amount of such expenses.

Section 4. Repayment of Advances or Other Expenses. The Indemnitee agrees that the Indemnitee shall reimburse the Corporation for all expenses paid by the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding against the Indemnitee in the event and only to the extent that it shall be determined pursuant to the provisions of this Article V or by final judgment or other final adjudication under the provisions of any applicable law that the Indemnitee is not entitled to be indemnified by the Corporation for such expenses.

Section 5. Request for Indemnification. To obtain indemnification, the Indemnitee shall submit to the Corporate Secretary of the Corporation a written claim or request. Such written claim or request shall contain sufficient information to reasonably inform the Corporation about the nature and extent of the indemnification or advance sought by the Indemnitee. The

Corporate Secretary of the Corporation shall promptly advise the Board of Directors of such request.

Section 6. Determination of Entitlement; No Change of Control. If there has been no Change of Control at the time the request for indemnification is submitted, the Indemnitee's entitlement to indemnification shall be determined in accordance with Section 145(d) of the DGCL. If entitlement to indemnification is to be determined by an Independent Counsel, the Corporation shall furnish notice to the Indemnitee within ten days after receipt of the request for indemnification, specifying the identity and address of Independent Counsel. The Indemnitee may, within 14 days after receipt of such written notice of selection, deliver to the Corporation a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of Independent Counsel and the objection shall set forth with particularity the factual basis for such assertion. If there is an objection to the selection of Independent Counsel, either the Corporation or the Indemnitee may petition the Court for a determination that the objection is without a reasonable basis and/or for the appointment of Independent Counsel selected by the Court.

Section 7. Determination of Entitlement; Change of Control. If there has been a Change of Control at the time the request for indemnification is submitted, the Indemnitee's entitlement to indemnification shall be determined in a written opinion by the Independent Counsel selected by the Indemnitee. The Indemnitee shall give the Corporation written notice advising of the identity and address of the Independent Counsel so selected. The Corporation may, within seven days after receipt of such written notice of selection, deliver to the Indemnitee a written objection to such selection. The Indemnitee may, within five days after the receipt of such objection from the Corporation, submit the name of another Independent Counsel and the Corporation may, within seven days after receipt of such written notice of selection, deliver to the Indemnitee a written objection to such selection. Any objections referred to in this Section 7 may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of an Independent Counsel, and such objection shall set forth with particularity the factual basis for such assertion. The Indemnitee may petition the Court for a determination that the Corporation's objection to the first and/or second selection of Independent Counsel is without a reasonable basis and/or for the appointment as Independent Counsel of a person selected by the Court.

Section 8. Procedures of Independent Counsel. If a Change of Control shall have occurred before the request for indemnification is sent by the Indemnitee, the Indemnitee shall be presumed (except as otherwise expressly provided in this Article V) to be entitled to indemnification upon submission of a request for indemnification in accordance with Article V, Section 5 (Request for Indemnification), and thereafter the Corporation shall have the burden of proof to overcome the presumption in reaching a determination contrary to the presumption. The presumption shall be used by the Independent Counsel as a basis for a determination of entitlement to indemnification unless the Corporation provides information sufficient to overcome such presumption by clear and convincing evidence or the investigation, review and analysis of the Independent Counsel convinces him by clear and convincing evidence that the presumption should not apply.

Except in the event that the determination of entitlement to indemnification is to be made by the Independent Counsel, if the person or persons empowered under Article V,

Section 6 (Determination of Entitlement; No Change of Control) or Section 7 (Determination of Entitlement; Change of Control) to determine entitlement to indemnification shall not have made and furnished to the Indemnitee in writing a determination within 60 days after receipt by the Corporation of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and the Indemnitee shall be entitled to such indemnification unless the Indemnitee knowingly misrepresented a material fact in connection with the request for indemnification or such indemnification is prohibited by applicable law. The termination of any Proceeding or of any Matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Article V) of itself adversely affect the right of the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Corporation, or with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful. A person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan of the Corporation shall be deemed to have acted in a manner not opposed to the best interests of the Corporation.

For purposes of any determination hereunder, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or Proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Corporation or another enterprise or on information supplied to him by the Officers of the Corporation or another enterprise in the course of their duties or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section shall mean any other corporation or any partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, Officer, employee or agent. The provisions of this paragraph shall not be deemed to be exclusive or to limit in any way the circumstances in which an Indemnitee may be deemed to have met the applicable standards of conduct for determining entitlement to rights under this Article V.

Section 9. Independent Counsel Expenses. The Corporation shall pay any and all reasonable fees and expenses of the Independent Counsel incurred acting pursuant to this Article V and in any proceeding to which it is a party or witness in respect of its investigation and written report and shall pay all reasonable fees and expenses incident to the procedures in which such Independent Counsel was selected or appointed. No Independent Counsel may serve if a timely objection has been made to his selection until a court has determined that such objection is without a reasonable basis.

Section 10. Adjudication. In the event that (i) a determination is made pursuant to Article V, Section 6 (Determination of Entitlement; No Change of Control) or Section 7 (Determination of Entitlement; Change of Control) that the Indemnitee is not entitled to indemnification under this Article V; (ii) advancement of Expenses is not timely made pursuant to Article V, Section 3 (Advances); (iii) the Independent Counsel has not made and delivered a

written opinion determining the request for indemnification (A) within 90 days after being appointed by the Court, (B) within 90 days after objections to his selection have been overruled by the Court or (C) within 90 days after the time for the Corporation or Indemnitee to object to his selection; or (iv) payment of indemnification is not made within five days after a determination of entitlement to indemnification has been made or deemed to have been made pursuant to Article V, Section 6 (Determination of Entitlement; No Change of Control), Section 7 (Determination of Entitlement; Change of Control) or Section
8 (Procedures of Independent Counsel), the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advancement of Expenses. In the event that a determination shall have been made that the Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, in any judicial proceeding commenced pursuant to this Section 10, the Corporation shall have the burden of proving that the Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. If a determination shall have been made or deemed to have been made that the Indemnitee is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 10, or otherwise, unless the Indemnitee knowingly misrepresented a material fact in connection with the request for indemnification, or such indemnification is prohibited by law.

The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 10 that the procedures and presumptions of this Article V are not valid, binding and enforceable and shall stipulate in any such proceeding that the Corporation is bound by all provisions of this Article V. In the event that the Indemnitee, pursuant to this
Section 10, seeks a judicial adjudication to enforce his rights under, or to recover damages for breach of, this Article V, the Indemnitee shall be entitled to recover from the Corporation, and shall be indemnified by the Corporation against, any and all Expenses actually and reasonably incurred by him in such judicial adjudication, but only if he prevails therein. If it shall be determined in such judicial adjudication that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the Expenses incurred by the Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

Section 11. Participation by the Corporation. With respect to any such claim, action, suit, proceeding or investigation as to which the Indemnitee notifies the Corporation of the commencement thereof, (a) the Corporation will be entitled to participate therein at its own expense and (b) except as otherwise provided below, to the extent that it may wish, the Corporation (jointly with any other indemnifying party similarly notified) will be entitled to assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee. After receipt of notice from the Corporation to the Indemnitee of the Corporation's election so to assume the defense thereof, the Corporation will not be liable to the Indemnitee under this Article V for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. The Indemnitee shall have the right to employ his own counsel in such action, suit, proceeding or investigation but the fees and expenses of such counsel incurred after notice from the

Corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the Corporation, (ii) the Indemnitee shall have reasonably concluded that there is a conflict of interest between the Corporation and the Indemnitee in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel employed by the Indemnitee shall be subject to indemnification pursuant to the terms of this Article V; provided, that the Corporation shall not be entitled to assume the defense of any action, suit, proceeding or investigation brought in the name of or on behalf of the Corporation or as to which the Indemnitee shall have made the conclusion provided for in clause (ii) of this sentence. The Corporation shall not be liable to indemnify the Indemnitee under this Article V for any amounts paid in settlement of any action or claim effected without its written consent, which consent shall not be unreasonably withheld. The Corporation shall not settle any action or claim in any manner that would impose any limitation or unindemnified penalty on the Indemnitee without the Indemnitee's written consent, which consent shall not be unreasonably withheld.

Section 12. Nonexclusivity of Rights. The rights of indemnification and advancement of Expenses as provided by this Article V shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled to under applicable law, the Amended and Restated Certificate of Incorporation, these Bylaws, any agreement, a vote of stockholders or a resolution of directors or otherwise. No amendment, alteration or repeal of this Article V or any provision hereof shall be effective as to any Indemnitee for acts, events and circumstances that occurred, in whole or in part, before such amendment, alteration or repeal. The provisions of this Article V shall continue as to an Indemnitee whose Corporate Status has ceased for any reason and shall inure to the benefit of his heirs, executors and administrators. Neither the provisions of this Article V nor those of any agreement to which the Corporation is a party shall be deemed to preclude the indemnification of any person who is not specified in this Article V as having the right to receive indemnification or is not a party to any such agreement, but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL.

Section 13. Insurance and Subrogation. The Corporation may maintain insurance, at its expense, to protect itself and any director, Officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnity such person against such expense, liability or loss under applicable law.

The Corporation shall not be liable under this Article V to make any payment of amounts otherwise indemnifiable hereunder if, but only to the extent that, the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

In the event of any payment hereunder, the Corporation shall be subrogated to the extent of such payment to all the rights of recovery of the Indemnitee, who shall execute all papers required and take all action reasonably requested by the Corporation to secure such rights, including execution of such documents as are necessary to enable the Corporation to bring suit to enforce such rights.

Section 14. Severability. If any provision or provisions of this Article V shall be held to be invalid, illegal or unenforceable for any reason whatsoever, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; and, to the fullest extent possible, the provisions of this Article V shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

Section 15. Certain Actions for Which Indemnification Is Not Provided. Notwithstanding any other provision of this Article V, no person shall be entitled to indemnification or advancement of Expenses under this Article V with respect to any Proceeding, or any Matter therein, brought or made by such person against the Corporation.

Section 16. Definitions. For purposes of this Article V:

"Change of Control" means:

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (1) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (D) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this definition; or

(ii) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were

the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 35% or more of, respectively, the then outstanding shares of common equity of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and
(3) at least a majority of the members of the board of directors of the corporation, or the similar managing body of a non-corporate entity, resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company, other than a liquidation or dissolution in connection with a transaction to which subsection (iii) applies.

"Corporate Status" describes the status of Indemnitee as a director, Officer, employee, agent or fiduciary of the Corporation or of any other corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the request of the Corporation.

"Court" means the Court of Chancery of the State of Delaware or any other court of competent jurisdiction.

"Designated Professional Capacity" shall include, but not be limited to, a physician, nurse, psychologist or therapist, registered surveyor, registered engineer, registered architect, attorney, certified public accountant or other person who renders such professional services within the course and scope of his employment, who is licensed by appropriate regulatory authorities to practice such profession and who, while acting in the course of such employment, committed or is alleged to have committed any negligent acts, errors or omissions in rendering such professional services at the request of the Corporation or pursuant to his employment (including, without limitation, rendering written or oral opinions to third parties).

"Expenses" shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

"Indemnitee" includes any Officer (including an Officer acting in his Designated Professional Capacity) or director of the Corporation who is, or is threatened to be made, a witness in or a party to any Proceeding as described in Article V, Section 1 (General) or Section 2 (Expenses) by reason of his Corporate Status.

"Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the five years previous to his selection or appointment has been, retained to represent: (i) the Corporation or Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.

"Matter" is a claim, a material issue or a substantial request for relief.

"Officer" means the president, the treasurer, the secretary, and each vice president of the Corporation and any other corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise for which such person is or was serving in such position at the request of the Corporation (and all variants of the preceding positions such as assistant treasurer, assistant secretary, senior vice president, and similar modifications), in each case elected or appointed pursuant to proper corporate authority, and each other person designated by the President of the Corporation from time to time as constituting an "Officer."

"Proceeding" includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative, except one initiated by an Indemnitee pursuant to Article V, Section 10 (Adjudication) to enforce his rights under this Article V.

Section 17. Notices. Promptly after receipt by the Indemnitee of notice of the commencement of any action, suit or proceeding, the Indemnitee shall, if he anticipates or contemplates making a claim for expenses or an advance pursuant to the terms of this Article V, notify the Corporation of the commencement of such action, suit or proceeding; provided, however, that any delay in so notifying the Corporation shall not constitute a waiver or release by the Indemnitee of rights hereunder and that any omission by the Indemnitee to so notify the Corporation shall not relieve the Corporation from any liability that it may have to the Indemnitee otherwise than under this Article V. Any communication required or permitted to the Corporation shall be addressed to the Corporate Secretary of the Corporation, and any such communication to the Indemnitee shall be addressed to the Indemnitee's address as shown on the Corporation's records unless he specifies otherwise and shall be personally delivered or delivered by overnight mail delivery. Any such notice shall be effective upon receipt.

Section 18. Contractual Rights. The right to be indemnified or to the advancement or reimbursement of Expenses (i) is a contract right based upon good and valuable consideration, pursuant to which the Indemnitee may sue as if these provisions were set forth in a separate written contract between the Indemnitee and the Corporation, (ii) is and is intended to be retroactive and shall be available as to events occurring prior to the adoption of these provisions and (iii) shall continue after any rescission or restrictive modification of such provisions as to events occurring prior thereto.

Section 19. Indemnification of Employees, Agents and Fiduciaries. The Corporation, by adoption of a resolution of the Board of Directors, may indemnify and advance expenses to a person who is an employee (including an employee acting in his Designated Professional Capacity), agent or fiduciary of the Corporation including any such person who is or was serving at the request of the Corporation as a director, Officer, employee, agent or fiduciary of any other corporation, partnership, joint venture, limited liability company, trust, employee benefit plan or other enterprise to the same extent and subject to the same conditions (or to such lesser extent and/or with such other conditions as the Board of Directors may determine) under which it may indemnify and advance expenses to an Indemnitee under this Article V.

ARTICLE VI
MISCELLANEOUS PROVISIONS

Section 1. Offices. The address of the registered office of the Corporation in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801, and the name of the registered agent of the Corporation at such address is The Corporation Trust Company. The principal office of the Corporation shall be located in Houston, Texas, unless and until changed by resolution of the Board of Directors. The Corporation may also have offices at such other places as the Board of Directors may designate from time to time, or as the business of the Corporation may require. The principal office and registered office may be, but need not be, the same.

Section 2. Resignations. Any director or officer may resign at any time. Any resignation shall be made in writing and shall take effect at the time specified therein or, if no time is specified, at the time of its receipt by the Chairman of the Board, if there is one, the Chief Executive Officer, if there is one, the President or the Corporate Secretary. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation.

Section 3. Separability. If one or more of the provisions of these Bylaws shall be held to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision hereof and these Bylaws shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein.

Section 4. Notice to Stockholders by Electronic Transmission. Without limiting the manner by which notice may be given effectively to stockholders, any notice required to be given to stockholders by the provisions of these Bylaws may be given by electronic transmission to an electronic address at which the stockholder has consented to receive notice, to the fullest extent allowed under Section 232 of the DGCL.

ARTICLE VII
AMENDMENT OF BYLAWS

Section 1. Vote Requirements. Except as otherwise required by law or the Amended and Restated Certificate of Incorporation, these Bylaws may be amended, in whole or in part, and new Bylaws may be adopted (i) by the affirmative vote of the shares representing not less than 75% of the voting power of all outstanding shares of capital stock of the Corporation generally entitled to vote in the election of directors, voting together as a single class; provided, that in the case of any such stockholder action at a meeting of stockholders, notice of the proposed alteration, amendment, repeal or adoption of the new Bylaw or Bylaws must be contained in the notice of such meeting; or
(ii) by action of the Board of Directors; provided, however, that any proposed alteration, amendment or repeal of, or the adoption of any Bylaw inconsistent with Section 3, 9, 10 or 11 of Article II, Section 2, 4, 7, 10 or 11 of Article III, Article V or this sentence, by the Board of Directors shall require the affirmative vote of not less than 75% of all directors then in office at a regular or special meeting of the Board of Directors called for that purpose.

Exhibit 4.1

NUMBER

INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE

COMMON STOCK

                                                                [SHARES]

[THIS CERTIFICATE IS          WESTLAKE CHEMICAL          SEE REVERSE FOR CERTAIN
TRANSFERABLE IN                  CORPORATION                   DEFINITIONS
                   ]                                       CUSIP XXXXXX XX X

THIS CERTIFIES THAT

IS THE OWNER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.01
EACH OF THE COMMON STOCK OF

CERTIFICATE OF STOCK

Westlake Chemical Corporation transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed.

This certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar.

Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated:

/s/  ALBERT CHAO                 (WESTLAKE LOGO)           /s/  TAI-LI KENG

PRESIDENT AND CHIEF EXECUTIVE OFFICER                      VICE PRESIDENT AND
Countersigned and Registered:                              TREASURER
     [                      ]
Transfer Agent and Registrar,

/s/
   -----------------------------------
   Authorized Signature

(WESTLAKE LOGO)

The Company will furnish without charge to each stockholder who so requests a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock of the company or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Any such request is to be addressed to the Secretary of Westlake Chemical Corporation at its principal executive office, or to its transfer agent named on the face of this certificate.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right of
survivorship and not as tenants in common

UNIF GIFT MIN ACT                                        Custodian
---------------------------------------------------------------------------------------------------------------------
                  (Cust)                                                                       (Minor)


 under Uniform Gifts to Minors Act
---------------------------------------------------------------------------------------------------------------------
                                                          (State)


UNIF TRF MIN ACT                                                                       Custodian (until age)
---------------------------------------------------------------------------------------------------------------------
                                                          (Cust)


                                             under Uniform Transfer to Minors Act
---------------------------------------------------------------------------------------------------------------------
                  (Minor)                                                                      (State)



---------------------------------------------------------------------------------------------------------------------
Additional abbreviations may also be used though not in the above list.


FOR VALUE RECEIVED
---------------------------------------------------------------------------------------------------------------------
HEREBY SELL, ASSIGN AND TRANSFER UNTO


Please insert Social Security or other identifying
number of transferee
                                                           ----------------------------------------------------------


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


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


Please print or typewrite name
and address of transferee
                                                           ----------------------------------------------------------


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


Please insert number of
shares transferred
                                                           -----------------------------------------------------------


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


                                                           -----------------------------------------------------------
                                                                         SHARES REPRESENTED BY THE WITHIN

CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT


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


------------------------------------------------------------
ATTORNEY TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE
WITHIN-NAMED COMPANY WITH FULL POWER OF SUBSTITUTION IN
THE PREMISES.


------------------------------------------------------------
DATED
------------------------------------------------------------


SIGNATURE
------------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS TRANSFER MUST CORRESPOND
WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.

------------------------------------------------------------
SIGNATURE GUARANTEED BY:
------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCK-BROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
------------------------------------------------------------

[BAKER BOTTS LLP LETTERHEAD]

Exhibit 5.1

[Baker Botts L.L.P.
One Shell Plaza
910 Louisiana Street
Houston, Texas 77002]

July ___, 2004

Westlake Chemical Corporation
2801 Post Oak Boulevard, Suite 600
Houston, Texas 77056

Ladies and Gentlemen:

As set forth in a Registration Statement on Form S-1, Registration No. 333-115790 (the "Registration Statement"), filed with the Securities and Exchange Commission (the "Commission") by Westlake Chemical Corporation, a Delaware corporation (the "Company"), under the Securities Act of 1933, as amended (the "Act"), relating to ________ shares (the "Shares") of the Company's Common Stock, par value $0.01 per share ("Common Stock"), together with ________ additional shares of Common Stock (the "Additional Shares") subject to the underwriters' over-allotment option as described in the Registration Statement, certain legal matters in connection with the Shares and the Additional Shares are being passed upon for you by us.

We understand that the Shares are to be sold by the Company, and any Additional Shares are to be sold by TTWF LP, a Delaware limited partnership, pursuant to the terms of an Underwriting Agreement (the "Underwriting Agreement") in substantially the form filed as Exhibit 1.1 to the Registration Statement.

In our capacity as your counsel in the connection referred to above, we have examined the Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws of the Company filed as exhibits to the Registration Statement, originals, or copies certified or otherwise identified, of corporate records of the Company, certificates of public officials and of representatives of the Company, statutes and other instruments and documents as a basis for the opinions hereafter expressed. In giving such opinions, we have relied on certificates of officers of the Company with respect to the accuracy of the factual matters contained in such certificates. In making our examination, we have assumed that all signatures on all documents examined by us are genuine, that all documents submitted to us as originals are accurate and complete, that all documents submitted to us as copies are true and correct copies of the originals thereof and that all information submitted to us was accurate and complete.

BAKER BOTTS LLP

2 July ___, 2004

On the basis of the foregoing, and subject to the assumptions, limitations and qualifications set forth herein, we are of the opinion that:

1. The Company is a corporation duly incorporated under the laws of the State of Delaware.

2. When offered as described in the Registration Statement, and upon the sale of the Shares and any Additional Shares in accordance with the terms and provisions of the Underwriting Agreement and as described in the Registration Statement, the Shares and any Additional Shares will be duly authorized by all necessary corporate action on the part of the Company, validly issued, fully paid and nonassessable.

This opinion is limited to the Delaware General Corporation Law. We hereby consent to the filing of this opinion of counsel as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our Firm under the heading "Legal Matters" in the prospectus forming a part of the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act and the rules and regulations of the Commission thereunder.

Very truly yours,

EXHIBIT 10.13

FORM OF REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of , 2004, between TTWF LP, a Delaware limited partnership ("TTWF"), and Westlake Chemical Corporation, a Delaware corporation (the "Company").

WHEREAS, the Company has determined to offer to the public (the "Public Offering") shares of Common Stock (as defined below); and

WHEREAS, in connection with the Public Offering, the Company has, among other things, agreed to grant to TTWF and its Affiliates (other than the Company or any of its Subsidiaries) who from time to time own Registrable Securities certain registration rights applicable to Registrable Securities (as defined below) held by TTWF and such Affiliates, and the parties hereto desire to enter into this Agreement to set forth the terms of such registration rights; and

NOW, THEREFORE, upon the premises and based on the mutual promises herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1. Certain Definitions. As used in this Agreement, the following initially capitalized terms shall have the following meanings:

(a) "Affiliate" means, with respect to any person, any other person who, directly or indirectly, is in control of, is controlled by or is under common control with the former person; and "control" (including the terms "controlling," "controlled by," and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

(b) "Common Stock" means the common stock of the Company, par value $0.01 per share.

(d) "Fair Market Value" means, with respect to any security, (i) if the security is listed on a national securities exchange or authorized for quotation on a national market quotation system, the closing price, regular way, of the security on such exchange or quotation system, as the case may be, or if no such reported sale of the security shall have occurred on such date, on the next preceding date on which there was such a reported sale, or (ii) if the security is not listed for trading on a national securities exchange or authorized for quotation on a national market quotation system, the average of the closing bid and asked prices as reported by the National Association of Securities Dealers Automated Quotation System or such other reputable entity or system engaged in the regular reporting of securities prices and on which such prices for

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such security are reported or, if no such prices shall have been reported for such date, on the next preceding date for which such prices were so reported, or
(iii) if the security is not publicly traded, the fair market value of such security as determined by a nationally recognized investment banking or appraisal firm mutually acceptable to the Company and the Holders, the fair market value of whose Registrable Securities is to be determined.

(e) "Holder" means (i) TTWF and any Affiliate of TTWF (other than the Company or any of its Subsidiaries) who from time to time owns Registrable Securities or (ii) any Permitted Transferee and any Affiliate of such Permitted Transferee who from time to time owns Registrable Securities.

(f) "Initiating Holders" has the meaning set forth in Section 3(b) hereof.

(g) "Initiating Holder Securities" has the meaning set forth in
Section 3(b) hereof.

(h) "Maximum Marketable Amount" means, when used in connection with an underwritten offering, the aggregate number or principal amount of securities which, in the opinion of the managing underwriter for such offering, can be sold in such offering without materially and adversely affecting the offering.

(i) "Other Holders" has the meaning set forth in Section 3(b) hereof.

(j) "Other Securities" has the meaning set forth in Section 3 hereof.

(k) "Permitted Transferee" has the meaning set forth in Section 10 hereof.

(l) "Person" means any individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, or other entity of whatever nature.

(m) "Registrable After-Acquired Securities" means any securities of the Company acquired by a Holder after the execution of this Agreement.

(n) "Registrable Securities" means any of the following held by a Holder (i) the shares of Common Stock owned as of the date of this Agreement by TTWF, (ii) all Registrable After-Acquired Securities, (iii) any stock or other securities into which or for which such Common Stock or Registrable After-Acquired Securities may hereafter be changed, converted or exchanged, and
(iv) any other securities issued to holders of such Common Stock or Registrable After-Acquired Securities (or such stock or other securities into which or for which such Common Stock or Registrable After-Acquired Securities are so changed, converted or exchanged) upon any reclassification, share combination, share subdivision, share dividend, merger, consolidation or similar transaction or event, provided that any such securities shall cease to be Registrable Securities when such securities are sold in any manner to a person who is not a Permitted Transferee or after the registration rights with respect to the Holder thereof has expired pursuant to Section 11(g).

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(o) "Registration Expenses" means all out-of-pocket expenses incurred in connection with any registration of Registrable Securities pursuant to this Agreement (other than Selling Expenses), including, without limitation, the following; (i) SEC filing fees; (ii) all fees, disbursements and expenses of the Company's counsel(s) and accountants in connection with the registration of the Registrable Securities to be disposed of and the reasonable fees, disbursements and expenses of counsel, other than the Company's counsel, selected by the Holders of the Registrable Securities to be disposed of; (iii) all expenses in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to any Holders, underwriters and dealers and all expenses incidental to delivery of the Registrable Securities; (iv) the cost of printing or producing any underwriting agreement, agreement among underwriters, agreement between syndicates, selling agreement, blue sky or legal investment memorandum or other document in connection with the offering, sale or delivery of the Registrable Securities to be disposed of; (v) all expenses in connection with the qualification of the Registrable Securities to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters in connection with such qualification and the preparation of any blue sky and legal investments surveys; (vi) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the Registrable Securities to be disposed of; (vii) transfer agents', depositaries' and registrars' fees and the fees of any other agent appointed in connection with such offering;
(viii) all security engraving and security printing expenses, (ix) all fees and expenses payable in connection with the listing of the Registrable Securities on any securities exchange or inter-dealer quotation system; (x) all expenses incurred in connection with "roadshow" presentations and holding meetings with potential investors to facilitate the distribution and sale of Registrable Securities; and (xi) any one-time payment for directors and officers insurance directly related to such offering, provided the insurer provides a separate statement for such payment.

(p) "Rule 144" means Rule 144 promulgated under the Securities Act, or any successor rule to similar effect.

(q) "SEC" means the United States Securities and Exchange Commission.

(r) "Securities Act" means the Securities Act of 1933, as amended, or any successor statute.

(s) "Selling Expenses" means all underwriting discounts and commissions, selling concessions and stock transfer taxes applicable to the sale by the Holders of Registrable Securities pursuant to this Agreement.

(t) "Selling Holder" has the meaning set forth in Section 5(e) hereof.

2. Demand Registration.

(a) At any time prior to such time as the rights under this
Section 2 terminate with respect to a Holder as provided in Section 2(a)(iii) hereof, upon written notice from such Holder in the manner set forth in Section 11(i) hereof requesting that the Company effect the

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registration under the Securities Act of any or all of the Registrable Securities held by such Holder or any of its Affiliates which notice shall specify the intended method or methods of disposition of such Registrable Securities, the Company shall use its best efforts to effect, in the manner set forth in Section 5, the registration under the Securities Act of such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in such request (including (1) in an offering on a delayed or continuous basis under Rule 415 (or any successor rule of similar effect) promulgated under the Securities Act and accordingly requiring the filing of a "shelf" registration statement and/or (2) sales for cash or dispositions upon exchange or conversion of securities or dispositions for any form of consideration or no consideration), provided that:

(i) if, while a registration request is pending pursuant to this Section 2(a), the Company determines, following consultation with and receiving advice from its legal counsel, that the filing of a registration statement would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential and the disclosure of which the Company determines reasonably and in good faith would have a material adverse effect on the Company, the Company shall not be required to effect a registration pursuant to this Section 2(a) until the earlier of (A) the date upon which such material information is otherwise disclosed to the public or ceases to be material and (B) 30 days after the Company makes such determination, provided, however, that the Company shall not be permitted to delay a requested registration in reliance on this clause (i) more than twice in any 12-month period;

(ii) the Company shall not be obligated to file a registration statement relating to a registration request pursuant to this Section 2 within a period of 60 calendar days after the effective date of any other registration statement of the Company demanded pursuant to this Section 2(a); and

(iii) the Company shall not be obligated to file a registration statement relating to a registration request pursuant to this Section 2: (A) in the case of a registration request by TTWF or any of its Affiliates, on more than five occasions after such time as TTWF and its Affiliates collectively own less than a majority of the then outstanding shares of Common Stock (it being acknowledged that so long as TTWF and its Affiliates collectively own a majority of the then outstanding shares of Common Stock, there shall be no limit to the number of occasions on which TTWF or its Affiliates may exercise their rights under this Section 2), or (B) in the case of a registration request by a Permitted Transferee or any of its Affiliates, on more than the number of occasions permitted such Holder in accordance with Section 10 hereof (it being acknowledged that (1) the exercise by such Permitted Transferee and its Affiliates of such rights shall not limit the number of occasions on which TTWF and its Affiliates may exercise their rights under this Section 2 and
(2) so long as such Permitted Transferee and its Affiliates collectively own a majority of the then outstanding shares of Common Stock, there shall be no limit to the number of occasions on which such Permitted Transferee or its Affiliates may exercise their rights under this Section 2).

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(b) Notwithstanding any other provision of this Agreement to the contrary, a registration requested by a Holder pursuant to this Section 2 shall not be deemed to have been effected (and, therefore, not requested for purposes of Section 2(a)), (i) unless the registration statement filed in connection therewith has become effective, (ii) if after such registration statement has become effective, it becomes subject to any stop order, or there is issued an injunction or other order or decree of the SEC or other governmental agency or court for any reason other than a misrepresentation or an omission by such Holder, which injunction, order or decree prohibits or otherwise materially and adversely affects the offer and sale of the Registrable Securities so registered prior to the completion of the distribution thereof in accordance with the plan of distribution set forth in the registration statement or (iii) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied other than by reason of some act, misrepresentation or omission by a Holder and are not waived by the purchasers or underwriters.

(c) In the event that any registration pursuant to this Section 2 shall involve, in whole or in part, an underwritten offering, Holders owning at least 50.1% of the Fair Market Value of the Registrable Securities to be registered in connection with such offering shall have the right to designate an underwriter reasonably satisfactory to the Company as the lead managing underwriter of such underwritten offering.

(d) The Company shall have the right to cause the registration of additional securities for sale for the account of any person (including the Company) in any registration of Registrable Securities requested by any Holder pursuant to Section 2(a); provided, however, that if the managing underwriter or other independent marketing agent for such offering (if any) determines that, in its opinion, the additional securities proposed to be sold will materially and adversely affect the offering and sale of the Registrable Securities to be registered in accordance with the intended method or methods of disposition then contemplated by such Holder only the number or principal amount of such additional securities, if any (in excess of the number or principal amount of Registrable Securities), which, in the opinion of such underwriter or agent, can be so sold without materially and adversely affecting such offering shall be included in such registration. The rights of a Holder to cause the registration of additional Registrable Securities held by such Holder in any registration of Registrable Securities requested by another Holder pursuant to Section 2(a) shall be governed by the agreement of the Holders with respect thereto as provided in Section 10(a).

3. Piggyback Registration. If the Company at any time proposes to register any of its Common Stock or any of its other securities (such Common Stock and other securities collectively, "Other Securities") under the Securities Act, whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities under the Securities Act, it will at such time give prompt written notice to each Holder of its intention to do so at least 20 business days prior to the anticipated filing date of the registration statement relating to such registration. Such notice shall offer each such Holder the opportunity to include in such registration statement such number of Registrable Securities as each such Holder may request. Upon the written request of any such Holder made within 15 business days after the receipt of the Company's notice (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), the Company shall effect, in the manner set forth in
Section 5, in connection with the registration of

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the Other Securities, the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Securities so requested to be registered, provided that:

(a) if at any time after giving written notice of its intention to register any securities and prior to the effective date of such registration, the Company shall determine for any reason not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to the Holders and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay registration of any Registrable Securities requested to be included in such registration for the same period as the delay in registering such Other Securities, but, in either such case, without prejudice to the rights of the Holders under Section 2;

(b) (i) if the registration referred to in the first sentence of this Section 3 is to be a registration in connection with an underwritten offering on behalf of any of the Company, holders of securities (other than Registrable Securities) of the Company ("Other Holders") or Holders of Registrable Securities, and the managing underwriter for such offering advises the Company in writing that, in such firm's opinion, such offering would be materially and adversely affected by the inclusion therein of Registrable Securities requested to be included therein pursuant to this Section 3 because such Registrable Securities are not of the same type, class or series as the securities to be offered and sold in such offering on behalf of the Company, the Other Holders and/or the Holders of Registrable Securities, the Company may exclude all such Registrable Securities requested to be included therein pursuant to this Section 3 from such offering;

(ii) if the registration referred to in the first sentence of this Section 3 is to be a registration in connection with an underwritten primary offering on behalf of the Company, and the managing underwriter for such offering advises the Company in writing that, in such firm's opinion, such offering would be materially and adversely affected by the inclusion therein of the Holder's Registrable Securities requested to be included therein pursuant to this Section 3 because the number or principal amount of such Registrable Securities, considered together with the number or principal amount of securities proposed to be offered by the Company, exceeds the Maximum Marketable Amount, the Company shall include in such registration (1) first, the lesser of (A) all securities the Company proposes to sell for its own account ("Company Securities") and (B) the number or principal amount of Company Securities that represents 80% of the total number or principal amount of the Maximum Marketable Amount (or the fair market value of the Maximum Marketable Amount if such Registrable Securities are not of the same type, class or series as the Company Securities) included in such registration; (2) second, the lesser of (A) the number or principal amount of Registrable Securities requested to be included therein pursuant to this Section 3 and (B) the number or principal amount of such Registrable Securities that represents 20% of the total number or principal amount of the Maximum Marketable Amount (or the fair market value of the Maximum Marketable Amount if such Registrable Securities are not of the same type, class or series as the Company Securities) included in such registration (in either case, allocated among

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the Holders in accordance with the agreement of the Holders with respect thereto as provided in Section 10(a)) ; and (3) third, the number or principal amount of securities, if any, requested to be included therein by Other Holders (in excess of the number or principal amount of Company Securities and such Registrable Securities) which, in the opinion of such underwriter, can be so sold without materially and adversely affecting such offering (allocated among such Other Holders on the basis of the number or principal amount (or the fair market value of such securities if the securities are not of the same type, class or series) of the securities requested to be included therein by each such Other Holder); and

(iii) if the registration referred to in the first sentence of this Section 3 is to be a registration in connection with an underwritten secondary offering on behalf of Other Holders made pursuant to demand registration rights granted by the Company to such Other Holders or on behalf of a Holder of Registrable Securities made pursuant to Section 2 of this Agreement (the "Initiating Holders"), and the managing underwriter for such offering advises the Company in writing that, in such firm's opinion, such offering would be materially and adversely affected by the inclusion therein of the Holder's Registrable Securities requested to be included therein pursuant to this Section 3 because the number or principal amount of such Registrable Securities, considered together with the number or principal amount of securities proposed to be offered by the Initiating Holders, exceeds the Maximum Marketable Amount, the Company shall include in such registration: (1) first, all securities any such Initiating Holder proposes to sell for its own account (the "Initiating Holder Securities"); (2) second, the number or principal amount of such Registrable Securities (in excess of the number or principal amount of Initiating Holder Securities) which, in the opinion of such underwriter, can be sold without materially and adversely affecting such offering (allocated among the Holders in accordance with the agreement of the Holders with respect thereto as provided in Section 10(a)); and (3) third, the number or principal amount of securities, if any, requested to be included therein by Other Holders to which clause (1) does not apply or the Company (in excess of the number or principal amount of Initiating Holder Securities and such Registrable Securities) which, in the opinion of such underwriter, can be so sold without materially and adversely affecting such offering (allocated among such Other Holders and the Company on the basis of the number or principal amount (or the fair market value of such securities if the securities are not of the same type, class or series) of the securities requested to be included therein by each such Other Holder or the Company; and

(c) the Company shall not be required to effect any registration of Registrable Securities under this Section 3 incidental to the registration of any of its securities in connection with stock option or other executive or employee benefit or compensation plans of the Company; and

(d) no registration of Registrable Securities effected under this
Section 3 shall relieve the Company of its obligation to effect any registration of Registrable Securities required of the Company pursuant to Section 2 hereof.

4. Expenses. The Company agrees to pay all Registration Expenses with respect to a registration pursuant to this Agreement. All internal expenses of the Company or a Holder in connection with any offering pursuant to this Agreement, including, without limitation, the salaries and expenses of officers and employees, including in-house attorneys, shall be borne by the party incurring them. All Selling Expenses of the Holders participating in any registration

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pursuant to this Agreement shall be borne by such Holders pro rata based on each Holder's number of Registrable Securities included in such registration.

5. Registration and Qualification. If and whenever the Company is required to use its best efforts to effect the registration of any Registrable Securities under the Securities Act as provided in Section 2 or 3 hereof, the Company shall:

(a) prepare and file a registration statement under the Securities Act relating to the Registrable Securities to be offered as soon as practicable, but in no event later than 30 days (45 days if the applicable registration form is other than Form S-3) after the date notice is given, and use its best efforts to cause the same to become effective as soon as practicable thereafter, but in no event later than 75 days after the date notice is given (90 days if the applicable registration form is other than Form S-3); provided that, a reasonable time before filing a registration statement or prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act and the rules and regulations adopted by the SEC thereunder), the Company will furnish to the Holders and their counsel and other representatives (including underwriters) for review and comment, copies of all documents proposed to be filed and provided further, that if TTWF so requests
(i) it and its counsel and other representatives (including underwriters) may participate in the drafting and preparation of such registration statement and prospectus and (ii) such information as it believes may be beneficial to be included in the registration statement and prospectus for marketing purposes shall be included therein so long as disclosure of such information (A) is in compliance with applicable law and (B) does not competitively harm the Company;

(b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective with respect to the disposition of all Registrable Securities included therein and to otherwise comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities included therein until the earlier of
(i) such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition set forth in such registration statement and (ii) the expiration of nine months after such registration statement becomes effective; provided, that such nine-month period shall be extended for such number of days that equals the number of days elapsing from (A) the date the written notice contemplated by paragraph (f) below is given by the Company to (B) the date on which the Company delivers to the Holders of Registrable Securities the supplement or amendment contemplated by paragraph (f) below; and provided further, that in the case of a registration to permit the exercise or exchange of Exchangeable Securities for, or the conversion of Exchangeable Securities into, Registrable Securities, the time limitation contained in clause (ii) above shall be disregarded to the extent that, in the written opinion of TTWF's counsel delivered to the Company, such Registrable Securities are required to be covered by an effective registration statement under the Securities Act at the time such Registrable Securities are issued upon exercise, exchange or conversion of Registrable Securities in order for such Registrable Securities to be freely tradeable by any person who is not an Affiliate of the Company or TTWF;

(c) furnish to the Holders and to any underwriter of such Registrable Securities such number of conformed copies of such registration statement and of each

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amendment thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and of each supplement thereto, in conformity with the requirements of the Securities Act, and such other documents, as the Holders or such underwriter may reasonably request in order to facilitate the public sale of the Registrable Securities, and a copy of any and all transmittal letters or other correspondence to, or received from, the SEC or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering;

(d) use its best efforts to register or qualify all Registrable Securities covered by such registration statement under the securities or blue sky laws of such jurisdictions (domestic or foreign) as the Holders or any underwriter of such Registrable Securities shall request, and use its best efforts to obtain all appropriate registrations, permits and consents required in connection therewith, and do any and all other acts and things which may be necessary or advisable to enable the Holders or any such underwriter to consummate the disposition in such jurisdictions of its Registrable Securities covered by such registration statement; provided that the Company shall not for any such purpose be required to register or qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, or to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction;

(e) (i) use its best efforts to furnish an opinion of counsel for the Company addressed to the underwriters dated the date of the closing under the underwriting agreement (if any) (or if such offering is not underwritten, dated the effective date of the registration statement), and (ii) use its best efforts to furnish a "cold comfort" letter addressed to the underwriters and each Holder of Registrable Securities included in such registration (each a "Selling Holder"), if permissible under applicable accounting practices, and signed by the independent public accountants who have audited the Company's financial statements included in such registration statement, in each such case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities and such other matters as the Selling Holders may reasonably request and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements;

(f) immediately notify the Selling Holders in writing (i) at any time when a prospectus relating to a registration pursuant to Section 2 or 3 hereof is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) of any request by the SEC or any other regulatory body or other body having jurisdiction for any amendment of or supplement to any registration statement or other document relating to such offering, and (iii) of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement relating to such offering or the initiation of proceedings for that purpose and in any such case (i), (ii) or (iii) at the request of the Selling Holders, promptly prepare and furnish to the Selling Holders a reasonable number of copies of a

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supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading or to remove such stop order;

(g) use its best efforts to list all such Registrable Securities covered by such registration on each securities exchange and inter-dealer quotation system on which the Common Stock is then listed;

(h) use its best efforts to list all Registrable Securities covered by such registration statement on any securities exchange or inter-dealer quotation system (in each case, domestic or foreign) not described in paragraph (g) above as the Selling Holders or any underwriter of such Registrable Securities shall request, and use its best efforts to obtain all appropriate registrations, permits and consents required in connection therewith, and to do any and all other acts and things which may be necessary or advisable to effect such listing;

(i) to the extent reasonably requested by the lead or managing underwriters in connection with any underwritten offering, send appropriate officers of the Company to attend any "road shows" scheduled in connection with any such registration;

(j) furnish for delivery in connection with the closing of any offering of Registrable Securities unlegended certificates representing ownership of the Registrable Securities being sold in such denominations as shall be requested by the Selling Holders or the underwriters; and

(k) use its best efforts to make available to its security holders, as soon as reasonably practicable (but not more than eighteen months) after the effective date of the registration statement, an earnings statement which shall satisfy the provisions of Section 10(a) of the Securities Act and the rules and regulations promulgated thereunder.

The Company may require each Selling Holder to furnish the Company with such information regarding such Selling Holder and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request.

6. Underwriting; Due Diligence.

(a) If requested by the underwriters for any underwritten offering of Registrable Securities pursuant to a registration requested under this Agreement, the Company shall enter into an underwriting agreement, with such underwriters for such offering, such agreement to contain such representations and warranties by the Company and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution substantially to the effect and to the extent provided in Section 7 hereof and the provision of opinions of counsel and accountants' letters to the effect and to the extent provided in Section 5(e) hereof. The Selling Holders on whose behalf the Registrable Securities are to be distributed by such underwriters shall be parties to any such underwriting agreement and the representations and

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warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters, shall also be made to and for the benefit of such Selling Holders. Such underwriting agreement shall also contain such representations and warranties by the Selling Holders on whose behalf the Registrable Securities are to be distributed as are customarily contained in underwriting agreements with respect to secondary distributions. The Selling Holders may require that any additional securities included in an offering proposed by a Holder be included on the same terms and conditions as the Registrable Securities that are included therein.

(b) In the event that any registration pursuant to Section 3 shall involve, in whole or in part, an underwritten offering, the Company may require the Registrable Securities requested to be registered pursuant to Section 3 to be included in such underwritten offering on the same terms and conditions as shall be applicable to the other securities being sold through underwriters under such registration. If requested by the underwriters for such underwritten offering, the Selling Holders on whose behalf the Registrable Securities are to be distributed shall enter into an underwriting agreement with such underwriters, such agreement to contain such representations and warranties by the Selling Holders and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, including, without limitation, indemnities and contribution substantially to the effect and to the extent provided in Section 7 hereof. Such underwriting agreement shall also contain such representations and warranties by the Company and such other person or entity for whose account securities are being sold in such offering as are customarily contained in underwriting agreements with respect to secondary distributions.

(c) In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act, the Company shall give the Holders of such Registrable Securities and the Underwriters, if any, and their respective counsel and accountants, such reasonable and customary access to its banks and records and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified the Company's financial statements as shall be necessary, in the opinion of such Holders and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.

7. Indemnification and Contribution.

(a) In the case of each offering of Registrable Securities made pursuant to this Agreement, the Company agrees to indemnify and hold harmless each Holder, its officers and directors, each underwriter of Registrable Securities so offered and each person, if any, who controls any of the foregoing persons within the meaning of the Securities Act, from and against any and all claims, liabilities, losses, damages, expenses and judgments, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse them, as and when incurred, for any reasonable legal or other expenses incurred by them in connection with investigating any claims and defending any actions, insofar as such losses, claims, damages, liabilities or actions shall arise out of, or shall be based upon, any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or any amendment or supplement

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thereto, or in any document incorporated by reference therein, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company shall not be liable to a particular Holder in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement, or any omission, if such statement or omission shall have been made in reliance upon and in conformity with information relating to such Holder furnished to the Company in writing by or on behalf of such Holder and identified in such writing as being specifically for use in the preparation of the registration statement (or in any preliminary or final prospectus included therein) or any amendment or supplement thereto. Such indemnity shall remain in full force and affect regardless of any investigation made by or on behalf of a Holder and shall survive the transfer of such securities. The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to each Holder, any of such Holder's directors or officers, underwriters of the Registrable Securities or any controlling person of the foregoing; provided, further, that this indemnity does not apply in favor of any underwriter or person controlling an underwriter (or if a Selling Holder offers Registrable Securities directly without an underwriter, the Selling Holder) with respect to any loss, liability, claim, damage or expense arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus if a copy of a final prospectus was not sent or given by or on behalf of an underwriter (or the Selling Holder, if the Selling Holder offered the Registrable Securities directly without an underwriter) to the person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus.

(b) In the case of each offering made pursuant to this Agreement, each Holder of Registrable Securities included in such offering, by exercising its registration rights hereunder, agrees to indemnify and hold harmless the Company, its officers and directors and each person, if any, who controls any of the foregoing within the meaning of the Securities Act (and if requested by the underwriters, each underwriter who participates in the offering and each person, if any, who controls any such underwriter within the meaning of the Securities Act), from and against any and all claims, liabilities, losses, damages, expenses and judgments, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, and shall promptly reimburse them, as and when incurred, for any legal or other expenses incurred by them in connection with investigating any claim and defending any actions, insofar as any such losses, claims, damages, liabilities or actions shall arise out of, or shall be based upon, any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement of a material fact is contained in, or such material fact is omitted from, information relating to such Holder furnished in writing to the Company by or on behalf of such Holder and identified in such writing as being specifically for use in the preparation of such registration statement (or in any preliminary or final prospectus included therein). The foregoing indemnity is in addition to any liability which such Holder may otherwise have to the Company, any of its directors or officers, underwriters who participates in

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the offering or any controlling person of the foregoing; provided, however, that this indemnity does not apply in favor of any underwriter or person controlling an underwriter (or if the Company offers securities directly without an underwriter, the Company) with respect to any loss, liability, claim, damage or expense arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus if a copy of a final prospectus was not sent or given by or on behalf of an underwriter (or the Company, if the Company offered the securities directly without an underwriter) to the person asserting such loss, claim, damage, liability or action at or prior to the written confirmation of the sale of the securities as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus.

(c) Each party indemnified under Paragraph (a) or (b) of this
Section 7 shall, promptly after receipt of notice of any claim or the commencement of any action against such indemnified party in respect of which indemnity may be sought, notify the indemnifying party in writing of the claim or the commencement thereof; provided that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party on account of the indemnity agreement contained in paragraph (a) or (b) of this Section 7, except to the extent the indemnifying party was materially prejudiced by such failure, and in no event shall relieve the indemnifying party from any other liability which it may have to such indemnified party. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided that each indemnified party, its officers and directors, if any, and each person, if any, who controls such indemnified party within the meaning of the Securities Act, shall have the right to employ separate counsel reasonably approved by the indemnifying party to represent them if the named parties to any action (including any impleaded parties) include both such indemnified party and an indemnifying party or an Affiliate of an indemnifying party, and such indemnified party shall have been advised by counsel a conflict may exist between such indemnified party and such indemnifying party or such Affiliate that makes representation by the same counsel inadvisable, and in that event the fees and expenses of one such separate counsel for all such indemnified parties shall be paid by the indemnifying party. An indemnified party will not enter into any settlement agreement which is not approved by the indemnifying party, such approval not to be unreasonably withheld. The indemnifying party may not agree to any settlement of any such claim or action which provides for any remedy or relief other than monetary damages for which the indemnifying party shall be responsible hereunder, without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld. In any action hereunder as to which the indemnifying party has assumed the defense thereof with counsel reasonably satisfactory to the indemnified party, the indemnified party shall continue to be entitled to participate in the defense thereof, with counsel of its own choice, but, except as set forth above, the indemnifying party shall not be obligated hereunder to reimburse the indemnified party for the costs thereof. In all instances, the

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indemnified party shall cooperate fully with the indemnifying party or its counsel in the defense of such claim or action.

(d) If the indemnification provided for in this Section 7 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to herein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, in such proportion as shall be appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information related to and supplied by the indemnifying party on the one hand or the indemnified party on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission, but not by reference to any indemnified party's stock ownership in the Company. In no event, however, shall a Holder be required to contribute in excess of the amount of the net proceeds received by such Holder in connection with the sale of Registrable Securities in the offering which is the subject of such loss, claim, damage or liability. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this paragraph shall be deemed to include, for purposes of this paragraph, any legal or other expenses reasonably incurred by such indemnifying party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

8. Rule 144. The Company shall take such measures and file such information, documents and reports as shall be required by the SEC as a condition to the availability of Rule 144 (or any successor provision). The Company shall use its best efforts to cause all conditions to the availability of Form S-3 (or any successor form thereto) under the Securities Act for the filing of registration statements under this Agreement to be met as soon as possible after the completion of the Public Offering.

9. Holdback.

(a) Each Holder agrees by the acquisition of Registrable Securities, if so required by the managing underwriter of any offering of equity securities by the Company and provided that the Company and each of its executive officers and directors enter into similar agreements, not to sell, make any short sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of any Registrable Securities owned by such Holder, during the 7 days prior to and the 90 days after the registration statement relating to such offering has become effective (or such shorter period as may be required by the underwriter), except as part of such underwritten offering. Notwithstanding the foregoing sentence, each Holder subject to the foregoing sentence shall be entitled to (i) sell any Registrable Securities acquired in open market transactions after the completion of such

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underwritten offering and (ii) sell any Registrable Securities in a transaction in which the purchaser agrees to be bound by the restrictions contained in the foregoing sentence. The Company may legend and may impose stop transfer instructions on any certificate evidencing Registrable Securities relating to the restrictions provided for in this Section 9. The Holders shall not be subject to the restrictions set forth in this Section 9(a) for longer than 97 days during any 12-month period and a Holder shall no longer be subject to such restrictions at such time as such Holder together with its Affiliates shall own less than 5% of the then outstanding shares of Common Stock on a fully-diluted basis.

(b) The Company agrees, if so required by the managing underwriter of any offering of Registrable Securities, not to sell, make any short sale of, loan, grant any option for the purchase of, effect any public sale or distribution of or otherwise dispose of any of its equity securities during the 30 days prior to and the 90 days after any underwritten registration pursuant to
Section 2 or 3 hereof has become effective, except as part of such underwritten registration. Notwithstanding the foregoing sentence, the Company shall be entitled to (i) issue shares of Common Stock or other securities upon the exercise of an option or warrant or the conversion or exchange of a security outstanding on such date, (ii) grant shares of Common Stock or other securities pursuant to employee benefit plans in effect on such date and (iii) sell shares of Common Stock or other securities in a transaction in which the purchaser agrees to be bound by the restrictions contained in the preceding paragraph. The Company shall use its best efforts to obtain and enforce similar agreements from any other Persons if requested by the managing underwriter of such offering. Neither the Company nor such Persons shall be subject to the restrictions set forth in this Section 9(b) for longer than 120 days during any 12-month period.

10. Transfer of Registration Rights.

(a) A Holder may transfer all or any portion of its rights under this Agreement to any transferee of Registrable Securities that represent (assuming the conversion, exchange or exercise of all Registrable Securities so transferred that are convertible into or exercisable or exchangeable for the Company's Common Stock) at least 10% of the then issued and outstanding Common Stock of the Company (each, a "Permitted Transferee"); provided, however, that
(i) with respect to any transferee of a majority of the then outstanding shares of Common Stock, the Company shall not be obligated to file a registration statement pursuant to a registration request made by such transferee pursuant to
Section 2 hereof on more than three occasions after such time as such transferee owns less than a majority of the then outstanding shares of Common Stock, (ii) with respect to any transferee of less than a majority but more than 25% of the then outstanding shares of Common Stock, the Company shall not be obligated to file a registration statement pursuant to a registration request made by such transferee pursuant to Section 2 hereof on more than two occasions, and (iii) with respect to any transferee of 25% or less of the then issued and outstanding Common Stock, the Company shall not be obligated to file a registration statement pursuant to a registration request made by such transferee pursuant to
Section 2 hereof on more than one occasion. No transfer of registration rights pursuant to this Section 10 shall be effective unless the Company has received written notice from the Holder of a transfer no later than 10 business days after the Holder enters into a binding agreement to transfer Registrable Securities. Such notice shall state the name and address of any Permitted Transferee and identify the number and/or aggregate principal amount of Registrable Securities with respect to which the rights under this Agreement are being transferred and the scope of the

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rights so transferred. In connection with any such transfer, the term TTWF as used in this Agreement (other than in Sections 2(a)(iii) and 5(a)) shall, where appropriate to assign the rights and obligations hereunder to such Permitted Transferee, be deemed to refer to the Permitted Transferee of such Registrable Securities. TTWF and any Permitted Transferees may exercise the registration rights hereunder in such priority, as among themselves, as they shall agree among themselves, and the Company shall observe any such agreements of which it shall have notice as provided above.

(b) After any such transfer, the transferring Holder shall retain its rights under this Agreement with respect to all other Registrable Securities owned by such transferring Holder.

(c) Upon the request of the transferring Holder, the Company shall execute an agreement with a Permitted Transferee substantially similar to this Agreement.

11. Miscellaneous.

(a) Injunctions. Each party acknowledges and agrees that irreparable damage would occur in the event that any of the provisions of this Agreement was not performed in accordance with its specific terms or was otherwise breached. Therefore, each party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court having jurisdiction, such remedy being in addition to any other remedy to which such party may be entitled at law or in equity.

(b) Severability. If any term or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms and provisions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and each of the parties shall use its best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term or provision.

(c) Further Assurances. Subject to the specific terms of this Agreement, each of the parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.

(d) Waivers, etc. Except as otherwise expressly set forth in this Agreement, no failure or delay on the part of either party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. Except as otherwise expressly set forth in this Agreement, no modification or waiver of any provision of this Agreement nor consent to any departure therefrom shall in any event be effective unless the same shall be in writing and signed by an authorized officer of each of the parties, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.

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(e) Entire Agreement. This Agreement contains the final and complete understanding of the parties with respect to its subject matter. This Agreement supersedes all prior agreements and understandings between the parties, whether written or oral, with respect to the subject matter hereof.

(f) Counterparts. For the convenience of the parties, this Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original but all of which together shall be one and the same instrument.

(g) Termination. The right of any Holder to request registration or inclusion in any registration pursuant to this Agreement shall terminate on such date as all Registrable Securities held or entitled to be held upon conversion by such Holder and its Affiliates may immediately be sold under Rule 144 during any ninety (90) day period.

(h) Amendment. This Agreement may be amended only by a written instrument duly executed by an authorized officer of each of the parties.

(i) Notices. Unless expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given (i) when personally delivered or (ii) if mailed registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter refused by the addressee or its agent or (iii) if sent by overnight courier which delivers only upon the signed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent or (iv) if sent by facsimile or other generally accepted means of electronic transmission, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (ii) or (iii)), addressed as follows or sent by facsimile to the following number (or to such other address or facsimile number for a party as it shall have specified by like notice):

(i) if to TTWF, to:

TTWF LP
2801 Post Oak Boulevard
Houston, Texas 77056
Attention: TTWFGP LLC, general partner
Facsimile Number: (713) 960-6738

(ii) if to the Company, to:

Westlake Chemical Corporation 2801 Post Oak Boulevard Houston, Texas 77056 Attention: General Counsel Facsimile Number: (713) 629-6239

(iii) if to a Holder of Registrable Securities, to the name and address as the same appear in the security transfer books of the Company,

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or to such other address as either party (or other Holders of Registrable Securities) may, from time to time, designate in a written notice in a like manner.

(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

(k) Assignment. Except as specifically provided herein, the parties may not assign their rights under this Agreement. The Company may not delegate its obligations under this Agreement.

(l) Conflicting Agreements. The Company shall not hereafter grant any rights to any person to register securities of the Company, the exercise of which would conflict with the rights granted to the Holders of the Registrable Securities under this Agreement. The Company shall not hereafter grant to any person demand registration rights permitting it to exclude the Holders from including Registrable Securities in a registration on behalf of such person on a basis more favorable than that set forth in Section 2(d) hereof with respect to the Holders.

(m) Construction. This Agreement shall be construed as if jointly drafted by the Company and TTWF and no rule of construction or strict interpretation shall be applied against either party. The paragraph headings contained in this Agreement are for reference purposes only, and shall not affect in any manner the meaning or interpretation of this Agreement.

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EXHIBIT 10.14

FORM OF

WESTLAKE CHEMICAL CORPORATION

2004 OMNIBUS INCENTIVE PLAN

1. Purpose of the Plan. The Westlake Chemical Corporation 2004 Omnibus Incentive Plan (the "Plan") of Westlake Chemical Corporation, a Delaware corporation (the "Company"), is intended to advance the best interests of the Company and its Subsidiaries by providing certain Employees and Directors of the Company and its Subsidiaries with additional incentives through the grant of Options to purchase common stock, par value US $_____ per share of the Company ("Common Stock"), Stock Appreciation Rights ("SARs"), Restricted Stock, Stock Units, Cash Awards and/or Performance Awards, thereby increasing the personal stake of such Employees and Directors in the continued success and growth of the Company.

2. Definitions. As used herein, the terms set forth below shall have the following respective meanings:

"Administrator" means (i) prior to the closing date of the IPO, the Board and (ii) on and after the closing date of the IPO, the Board or a committee designated by the Board.

"Authorized Officer" means the Chief Executive Officer or the Chief Administrative Officer of the Company (or any other senior officer of the Company to whom the Administrator or such Authorized Officer shall delegate the authority to execute any Award Agreement or to carry out any actions, duties or other responsibilities under the Plan as may be permitted by applicable law and directed by the Administrator, where applicable).

"Award" means an Employee Award or a Director Award.

"Award Agreement" means a written agreement setting forth the terms, conditions and limitations applicable to an Award, to the extent the Administrator determines such agreement is necessary.

"Board" means the Board of Directors of the Company.

"Cash Award" means an Award denominated in cash.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Common Stock" means the common stock, par value ______ per share, of the Company.

"Company" means Westlake Chemical Corporation, a Delaware corporation, or any successor thereto.

"Director" means an individual who is a member of the Board that is not an Employee of the Company or any of its Subsidiaries.

"Director Award" means any Option, Stock Appreciation Right or Stock Award granted, whether singly, in combination or in tandem, to a Director pursuant to such applicable terms, conditions and limitations as the Administrator may establish in order to fulfill the objectives of the Plan.

"Dividend Equivalents" means an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable by the Company on one share of Common Stock to stockholders of record, which, in the discretion of the Administrator, may be awarded (i) in connection with any Award under the Plan while such Award is outstanding or otherwise subject to a Restriction Period and on a like number of shares of Common Stock under such Award or (ii) singly.

"Employee" means an employee of the Company or any of its Subsidiaries and an individual who has agreed to become an Employee of the Company or any of its Subsidiaries and actually becomes such an Employee within the following six months.

"Employee Award" means any Option, Stock Appreciation Right, Stock Award or Cash Award (including any Performance Award) granted, whether singly, in combination or in tandem, to an Employee pursuant to such applicable terms, conditions and limitations (including treatment as a Performance Award) as the Administrator may establish in order to fulfill the objectives of the Plan.

"Fair Market Value" of a share of Common Stock means, as of a particular date, (i) (A) if Common Stock is listed on a national securities exchange, the mean between the highest and lowest sales price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Administrator, the price prevailing on the exchange at the time of exercise, (B) the mean between the highest and lowest sales price per share of such Common Stock reported on the consolidated transaction reporting system for The Nasdaq Stock Market, Inc. or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was reported, (C) if Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by The Nasdaq Stock Market, Inc., or, if not reported by The Nasdaq Stock Market, Inc., by the National Quotation Bureau Incorporated or (D) if Common Stock is not publicly traded, the most recent value determined by an independent appraiser appointed by the Company for such purpose, or (ii) if applicable, the price per share as determined in accordance with the procedures of a third party administrator retained by the Company to administer the Plan.

"Grant Date" means the date an Award is granted to a Participant pursuant to the Plan. The Grant Date for a substituted award is the Grant Date of the original award.

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"Grant Price" means the price at which a Participant may exercise his or her right to receive cash or Common Stock, as applicable, under the terms of an Award.

"IPO" means the initial public offering of shares of Common Stock of the Company (the "IPO").

"Incentive Option" means an Option that is intended to comply with the requirements set forth in Section 422 of the Code.

"Nonqualified Option" means an Option that is not an Incentive Option.

"Option" means a right to purchase a specified number of shares of Common Stock at a specified price.

"Participant" means an Employee or Director to whom an Award has been granted under this Plan.

"Performance Award" means an Award made pursuant to this Plan that is subject to the attainment in the future of one or more Performance Goals.

"Performance Goal" means a standard established by the Administrator, to determine in whole or in part whether a Performance Award shall be earned.

"Qualified Performance Award" means a Performance Award made to an Employee that is intended to qualify as qualified performance-based compensation under Section 162(m) of the Code, as described in Section 7(a)(v)(B) of the Plan.

"Restricted Stock" means Common Stock that is restricted or subject to forfeiture provisions.

"Restriction Period" means a period of time beginning as of the Grant Date of an Award of Restricted Stock and ending as of the date upon which the Common Stock subject to such Award is no longer restricted or subject to forfeiture provisions.

"Stock Appreciation Right" or "SAR" means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair Market Value or other specified valuation of a specified number of shares of Common Stock on the date the right is exercised over a specified Grant Price, in each case as determined by the Administrator.

"Stock Award" means an Award in the form of shares of Common Stock or Stock Units, including an award of Restricted Stock.

"Stock Unit" means a unit evidencing the right to receive in specified circumstances one share of Common Stock (as determined by the Administrator) granted to either an Employee or a Director.

"Subsidiary" means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing more than 50% of the combined voting

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power of the shares of all classes or series of capital stock of that corporation that have the right to vote generally on matters submitted to a vote of the stockholders of that corporation and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns more than 50% of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise).

3. Eligibility.

(a) Employees. Employees eligible for the grant of Employee Awards under this Plan are Employees, including Employees that may serve as a director of the Company.

(b) Directors. Members of the Board eligible for the grant of Director Awards under this Plan are those who are Directors.

4. Common Stock Available for Awards. Subject to the provisions of Section 14 hereof, there shall be available for Awards under this Plan granted or payable wholly or partly in Common Stock (including rights that may be exercised for or settled in Common Stock) an aggregate of __________ shares, of which ________ shares are available for awards to Directors.

The number of shares of Common Stock that are the subject of Awards under this Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or otherwise in a manner such that all or some of the shares covered by an Award are not issued to a Participant or are exchanged for Awards that do not involve Common Stock, shall not be counted against the aggregate plan maximum or any sublimit set forth above and shall again immediately become available for Awards hereunder. If the tax withholding obligation resulting from the settlement of any Award is satisfied by withholding shares of Common Stock, only the number of shares of Common Stock issued net of the shares of Common Stock withheld shall be deemed delivered for purposes of determining usage of shares against the maximum number of shares of Common Stock available for delivery under the Plan or any sublimit set forth above. Shares of Common Stock delivered under the Plan as an Award or in settlement of an Award issued or made (a) upon the assumption, substitution, conversion or replacement of outstanding awards under a plan or arrangement of an entity acquired in a merger or other acquisition or (b) as a post-transaction grant under such a plan or arrangement of an acquired entity shall not reduce or be counted against the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that the exemption for transactions in connection with mergers acquisitions from the shareholder approval requirements of the New York Stock Exchange for equity compensation plans applies. The Administrator may from time to time adopt and observe such rules and procedures concerning the counting of shares against the Plan maximum or any sublimit as it may deem appropriate, including rules more restrictive than those set forth above to the extent necessary to satisfy the requirements of any national stock exchange on which the Common Stock is listed or any applicable regulatory requirement. The Board and the appropriate officers of the Company are authorized to take from time to time whatever actions are necessary, and to file any required documents with governmental authorities, stock

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exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards.

5. Administration.

(a) This Plan shall be administered by the Administrator, except as otherwise provided herein.

(b) Subject to the provisions hereof, the Administrator shall have full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Administrator shall also have full and exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper. The Administrator may, in its discretion, provide for the extension of the exercisability of an Award, accelerate the vesting or exercisability of an Award, eliminate or make less restrictive any restrictions applicable to an Award, waive any restriction or other provision of this Plan (insofar as such provision relates to Awards) or an Award or otherwise amend or modify an Award in any manner that is either (i) not adverse to the Participant to whom such Award was granted or (ii) consented to by such Participant. Notwithstanding anything herein to the contrary, without the prior approval of the Company's stockholders, Awards issued under the Plan will not be repriced, replaced or regranted through cancellation or by decreasing the exercise price of a previously granted Award. The Administrator may make an Award to an individual who it expects to become an Employee of the Company or any of its Subsidiaries within the next six months, with such award being subject to the individual's actually becoming an Employee within such time period, and subject to such other terms and conditions as may be established by the Administrator. The Administrator may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent the Administrator deems necessary or desirable to further the Plan purposes. Any decision of the Administrator, with respect to Awards, in the interpretation and administration of this Plan shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned.

(c) No member of the Administrator or Authorized Officer of the Company to whom the Administrator has delegated authority in accordance with the provisions of Section 6 of this Plan shall be liable for anything done or omitted to be done by him or her, by any member of the Administrator or by any officer of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute.

6. Delegation of Authority. Following the authorization of a pool of cash or shares of Common Stock to be available for Awards, the Administrator may authorize an Authorized Officer of the Company, if and to the extent permitted by applicable law, rule or regulation, or a subcommittee of members of the Administrator to grant individual Employee Awards from such pool pursuant to such conditions or limitations as the Administrator may establish. The Administrator may also delegate to an Authorized Officer its administrative duties under this Plan (excluding its granting authority) pursuant to such conditions or limitations as the

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Administrator may establish. The Administrator may engage or authorize the engagement of a third party administrator to carry out administrative functions under the Plan.

7. Awards.

(a) The Administrator shall determine the type or types of Awards to be made under this Plan and shall designate from time to time the Participants who are to be the recipients of such Awards. Each Award may, in the discretion of the Administrator, be embodied in an Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Administrator in its sole discretion and, if required by the Administrator, shall be signed by the Participant to whom the Award is granted and by an Authorized Officer for and on behalf of the Company. Awards may consist of those listed in this Section 7(a) and may be granted singly, in combination or in tandem. Awards may also be granted in combination or in tandem with, in replacement of (subject to Sections 12 and 9(d)), or as alternatives to, grants or rights under this Plan or any other plan of the Company or any of its Subsidiaries, including the plan of any acquired entity. An Award may provide for the grant or issuance of additional, replacement or alternative Awards upon the occurrence of specified events. All or part of an Award may be subject to conditions established by the Administrator, which may include, but are not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, items referenced to in clause (v) below, and other comparable measurements of performance. Upon an Employee's termination of employment, any unexercised, deferred, unvested or unpaid Employee Awards shall be treated as set forth in the applicable Employee Award Agreement or as otherwise specified by the Administrator.

(i) Option. An Employee Award may be in the form of an Incentive Option or a Nonqualified Option. A Director Award may be in the form of a Nonqualified Option. The term of the Option shall extend no more than 10 years after the Grant Date. The price at which any share of Common Stock may be purchased on the exercise of any Option will not be less than the Fair Market Value of a share of the Common Stock on the date of grant of that Option. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded pursuant to this Plan, including the Grant Price, minimum vesting, the number of shares subject to the Option and the date or dates upon which they become exercisable, shall be determined by the Administrator.

(ii) Stock Appreciation Rights. An Award may be in the form of an SAR. SARs may be granted in tandem with an Option or other Award, either at the time of grant or by later amendment thereto, or on a freestanding basis not related to any other Award. The Grant Price of an SAR shall be determined by the Administrator but shall not be less than the Fair Market Value of the Common Stock subject to such SAR on the Grant Date or the Grant Price of a tandem Option to which such SAR relates. The holder of a tandem SAR may elect to exercise either the Option or the SAR, but not both. The exercise period for an SAR shall extend no more than 10 years after the Grant Date. Subject to the

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foregoing provisions, the terms, conditions and limitations applicable to any SARs awarded to Participants pursuant to this Plan, including the Grant Price, the term of any SARs and the date or dates upon which they become exercisable, shall be determined by the Administrator.

(iii) Stock Award. An Employee Award or Director Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted to Participants pursuant to this Plan shall be determined by the Administrator, subject to the limitations specified below.

(iv) Cash Award. An Employee Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to any Cash Awards granted pursuant to this Plan shall be determined by the Administrator.

(v) Performance Award. Without limiting the type or number of Employee Awards or Director Awards that may be made under the other provisions of this Plan, an Employee Award or Director Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to any Performance Awards granted to Participants pursuant to this Plan shall be determined by the Administrator, subject to the limitations specified below. The Administrator shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Participant and/or the portion of an Award that may be exercised.

(A) Nonqualified Performance Awards. Performance Awards granted to Employees or Directors that are not intended to qualify as qualified performance-based compensation under
Section 162(m) of the Code shall be based on achievement of such Performance Goals and be subject to such terms, conditions and restrictions as the Administrator or its delegate shall determine.

(B) Qualified Performance Awards. Performance Awards granted to Employees under the Plan that are intended to qualify as qualified performance-based compensation under
Section 162(m) of the Code shall be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals established by the Administrator prior to the earlier to occur of (x) 90 days after the commencement of the period of service to which the Performance Goal relates and (y) the lapse of 25% of the period of service (as scheduled in good faith at the time the goal is established), and in any event while the outcome is substantially uncertain. A Performance Goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to the Employee, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the Administrator, by comparison with a

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peer group of companies. A Performance Goal may include one or more of the following: increased revenue; net income measures (including but not limited to income after capital costs and income before or after taxes); stock price measures (including but not limited to growth measures and total stockholder return); price per share of Common Stock; market share; net earnings; earnings per share (actual or targeted growth); earnings before interest, taxes, depreciation, and amortization ("EBITDA"); earnings before interest, taxes and amortization ("EBITA"); economic value added (or an equivalent metric); market value added; debt to equity ratio; cash flow measures (including but not limited to cash flow per share, cash flow return on capital, cash flow return on tangible capital, net cash flow, net cash flow before financing activities and improvement in or attainment of working capital levels); return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors' capital and return on average equity); operating measures (including operating income, funds from operations, cash from operations, after-tax operating income; net operating profit after tax, sales volumes, operating efficiency, production volumes and production efficiency); expense measures (including but not limited to overhead cost, general and administrative expense and improvement in or attainment of expense levels); margins; stockholder value; proceeds from dispositions; total market value; safety; reliability; productivity; corporate values measures (including ethics compliance, environmental, and safety) and debt reduction.

Unless otherwise stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to Performance Goals and Qualified Performance Awards, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation Section 1.162-27(e)(2)(i), as to grants to those Employees whose compensation is, or is likely to be, subject to Section 162(m) of the Code, and the Administrator in establishing such goals and interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals applicable to Qualified Performance Awards, the Administrator must certify in writing that applicable Performance Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Qualified Performance Awards made pursuant to this Plan shall be determined by the Administrator.

(b) Notwithstanding anything to the contrary contained in this Plan, the following limitations shall apply to any Employee Awards made hereunder:

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(i) no Participant may be granted, during any calendar year, Employee Awards consisting of Options or SARs that are exercisable for more than _______ shares of Common Stock (the limitation set forth in this clause (b)(i), together with the limitations set forth in clauses (b)(ii) below, being hereinafter collectively referred to as the "Stock Based Awards Limitations");

(ii) no Participant may be issued, during any calendar year, more than _________ shares of Common Stock in connection with Stock Awards.

(iii) no Participant may be granted Employee Awards consisting of Cash Awards that are intended to constitute performance-based awards subject to Section 7(a)(v)(B) having a maximum payment value in any calendar year in excess of $5,000,000.

8. Non-United States Participants. The Administrator may grant awards to persons outside the United States under such terms and conditions as may, in the judgment of the Administrator, be necessary or advisable to comply with the laws of the applicable foreign jurisdictions and, to that end, may establish sub-plans, modified option exercise procedures and other terms and procedures. Notwithstanding the above, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Code, any securities law, any governing statute, or any other applicable law.

9. Payment of Awards.

(a) General. Payment made to a Participant pursuant to an Award may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Administrator shall determine, including, in the case of Common Stock, restrictions on transfer and forfeiture provisions. If such payment is made in the form of Restricted Stock, the Administrator shall specify whether the underlying shares are to be issued at the beginning or end of the Restriction Period. In the event that shares of Restricted Stock are to be issued at the beginning of the Restriction Period, the certificates evidencing such shares (to the extent that such shares are so evidenced) shall contain appropriate legends and restrictions that describe the terms and conditions of the restrictions applicable thereto. In the event that shares of Restricted Stock are to be issued at the end of the Restricted Period, the right to receive such shares shall be evidenced by book entry registration or in such other manner as the Administrator may determine.

(b) Deferral. With the approval of the Administrator, amounts payable in respect of Awards may be deferred and paid either in the form of installments or as a lump-sum payment. The Administrator may permit selected Participants to elect to defer payments of some or all types of Awards or any other compensation otherwise payable by the Company in accordance with procedures established by the Administrator and may provide that such deferred compensation may be payable in shares of Common Stock. Any deferred payment pursuant to an Award, whether elected by the Participant or specified by the Award Agreement or the terms of the Award or by the Administrator,

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may be forfeited if and to the extent that the Award Agreement or the terms of the Award so provide.

(c) Dividends, Earnings and Interest. Rights to dividends or Dividend Equivalents may be extended to and made part of any Award, subject to such terms, conditions and restrictions as the Administrator may establish. The Administrator may also establish rules and procedures for the crediting of interest or other earnings on deferred cash payments and Dividend Equivalents for Awards.

(d) Substitution of Awards. Subject to Sections 12 and 14, at the discretion of the Administrator, an Employee may be offered an election to substitute an Employee Award for another Employee Award or Employee Awards of the same or different type; provided, however, that no Option may be granted in exchange or in replacement of an Option having a higher exercise price.

10. Payment of Grant Price. The Grant Price shall be paid in full at the time of exercise in cash or, if permitted by the Administrator and elected by the Participant, the Participant may purchase such shares by means of tendering Common Stock or surrendering another Award valued at Fair Market Value on the date of exercise, or any combination thereof. The Administrator shall determine acceptable methods and requirements for Participants to tender Common Stock or other Awards. The Administrator may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award. The Administrator may adopt additional rules and procedures regarding the payment of the Grant Price of Awards from time to time, provided that such rules and procedures are not inconsistent with the provisions of this Section 10.

A Participant desiring to pay the Grant Price of an Option by tendering Common Stock using the method of attestation may, subject to any such conditions and in compliance with any such procedures as the Administrator may adopt, do so by attesting to the ownership of Common Stock of the requisite value in which case the Company shall issue or otherwise deliver to the Participant upon such exercise a number of shares of Common Stock subject to the Option equal to the result obtained by dividing (a) the excess of the aggregate Fair Market Value of the shares of Common Stock subject to the Option for which the Option (or portion thereof) is being exercised over the Grant Price payable in respect of such exercise by (b) the Fair Market Value per share of Common Stock subject to the Option, and the Participant may retain the shares of Common Stock the ownership of which is attested.

11. Taxes. The Company or its designated third party administrator shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Administrator may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Award with respect to which withholding is required. If

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shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made.

12. Amendment, Modification, Suspension or Termination of the Plan. The Board may amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that (i) no amendment or alteration that would adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant and (ii) no amendment or alteration shall be effective prior to its approval by the stockholders of the Company to the extent such approval is required by applicable legal requirements or the applicable requirements of the securities exchange on which the Company's Common Stock is listed.

13. Assignability. Unless otherwise determined by the Administrator and provided in the Award Agreement or the terms of the Award, no Award or any other benefit under this Plan shall be assignable or otherwise transferable except by will, by beneficiary designation or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder. In the event that a beneficiary designation conflicts with an assignment by will, the beneficiary designation will prevail. The Administrator may prescribe and include in applicable Award Agreements or the terms of the Award other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Section 13 shall be null and void.

14. Adjustments.

(a) From and after the closing date of the IPO, the existence of outstanding Awards shall not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the existing Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.

(b) From and after the closing date of the IPO, in the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of shares of Common Stock reserved under this Plan and available for issuance pursuant to specific types of Awards as described in Section 4, (ii) the number of shares of Common Stock covered by outstanding Awards, (iii) the appropriate Fair Market Value and other price determinations for such Awards, and (iv) the Stock Based Awards Limitations shall each be proportionately adjusted by the Administrator as appropriate to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another Company or entity,

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the adoption by the Company of any plan of exchange affecting Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Administrator shall make appropriate adjustments to (x) the number of shares of Common Stock reserved under this Plan and (y)(i) the number of shares of Common Stock covered by Awards, (ii) the Grant Price or other price in respect of such Awards, (iii) the appropriate Fair Market Value and other price determinations for such Awards, and (iv) the Stock Based Awards Limitations to reflect such transaction; provided that such adjustments shall only be such as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without increasing, the value of such Awards. In the event of a corporate merger, consolidation, acquisition of assets or stock, separation, reorganization, or liquidation, the Board shall be authorized (x) to assume under the Plan previously granted compensatory awards, or to substitute new Awards for previously granted compensatory awards, including Awards, as part of such adjustment; (y) to cancel Awards that are Options or SARs and give the Participants who are the holders of such Awards notice and opportunity to exercise for 30 days prior to such cancellation; or (z) to cancel any such Awards and to deliver to the Participants cash in an amount that the Board shall determine in its sole discretion is equal to the fair market value of such Awards on the date of such event, which in the case of Options or SARs shall be the excess of the Fair Market Value of Common Stock on such date over the exercise or strike price of such Award.

15. Restrictions. No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. Certificates evidencing shares of Common Stock delivered under this Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Administrator may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.

16. Unfunded Plan. This Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants under this Plan, any such accounts shall be used merely as a bookkeeping convenience, including bookkeeping accounts established by a third party administrator retained by the Company to administer the Plan. The Company shall not be required to segregate any assets for purposes of this Plan or Awards hereunder, nor shall the Company, the Board or the Administrator be deemed to be a trustee of any benefit to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award under this Plan shall be based solely upon any contractual obligations that may be created by this Plan and any Award Agreement or the terms of the Award, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Administrator shall be required to give any security or bond for the performance of any obligation that may be created by this Plan.

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17. Right to Employment. Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company to terminate any Participant's employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company.

18. Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

19. Governing Law. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Texas.

20. Effectiveness; Term. The Plan shall be effective on the date the Plan has been approved by the Board. No Awards shall be made after the tenth anniversary of the effective date of the Plan.

.
.

EXHIBIT 21.1

WESTLAKE CHEMICAL CORPORATION SUBSIDIARIES(1)

                                                               JURISDICTION
                                                                    OF
               NAME OF SUBSIDIARY                             INCORPORATION
               ------------------                             -------------
North American Pipe Corporation                                  Delaware
Van Buren Pipe Corporation                                       Delaware
Westech Building Products, Inc                                   Delaware
North American Profiles, Inc.                                    Delaware
Westlake Chemical Holdings, Inc.                                 Delaware
Westlake Chemical Manufacturing, Inc.                            Delaware
Westlake Styrene LP                                              Delaware
WPT LP                                                           Delaware
Westlake Development Corporation                                 Delaware
Westlake Vinyl Corporation                                       Delaware
Westlake Vinyls, Inc.                                            Delaware
GVGP, Inc.                                                       Delaware
Geismar Holdings, Inc.                                           Delaware
Westlake PVC Corporation                                         Delaware
North American Bristol Corporation                               Delaware
Geismar Vinyls Company LP                                        Delaware
Westlake Profiles Limited                                         Canada
North American Profiles Limited                                   Canada
Westlake Olefins Corporation                                     Delaware
Westlake Chemical Investments, Inc.                              Delaware
Westlake Chemical Products, Inc.                                 Delaware
Westlake Polymers LP                                             Delaware
Westlake Petrochemicals LP                                       Delaware
Westlake Resources Corporation                                   Delaware
Westlake Management Services, Inc.                               Delaware
Westlake International Investments Corporation            British Virgin Islands
Suzhou Huasu Plastics Co., Ltd.                                   China
Westlake Technology Corporation                                  Delaware
Westlake International Corporation                               Delaware

(1) After giving effect to the mergers of Gulf Polymer & Petrochemical, Inc., and Westlake Polymer & Petrochemical, Inc., into Westlake Chemical Corporation.

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-1 of our report dated May 24, 2004 relating to the consolidated financial statements of Westlake Chemical Corporation and its subsidiaries, which appear in such Registration Statement. Additionally, we consent to the use in this Registration Statement on Form S-1 of our report on the Financial Statement Schedule of Westlake Chemical Corporation and its subsidiaries, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

PricewaterhouseCoopers LLP

Houston, Texas
July 1, 2004


(1)	In accordance with Rule 457(o) under the Securities Act of 1933, as amended, the number of shares being registered and the proposed maximum offering price per share are not included in this table.

(2)	Estimated solely for the purpose of calculating the registration fee.

(3)	Includes common stock to be sold by the selling stockholder upon exercise of the underwriters’ over-allotment option.


(4)	$29,141 was previously paid with the initial filing of this registration statement.


	•	Continue productivity improvements. We focus on productivity improvements and cost reduction across our businesses. For example, we have increased our production capacity by approximately 20% since 1999 with minimal change in employee headcount. We completed a conversion at our chlorine facility in 2002 that reduced energy consumption per ton by approximately 25% and increased annual capacity by 64%. We will continue to improve our feedstock flexibility at our ethylene facilities, which will enhance our ability to select feedstocks depending on prevailing market prices.

	•	Pursue low-cost expansion opportunities. We will continue to invest in opportunities to prudently expand capacity through new investments and debottlenecking initiatives. For example, we acquired a vinyls facility in Geismar, Louisiana in 2002 and started the EDC portion of the facility in the fourth quarter of 2003, enabling us to more economically provide basic chemicals to our vinyls chain. At a future date, if market conditions warrant, we could bring approximately 600 million pounds per year of VCM and PVC capacity on line. In our Olefins segment, we recently completed a scheduled turnaround at Lake Charles that increased ethylene capacity by 100 million pounds per year. These investments allow us to significantly increase sales and further improve operating efficiencies with modest incremental capital expenditures.

	•	Maintain a disciplined acquisition strategy. Since our formation, we have successfully integrated 12 acquisitions. Going forward, we will actively seek opportunities in our Vinyls and Olefins businesses that enhance our level of integration, improve our product portfolio, expand our market presence or provide operational synergies and cost savings.


	(1)	The 2003 impairments related primarily to idled styrene assets and other miscellaneous assets written down to fair market value. The 2002 impairment related to a ceased product business. Impairments in 2001 and 2000 related primarily to assets that were acquired but never placed in service. Impairments in 1999 related primarily to a fabricated products business that was subsequently sold and an idled PVC plant.

	(2)	Other income (expense), net is composed of interest income, insurance proceeds, income and expenses related to our accounts receivable securitization facility which was terminated in July 2003, equity income, management fee income and other gains and losses.

	(3)	Does not reflect the issuance of common stock in exchange for the preferred stock as part of the Transactions. No cash dividends were paid during any of the periods presented.

	(4)	Working capital equals current assets less current liabilities.


	(5)	EBITDA (a non-GAAP financial measure) is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as “GAAP.” For this purpose a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this prospectus because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future


	(6)	These are average industry prices for the indicated products as reported by CMAI and are not the prices we realized.

	(7)	Represents average North American spot prices of ethylene over the period as reported by CMAI.

	(8)	Represents average North American contract prices of LDPE general purpose film over the period as reported by CMAI.

	(9)	Represents average North American spot prices of styrene over the period as reported by CMAI.


(10)	Represents average North American contract prices of PVC over the period as reported by CMAI.

(11)	Represents average North American contract prices of VCM over the period as reported by CMAI.

(12)	Represents average North American spot prices of caustic soda (diaphragm grade) over the period as reported by CMAI.

(13)	Represents average prices of Henry Hub natural gas over the period as reported by the New York Mercantile Exchange (NYMEX).


	•	general economic conditions;

	•	the level of business activity in the industries that use our products;

	•	competitor action;

	•	technological innovations;

	•	currency fluctuations;

	•	international events and circumstances; and

	•	governmental regulation in the United States and abroad.


	•	product price;

	•	technical support and customer service;

	•	quality;

	•	reliability of supply;

	•	availability of potential substitute materials; and

	•	product performance.


	•	the emergence of new domestic and international competitors;

	•	the rate of capacity additions by competitors;

	•	change in customer base due to mergers;

	•	the intensification of price competition in our markets;

	•	the introduction of new or substitute products by competitors;

	•	the technological innovations of competitors; and

	•	the adoption of new environmental laws and regulatory requirements.


	•	pipeline leaks and ruptures;

	•	explosions;

	•	fires;

	•	severe weather and natural disasters;


	•	mechanical failure;

	•	unscheduled downtime;

	•	labor difficulties;

	•	transportation interruptions;

	•	chemical spills;

	•	discharges or releases of toxic or hazardous substances or gases;

	•	storage tank leaks;

	•	other environmental risks; and

	•	terrorist attacks.


	•	a significant portion of our cash flow from operations will be dedicated to the payment of interest and principal on our debt and will not be available for other purposes, including the payment of dividends;

	•	we may not be able to pay the regular quarterly dividend that we currently intend to pay;

	•	we may not be able to obtain necessary financing in the future for working capital, capital expenditures, acquisitions, debt service requirements or other purposes;

	•	our less leveraged competitors could have a competitive advantage because they have greater flexibility to utilize their cash flow to improve their operations;

	•	we may be exposed to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which would result in higher interest expense in the event of increases in interest rates; and

	•	we could be more vulnerable in the event of a downturn in our business that would leave us less able to take advantage of significant business opportunities and to react to changes in our business and in market or industry conditions.


	•	pay dividends on, redeem or repurchase our capital stock;

	•	make investments and other restricted payments;

	•	incur additional indebtedness or issue preferred stock;

	•	create liens;

	•	permit dividend or other payment restrictions on our restricted subsidiaries;

	•	sell all or substantially all of our assets or consolidate or merge with or into other companies;

	•	engage in transactions with affiliates; and

	•	engage in sale-leaseback transactions.


	•	we may fail to integrate the businesses we acquire into a cohesive, efficient enterprise;


	•	our resources, including management resources, are limited and may be strained if we engage in a significant number of acquisitions, and acquisitions may divert our management’s attention from initiating or carrying out programs to save costs or enhance revenues; and

	•	our failure to retain key employees and contracts of the businesses we acquire.


	•	the composition of our board of directors and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers;

	•	the determination of incentive compensation, which may affect our ability to retain key employees;

	•	the allocation of business opportunities between the Selling Stockholder Affiliates and us;

	•	any determinations with respect to mergers or other business combinations;

	•	our acquisition or disposition of assets;

	•	our financing decisions and our capital raising activities;

	•	the payment of dividends on our common stock;

	•	amendments to our restated certificate of incorporation or bylaws; and

	•	determinations with respect to our tax returns.


	•	the solicitation and hiring of employees from each other;

	•	the timing and manner of any sales or distributions by the selling stockholder of all or any portion of its ownership interest in us;

	•	agreements with the Selling Stockholder Affiliates relating to corporate services that may be material to our business;

	•	business opportunities that may be presented to the Selling Stockholder Affiliates and to our officers and directors associated with the Selling Stockholder Affiliates;

	•	competition between Selling Stockholder Affiliates and us within the same lines of business; and

	•	our dividend policy.


	•	our operating and financial performance and prospects;

	•	quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and revenues;

	•	changes in revenue or earnings estimates or publication of research reports by analysts;

	•	speculation in the press or investment community;

	•	strategic actions by us or our competitors, such as acquisitions or restructurings;

	•	sales of our common stock by stockholders;


	•	actions by institutional investors or by the selling stockholder;

	•	fluctuations in oil and gas prices;

	•	general market conditions, including fluctuations in commodity prices; and

	•	U.S. and international economic, legal and regulatory factors unrelated to our performance.


	•	future operating rates, margins, cash flow and demand for our products;

	•	production capacities;

	•	expected cyclical recovery in the olefins and vinyls industries;

	•	our ability to borrow additional funds under our credit facility;

	•	our intended quarterly dividends;

	•	future capacity additions and expansions in the industry;

	•	compliance with present and future environmental regulations and costs associated with environmentally related penalties, capital expenditures, remedial actions and proceedings; and

	•	effects of pending legal proceedings.


	•	general economic and business conditions;

	•	the cyclical nature of the chemical industry;

	•	the availability, cost and volatility of raw materials and energy;

	•	uncertainties associated with the United States and worldwide economies, including those due to political tensions in the Middle East and elsewhere;

	•	current and potential governmental regulatory actions in the United States and regulatory actions and political unrest in other countries;

	•	industry production capacity and operating rates;

	•	the supply/demand balance for our products;

	•	competitive products and pricing pressures;

	•	access to capital markets;

	•	terrorist acts;

	•	operating interruptions (including leaks, explosions, fires, weather-related incidents, mechanical failure, unscheduled downtime, labor difficulties, transportation interruptions, spills and releases and other environmental risks);


	•	changes in laws or regulations;

	•	technological developments;

	•	our ability to implement our business strategies; and

	•	creditworthiness of our customers.


	•	any applicable contractual restrictions limiting our ability to pay dividends;

	•	our earnings and cash flows;

	•	our capital requirements;

	•	our financial condition; and

	•	other factors our board of directors deems relevant.


	(1)	The 2003 impairments related primarily to idled styrene assets and other miscellaneous assets written down to fair market value. The 2002 impairment related to a ceased product business. Impairments in 2001 and 2000 related primarily to assets that were acquired but never placed in service. Impairments in 1999 related primarily to a fabricated products business that was subsequently sold and an idled PVC plant.

	(2)	Other income, net is composed of interest income, insurance proceeds, income and expenses related to our accounts receivable securitization facility which was terminated in July 2003, equity income, management fee income and other gains and losses.

	(3)	Does not reflect the issuance of common stock in exchange for preferred stock as part of the Transactions. No cash dividends were paid during any of the periods presented.

	(4)	Working capital equals current assets less current liabilities.


	(5)	EBITDA (a non-GAAP financial measure) is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as “GAAP.” For this purpose a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this prospectus because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future


	•	shortages of raw materials due to increasing demand;

	•	capacity constraints due to construction delays, strike action or involuntary shutdowns;

	•	the general level of business and economic activity; and

	•	the direct or indirect effect of governmental regulation.


(1)	The following tables reconcile EBITDA to our income (loss) from operations for each segment. See footnote 5 of the table in “Selected Consolidated Financial, Operating and Industry Data.”


	•	repay in full all outstanding amounts under our then-existing revolving credit facility, term loan and 9.5% Series A and Series B notes, including accrued and unpaid interest, fees and a $4.0 million make-whole premium to the noteholders; and

	•	provide $2.4 million in cash collateral for outstanding letter of credit obligations of $2.2 million.


	•	$380.0 million in aggregate principal amount of 8 3/4% senior notes due 2011;

	•	$120.0 million senior collateralized term loan due in 2010; and

	•	$21.0 million in borrowings under a new $200.0 million senior collateralized working capital revolving credit facility due in 2007.


(1)	EDC, a VCM intermediate product, is not included in the table.

(2)	Annual capacity excludes total capacity of 79 million pounds of PVC film and 286 million pounds of PVC resin from the joint venture in China (in which we have a 43% interest) and 600 million pounds of potential PVC and VCM capacity at our facilities in Geismar, Louisiana.


	•	emissions to the air;

	•	discharges to land or to surface and subsurface waters;

	•	other releases into the environment;

	•	remediation of contaminated sites;


	•	generation, handling, storage, transportation, treatment and disposal of waste materials; and

	•	maintenance of safe conditions in the workplace.