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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 2002

Commission file number: 333-70011

GEO Specialty Chemicals, Inc.

(Exact Name of Registrant as Specified in Its Charter)

GEO Specialty Chemicals, Inc.

3201 Enterprise Parkway, Suite 490

Cleveland, Ohio 44122

(Address, including Zip Code, of Principal Executive Offices)

Registrant’s telephone number, including area code: (216) 464-5564

Securities Registered Pursuant To Section 12(b) Of The Act:

None

Securities Registered Pursuant To Section 12(g) Of The Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant cannot be computed, since the registrant’s equity is not traded on any public market.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Shares of Class A Voting Common Stock, $1.00 par value, as of April 15, 2003: 135.835

Shares of Class B Nonvoting Common Stock, $1.00 par value, as of April 15, 2003: none

PART I.

ITEM 1. BUSINESS

Introduction to GEO’s Business

GEO Specialty Chemicals, Inc., an Ohio corporation that commenced business in 1993, develops, manufactures and markets a wide variety of specialty chemicals. GEO is a leading supplier of a broad variety of niche products sold to a diverse customer and market base. GEO manufactures over 300 products sold to major industrial customers for such diverse end-use applications as water treatment, wire and cable, industrial rubber, oil and gas production, coatings, construction, and electronics.

GEO manages its products within three primary operating groups: specialty additives, performance chemicals and electronic chemicals. Specialty additives are primarily chemical components that improve the properties of customers’ products. GEO is a leading U.S. producer of a number of specialty additives that are used in a variety of construction, oil field, coating, wire and cable, and industrial rubber applications. Specialty additives represented approximately 57.1% of GEO’s total net sales for the year ended December 31, 2002.

Performance chemicals are primarily products used by customers to enhance the productivity of their operations and decrease their operating costs. GEO’s performance chemicals consist principally of chemicals used in the water treatment and oil well stimulation markets. GEO is a leading U.S. producer and marketer of several performance chemicals sold in these markets. Performance chemicals represented approximately 24.9% of GEO’s total net sales for the year ended December 31, 2002.

GEO’s electronic chemicals group was created after its 1999 acquisition of a gallium extraction and purification business from Rhodia Chimie S.A. The electronic chemicals group manufactures and sells virgin gallium to various sectors of the electronics market for applications in telecommunications and optoelectronics. These sales represented approximately 2.8% of GEO’s total net sales for the year ended December 31, 2002.

In addition to specialty additives, performance chemicals and electronic chemicals, GEO supplies numerous raw materials and intermediates to Cognis Corporation and finished products used in the paper industry under a long-term supply agreement with ONDEO Nalco Company. GEO also produces by-products, which it sells in the merchant market, and raw materials for internal consumption. These activities represented approximately 15.2% of GEO’s total net sales for the year ended December 31, 2002.

GEO was formed by George P. Ahearn and William P. Eckman to build, primarily through acquisitions, a specialty chemical business targeted in strategic markets. GEO’s initial acquisition occurred on February 3, 1993 with the purchase of Rhone-Poulenc, Inc.’s Gulf Coast aluminum sulfate business, a manufacturer and supplier of paper processing chemicals and processed clays located in the Southeastern United States, for $3.6 million. On July 15, 1994, GEO acquired the assets of Courtney Industries, Inc., a manufacturer of aluminum-based chemicals used in water treatment and industrial applications, for $5.1 million. The acquisition of Courtney Industries also provided GEO with complementary products to its existing aluminum

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sulfate business. On June 30, 1995, GEO purchased the customer list relating to the dry aluminum sulfate business of Rhone-Poulenc, Inc. for an aggregate $375,000. GEO acquired seven plants comprising the business and assets of the aluminum sulfate business of Cytec Industries Inc. on December 5, 1996 for $7.3 million. The acquisition of Cytec Industries further improved GEO’s position in the aluminum sulfate market and expanded its network of strategically located plants in the Southeastern United States.

On March 25, 1997, GEO purchased from Henkel Corporation (the relevant business of which has been spun-off as Cognis Corporation) two modern ISO 9002 certified manufacturing plants located in the United States and involved in the development, manufacture and supply of specialty paper chemicals and construction and process additive chemicals, for $54.2 million. Through the Henkel acquisition, GEO became one of the most diversified specialty chemical suppliers to the paper industry with over 200 products. The Henkel acquisition also provided GEO with over 100 products sold to the construction, oil and gas, and ceramic industries.

On July 31, 1998, GEO acquired substantially all of the assets of the TRIMET Technical Products Division of Mallinckrodt Inc. for approximately $61.1 million. As a result of the acquisition of TRIMET, GEO became the leading global supplier of dimethylolpropionic acid, marketed under the brand name DMPA^®, and trimethylolethane, marketed under the brand name TRIMET^®, specialty chemicals used primarily in the production of specialty paints and coatings.

On September 8, 1999, GEO acquired a gallium extraction and purification business from Rhodia Chimie S.A. for the French franc equivalent of approximately $23.3 million. The acquired business provides various grades of gallium to the electronics market for applications in telecommunications and optoelectronics. The acquisition included a gallium purification facility in Salindres, France and a gallium extraction facility in Stade, Germany. As part of the acquisition, GEO was also granted a three-year option to acquire a dormant gallium extraction facility near Pinjarra, Australia. GEO exercised the option in September 2002 for $1.5 million. GEO plans to keep the facility in its dormant status until the global market for gallium strengthens.

On April 15, 2001, GEO sold to ONDEO Nalco Company certain assets of its paper chemicals business for $8.5 million in cash plus the assumption of certain liabilities associated with the paper chemicals business. In addition, GEO could receive performance- related consideration of up to $2.0 million based on sales of certain products during two twelve month periods following the divestment. As of December 31, 2001, GEO had recorded a pre-tax gain of approximately $2.2 million on the sale. As part of the transaction, GEO entered into a supply agreement with Nalco, pursuant to which GEO has produced and will continue to produce specific coating products for a period of five years after the divestment. For the years ended December 31, 2001 and 2002, GEO sold $8.5 million and $7.6 million, respectively, to Nalco under the supply agreement. Prior to the divestment, GEO’s paper chemicals business recorded sales of $6.8 million in 2001 and $26.3 million in 2000. In July 2002, GEO received $1.0 million of performance- related consideration from Nalco based on the sales of the divested business during the twelve month period after the divestment.

On May 31, 2001, GEO acquired from Hercules Incorporated substantially all the assets, net of certain liabilities, of Hercules’ Peroxy Chemicals division for $ 92.2 million. The acquired

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business produces various grades of organic peroxide products derived primarily from cumene. These organic peroxide additives are used as crosslinking agents in the making of insulation for medium and high voltage wire and cable and as both a curing agent and crosslinking agent for industrial rubber used in high performance applications. As part of the acquisition, GEO purchased manufacturing facilities in Gibbstown, New Jersey and Franklin, Virginia. The acquired business is the sole producer of cumene-based organic peroxides in the United States. During fiscal 2002 and seven months of fiscal 2001, GEO recorded net sales of $33.3 million and $20.8 million, respectively, by the Peroxy Chemicals business.

Products and Markets Overview

The following table shows on a pro forma basis GEO’s principal operating groups by product line, primary end-markets and as a percentage of sales for the years 2000 through 2002. The pro forma sales percentages assume that the Hercules acquisition and Nalco disposition were each effected on January 1, 2000.

Performance Chemicals

Water Treatment. The U.S. specialty chemical water treatment market is comprised of two parts: industrial water treatment and municipal water treatment. The industrial water treatment market uses specialty chemicals primarily to purify water for manufacturing processes, since the use of untreated water results in low product quality and accelerated equipment degradation. The industrial market is also required by environmental regulations to treat its wastewater. Demand in this area is therefore driven by both the level of industrial production and environmental regulations.

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The municipal water treatment market uses specialty chemicals primarily to purify water sources into a consumable form. Municipalities must also comply with environmental regulations. The following factors drive growth for specialty water treatment chemicals:

Within the specialty chemical water treatment industry, GEO markets products in the following major areas: flocculants and coagulants.

Flocculants/Coagulants. GEO’s flocculants and coagulants are used in the paper formation process and the treatment of pulp and paper mill wastewater. GEO believes it is a leading seller of these products, including polyaluminum chloride and aluminum sulfate, to the U.S. pulp and paper industry.

Flocculants and coagulants remove suspended matter from water and are essential to the treatment of industrial processing water, wastewater and drinking water. Coagulants are used to achieve primary separation of fine particles. Flocculants are added after the primary coagulant to cause the separated particles to clump together and settle out more rapidly. GEO is a leading U.S. manufacturer of several flocculants and coagulants, including aluminum sulfate and polyaluminum chlorides, which are used as both a flocculant and coagulant for the treatment of water in the industrial and municipal markets. GEO markets over 70 products in this industry.

GEO derives its strong market position from the strategic location of its plants and its status as a low cost producer. The close proximity of GEO’s nine small plants to its customer base, most notably its pulp and paper customers, provides GEO with a distinct advantage over its competitors, allowing it to deliver its products in a more timely and cost effective manner. GEO’s source of kaolin clay, which is used in the production of aluminum sulfate, provides a strategic raw material enabling GEO to be a low cost supplier in the market. These factors, along with the low quality of water in the Southeastern U.S., where GEO’s performance chemicals business primarily operates, have resulted in strong market share for GEO.

In this market, GEO competes with General Chemical Corporation, Gulbrandsen Co., Inc., Summit Research Labs, Kemwater North America Company, a subsidiary of Kimera Corporation, Southern Ionics, Inc. and Delta Chemical Corp.

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Specialty Additives

Construction. GEO competes primarily in two parts of the construction industry: concrete additives and plaster board.

Concrete Additives. GEO’s naphthalene sulfonate condensates and the other specialty chemicals that it sells in this segment of the construction market are used as additives to increase the strength and workability of concrete. These products also improve the ability of concrete to withstand deterioration due to temperature variations and corrosive agents. Major markets for these products include roadway construction and repair and residential and commercial construction. GEO markets approximately 30 products in this market. GEO competes in this market with the Hampshire Division of The Dow Chemical Company and Handy Chemicals Ltd., a subsidiary of Rutgers Organics GmbH.

Plaster Board. GEO’s naphthalene sulfonate condensates and the other specialty chemicals that it sells in this segment of the construction market are used to shorten the drying time and expedite the manufacture of plaster board. Demand for GEO’s products in this market is primarily a function of the level of residential and commercial construction. GEO is the leading U.S. manufacturer of naphthalene sulfonate condensates to the plaster board market. GEO markets approximately 10 products for plaster board use. GEO developed the application of naphthalene sulfonate condensates in this market and is considered to be the technology leader. GEO is also a leading manufacturer of foaming agents and defoamers to the plaster board industry. Major customers include the four leading plaster board producers: United States Gypsum Company, Georgia-Pacific Corporation, National Gypsum and James Hardie. GEO competes primarily with the Hampshire Division of The Dow Chemical Company and Handy Chemicals Ltd., a subsidiary of Rutgers Organics GmbH.

Coatings. Primarily concentrated in the United States, Western Europe and Japan, the global market for paint and coating chemicals is split primarily into two applications: construction, primarily new home construction, and consumer durables, including motor vehicles, home furnishings, outdoor equipment and household appliances. Demand for paint and coating chemicals is largely a function of construction expenditures, motor vehicle production and general consumer spending.

In addition, environmental concerns have resulted in increased demand for more environmentally-friendly water-based paints and coatings and the specialty chemicals used in their production. This increase has been most pronounced in the construction industry, where most household paints now use water-based paint and coatings. In the 1990s, the shift towards water-based paints and coatings spread to the consumer durables sector and other industrial sectors as well, resulting in continued growth in the paint and coating chemicals market.

Within the specialty paint and coating chemicals market, GEO manufactures and supplies two products: DMPA^® and TRIMET^®.

DMPA^®. GEO’s DMPA^® is used in the production of such products as wood varnishes, leather coatings, adhesives and automotive parts. GEO believes that its DMPA^® product, with its environmentally-friendly profile and superior performance, will benefit from the worldwide

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trend towards more stringent environmental standards for many paint and coating products. GEO is the only producer of DMPA^® in the United States and supplies such major manufacturers as Avecia Corp., PPG Industries, Inc. and Reichhold Chemicals, Inc.

TRIMET^®. GEO’s TRIMET^® product is used in the production of such products as: automotive finishes, where it improves gloss and hardness; outdoor equipment, where ultra-violet resistance is enhanced; and decorative finishes for home furnishings, where it improves water resistance. TRIMET^® is also used as a surface treatment in the production of can coatings and architectural paints. GEO believes that its TRIMET^® product, with its environmentally-friendly profile and superior properties, will also benefit from the worldwide trend towards more stringent environmental standards for many paint and coating products. GEO has limited competition for its TRIMET^® product, although substitute products are available depending on the application and customer performance requirements, and supplies such major manufacturers as McWorter Corporation, Reichhold Chemicals, Inc., Cook Composites Company and Kerr-McGee Chemical Corporation.

Oilfield. The North American oilfield chemical market uses many specialty chemicals for cementing, stimulation and production. Demand for oilfield specialty chemicals is a function of exploration expenditures, oil and gas production and crude oil and gas prices. The increased exploration efforts in the Gulf of Mexico, particularly at deeper depths, and increased oil production in Canada and Mexico will drive demand in North America for oilfield specialty chemicals.

Within the oilfield specialty chemicals market, GEO markets approximately 25 products in the following major areas: cementing, stimulation and production.

Cementing. In the cementing market, GEO’s naphthalene sulfonate condensates are used to enhance the physical properties of cement used for well casings. GEO’s naphthalene sulfonate condensates allow for improved handling of cement, resulting in reduced energy requirements for pumping at greater depths. In this market, GEO competes with the Hampshire Division of The Dow Chemical Company and several alternative specialty chemicals.

Stimulation. GEO manufactures calcined clay and bauxite used as an intermediate in the manufacturing of clay proppants. Clay proppants are used in the stimulation of oil and natural gas wells. GEO markets 12 products, and competes primarily with CE Minerals, Inc. in this market.

Production. GEO also manufactures its naphthalene sulfonate condensates for oil production. These products are used primarily to facilitate the de-watering of crude-oil. GEO competes primarily with Witco Corporation in this market.

Wire and Cable. GEO’s organic peroxide products, primarily dialkyl peroxides, sold primarily under the DI-CUP^® and VUL-CUP^® brand names, are used to crosslink polymers in making the insulation for medium and high voltage wire and cable. These additives provide greater thermal stability at elevated temperatures during power transmission and thus enhance the life-span of the insulation on the power cable. The wire and cable end market represents approximately 50% of GEO’s sales of organic peroxides. Key customers in this market are The Dow

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Chemical Company, General Cable and Okonite. Competition for the wire and cable market in the United States is from imported peroxides primarily sold by NOF, a Japanese manufacturer, and Akzo, which imports products from a joint venture company in China. In Europe, the main competitors are Atofina, which sources products from Europe, and Akzo, which sources products from China.

Industrial. GEO’s organic peroxides, again primarily dialkyl peroxides, are sold under the brand names DI-CUP^®, VUL-CUP^® and ECHO^® and are used mostly as crosslinking and vulcanizing agents for high performance rubber and plastic used in automotive parts, especially under-the-hood hoses and belts. Industrial rubber and plastic applications account for approximately 40% of GEO’s sales of organic peroxides, with the majority ultimately being used in automotive parts. Key customers in this market are PolyOne, Equistar, Rhein Chemie and the distributor Hardwick Standard. The major competitors in both the United States and Europe are Akzo and Atofina for industrial and plastic applications.

Electronic Chemicals

Gallium. As a result of its 1999 acquisition of Rhodia’s gallium business, GEO is a leading producer of virgin gallium, which is used primarily in integrated circuits and chips for mobile telephones, wireless communications and optoelectronics (light emitting diodes).

Competition

GEO competes with a variety of specialty chemical manufacturers. Certain of GEO’s principal competitors are less highly leveraged and have greater financial resources than GEO. As a result, these competitors may be better able to withstand volatility within the industry or the economy as a whole while maintaining greater operating and financial flexibility than GEO. This advantage could allow these competitors to invest more resources than GEO in technological and product development, sales and marketing and other areas and, therefore, to gain market share against GEO. In addition, a number of GEO’s product applications are customized or sold into specialized markets. These specialized markets might attract additional competitors with greater financial, technological or manufacturing resources than GEO. Any entrants into these specialized markets could take market share from GEO.

Sales and Marketing

GEO markets its products through a variety of strategies, depending upon the nature of the product being sold. Performance chemicals are generally marketed through direct, on-site visits to process industry manufacturers, such as pulp and paper manufacturers. These on-site visits typically include trial applications and demonstrations of the cost-effectiveness of the performance chemicals and involve follow-up on-site visits and ongoing technical assistance. In these direct, on-site marketing efforts GEO succeeds by demonstrating the superior performance of its product.

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GEO also relies upon more traditional methods of marketing for a number of its products. GEO markets to distributors through purchasing agents for the sale of many products in its aluminum flocculants line. GEO also sells numerous products to indirect suppliers and distributors, including such products as aluminum chlorhydrate, aluminum chloride solutions and liquid and dry aluminum sulfate. The use of purchasing agents, indirect suppliers and distributors has enabled GEO to market its products on a wide geographic scale, including the West Coast and other locations where GEO has no regional sales coverage, and into smaller markets that are not economically feasible for GEO to target directly.

GEO markets certain products by participating in formal bid procedures, most commonly in connection with the supply of specialty chemicals to municipalities that operate water treatment, recirculation and effluent treatment facilities and manufacturers in the pulp and paper industry.

Specialty additives are generally marketed through a cooperative effort with customers at the research and development phase of the manufacturing process. Representatives of GEO work with customers in developing a desired product by providing up-front technical assistance. This marketing method involves GEO’s specialty additives being included in the customers’ formulations, thereby allowing GEO to establish long-term relationships with customers in this market.

GEO’s specialty additives are marketed through teams of sales and technical support personnel aligned with the three major markets served, paints and coatings, rubber and plastics and construction and industrial markets. The vice president of sales manages 10 direct salespeople located in North America and Europe and utilizes numerous distributor relationships worldwide. The technical support manager heads up a group of researchers and technicians dedicated to developing innovative products for this business.

Gallium, an inorganic specialty used primarily in electronics applications, is sold based on its purity and form. GEO markets and sells gallium worldwide through a network of agents and distributors.

GEO’s global net sales for fiscal year 2002 were $164.5 million. Domestic U.S. sales of $144.1 million represented approximately 88% of total net sales and overseas sales of $20.4 million represented approximately 12% of total net sales.

Raw Materials

GEO uses a variety of specialty and commodity chemicals in its manufacturing processes. These raw materials are generally available from several suppliers and are typically purchased by GEO under agreements negotiated annually with two or more vendors per raw material. GEO currently has in place multiple long-term supply contracts ranging in duration from 1 to 4 years for key raw materials, including fatty acids, cumene, methanol, propionaldehyde, hydrogen peroxide and sulfuric acid. GEO is vertically integrated with its own source of kaolin clay used in the manufacture of certain of its aluminum and clay products and formaldehyde used in the manufacture of DMPA^® and TRIMET^®.

At its Stade, Germany facility, GEO extracts gallium from bauxite provided under a long-term agreement with a vendor located at a neighboring facility.

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Although GEO has historically passed on raw material price increases to its customers within 90 to 120 days, GEO can provide no assurance that it will be able to do so in the future. If material price increases cannot be passed on to customers in a reasonable time, GEO’s financial condition could be adversely affected.

Intellectual Property

GEO believes that trademarks are important competitive factors in a number of the markets in which it competes. The use of trademarks often represents quality and performance as well as industry leadership. A number of GEO’s principal products are sold under registered trademarks, including liquid calcium stearate used as coatings and lubricants (except for use in the paper industry as the trademark was included in the sale of the Paper Chemicals business to Nalco pursuant to the terms of a license agreement) (NOPCOTE^®), trimethylolethane (TRIMET^®) and dimethylolpropionic acid (DMPA^®) used in the coatings and resins markets, naphthalene sulfonate condensates used as dispersants in the concrete, plaster board, oilfield and other industries (LOMAR^®), aluminum-based flocculants and coagulants used in the treatment of water (ULTRAFLOC^®), and DI-CUP^®, VUL-CUP^® and ECHO^® which are trademarks for GEO’s organic peroxides. GEO’s trademarks should remain protected under federal law as long as they are commercially used by GEO.

In the acquisition of Rhodia’s gallium business, GEO was assigned various patents relating to the extraction and purification of gallium. These patents have expiration dates ranging between 2005 and 2012. Although GEO considers these patents to be important to its gallium business, there can be no assurance that any of these patents will provide adequate protection for the process or technology that it covers.

Employees

As of December 31, 2002, GEO employed approximately 450 persons, the majority of whom are involved in production and operations, with the balance engaged in administration, research and development, sales, customer service and clerical work. Approximately 57 employees are located at the Cedartown, Georgia facility, 51 employees at the Allentown, Pennsylvania facility, 26 employees at the Bastrop, Louisiana facility, 9 employees at the Baltimore, Maryland facility, 5 employees at the Georgetown, South Carolina facility, 2 employees at the Chattanooga, Tennessee facility and 36 employees at the Gibbstown, New Jersey facility are unionized and are covered by collective bargaining agreements. These collective bargaining agreements have expiration dates ranging between August 2003 and December 2006. The unionized employees of GEO located at the Allentown, Bastrop and Baltimore facilities are represented by the International Chemical and United Food and Commercial Workers, AFLCIO, those located at the Cedartown facility by the United Food Workers, those located at the Georgetown facility by the United Paper Allied International Chemical Energy Workers International, those located at the Chattanooga facility by the United Steel Workers of America and those located at the Gibbstown facility by the Independent Union of Delaware Valley Chemical Workers. In Europe, GEO has approximately 15 employees at its Salindres, France plant and 11 employees at its Stade, Germany plant. Most of the employees at these European sites are part of national labor unions. GEO believes that its relationship with its employees is good. GEO has experienced no work stoppages at any of its facilities since its inception in 1993.

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Environmental Matters

GEO’s operations are subject to extensive laws and regulations relating to the handling and disposal of hazardous wastes, waste water discharges, air emissions, the remediation of contamination, and otherwise relating to health, safety and the protection of the environment. GEO has incurred, and will continue to incur, costs and capital expenditures in complying with these laws and regulations and to obtain and maintain all necessary environmental permits. GEO believes that its operations are currently being conducted in substantial compliance with all applicable environmental laws. GEO occasionally receives notices from environmental agencies of various potential violations of environmental laws or regulations. In such cases, GEO works with the agencies to address any issues and to implement appropriate corrective action when necessary. Based on presently known information and existing accrued environmental reserves, GEO does not expect environmental expenditures to have a material adverse effect on its business or financial condition. However, GEO’s operations entail risks in these areas, and material costs or liabilities could be incurred by GEO in the future.

In connection with its acquisitions, GEO has performed substantial due diligence to assess the environmental liabilities associated with acquired businesses and has negotiated contractual indemnifications with respect to such liabilities. These indemnifications are currently expected to cover a substantial portion of GEO’s known and foreseeable environmental liabilities relating to the acquired businesses. However, GEO cannot be certain that indemnitors will in all cases meet their indemnification obligations or that the discovery of presently unknown environmental conditions or other unanticipated events will not give rise to liabilities that are not covered by indemnification.

The expenses that GEO expects to incur in connection with environmental compliance have been accrued and are reflected in its financial statements in accordance with generally accepted accounting principles. As of December 31, 2002, GEO had reserves for environmental liabilities of $1,841,378. For more information regarding these reserves, see the section entitled “Environmental Expenditures” set forth in footnote 1 to GEO’s consolidated financial statements contained in Exhibit 99.1 to this Annual Report. Although GEO believes that its environmental reserves are adequate, it is possible that, due to the uncertainties involved in estimating environmental costs, the amount of expenses which will be required relating to remedial actions and environmental compliance will exceed the amounts reflected in GEO’s reserves or that indemnitors will not fulfill their indemnity obligations. Accordingly, currently identified environmental liabilities may not be adequately covered by GEO’s reserves.

Aluminum Sulfate Facilities. Seven of GEO’s facilities use aluminum-bearing clay as the basic raw material in the manufacture of aluminum sulfate. These facilities generate a by-product known as process silica. GEO has historically managed this by-product in on-site impounds. These impounds have impacted groundwater quality by affecting the level and flow of groundwater, and by producing elevated levels of aluminum, sulfates and acidity in the groundwater. GEO currently operates seven of these impounds and is addressing the groundwater issues at each of these facilities. Most of these facilities are working with their

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respective state environmental protection agencies to address the potential groundwater contamination through periodic monitoring.

The cost of closing these impounds varies by facility, depending on state requirements, the size and age of the facilities, the extent of the contamination, and whether impounded water must be transported off-site. Estimates for the closure of an impound range from $200,000 to $700,000. Monitoring and reporting typically would be required for twenty to fifty years following closure, and the associated costs range from $10,000 to $25,000 annually per facility. As of April 15, 2003, GEO had completed the closure of one such impound, at a cost of $674,000.

Former Henkel Facilities. GEO’s Harrison, New Jersey facility is subject to a 1994 declaration of environmental restrictions. This deed restriction relates to a portion of the facility that has been capped due to contamination from prior operations. As of April 15, 2003, GEO had not incurred any material costs in connection with this matter.

Former operators of GEO’s Cedartown, Georgia facility buried at the facility approximately 1,500 gallons of tall oil and 700 drums of obsolete products and raw materials. As a result, in 1990 a portion of the Cedartown facility was listed as a “Superfund” site on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980. Henkel Corporation and the U.S. Environmental Protection Agency entered an administrative order on consent related to the Superfund site. On behalf of Henkel, GEO conducts all groundwater and surface water monitoring and complies with the reporting obligations under the administrative order. Under the asset purchase agreement between the parties, Henkel is responsible for paying, and is required to indemnify GEO for, all such compliance costs. Pursuant to its indemnification obligation, Henkel had either paid or reimbursed GEO for all expenses arising from the Cedartown’s status as a Superfund site as of April 15, 2003.

GEO’s Cedartown, Georgia facility is also subject to a 1993 corrective action consent order between Henkel and the Georgia Department of Natural Resources. The consent order relates to the remediation of surface and groundwater contamination from prior operations at the facility. The facility is listed in the State of Georgia Master Sites List for Hazardous Waste Sites. On behalf of Henkel, GEO conducts the groundwater and surface water remediation and also complies with the monitoring and reporting requirements under the consent order. Under the asset purchase agreement between the parties, Henkel is responsible for paying, and is required to indemnify GEO for, these compliance costs. Pursuant to its indemnification obligation, Henkel had either paid or reimbursed GEO for all such compliance costs as of April 15, 2003.

Little Rock Mining Facility. Upon completion of mining activities at GEO’s Little Rock, Arkansas facility, two impounded pits must be reclaimed. GEO will comply with all reclamation requirements, but does not anticipate that it will incur material costs in connection with these requirements.

TRIMET Properties. In the acquisition of TRIMET, GEO acquired approximately 95 acres of an approximately 385 acre site. Mallinckrodt Inc. continues to own the larger site, of which GEO leases a very small portion, consisting of a warehouse and wastewater treatment

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system. There is groundwater and soil contamination on the larger site from former explosive manufacturing operations. The larger site has at times been the subject of federal and state investigations. The site that GEO owns is subject to extensive air, water, solid waste and hazardous substance regulations. Prior to the acquisition, Mallinckrodt installed modern pollution control equipment throughout the smaller site to comply with these requirements. Mallinckrodt has agreed to indemnify GEO for all pre-closing environmental liabilities associated with the larger site.

Former Hercules Facility. GEO has identified issues regarding potential historic releases in connection with the underground sewers at its Gibbstown, New Jersey facility. Under the asset purchase agreement between the parties, Hercules is responsible for paying, and is required to indemnify GEO for, all costs relating to this issue. On December 18, 2001, GEO made a claim for indemnification with respect to these releases against Hercules. The parties are currently in negotiations to bring the underground sewer system above ground, and Hercules has agreed to indemnify GEO for any releases from the underground system. GEO expects to pay approximately $283,000 in connection with the installation of the aboveground system, which represents 25% of the expected total cost of the project. Hercules has agreed to pay the remaining 75% of the total cost of the project.

The Gibbstown facility is the subject of ongoing remediation under the auspices of state and federal authorities and is listed as a “Superfund” site on the National Priorities List. Under the asset purchase agreement between the parties, Hercules is responsible for paying, and is required to indemnify GEO for, all costs relating to this issue. On behalf of Hercules, GEO operates and maintains the groundwater monitoring and extraction system under the applicable administrative order. Pursuant to its indemnification obligation, Hercules had either paid or reimbursed GEO for all expenses arising from the Gibbstown’s status as a Superfund site as of April 15, 2003. Hercules is also responsible for remediating the site under the New Jersey Industrial Site Recovery Act.

ITEM 2. PROPERTIES

GEO’s manufacturing operations are conducted at the facilities described below.

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GEO’s executive offices are located in Cleveland, Ohio. GEO maintains sales offices in Little Rock, Arkansas; Baltimore, Maryland; Gibbstown, New Jersey; Ambler, Pennsylvania; Cheltenham, England; Potters Bar, England; and Paris, France. GEO also has financial and treasury staff located in Lafayette, Indiana, administrative and technical support facilities located in Ambler, Pennsylvania and a sales and administrative office in Paris, France. GEO believes that its facilities are in good operating condition and adequate to meet anticipated requirements in the near future.

ITEM 3. LEGAL PROCEEDINGS

In the ordinary course of business, GEO is periodically named as a defendant in a variety of lawsuits. GEO believes that its pending cases will not have a material adverse effect on its business or financial condition.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders in the fourth quarter of 2002.

PART II

ITEM 5. MARKET FOR GEO’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

There is no established public trading market for GEO’s equity securities.

GEO has not paid any dividends on its common shares since its inception and does not expect to pay any dividends in the near future. GEO’s senior credit facility and the indenture that

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governs GEO’s senior subordinated notes limit GEO’s ability to pay dividends. GEO’s senior credit facility prohibits GEO from paying any dividends to its shareholders other than in the form of its capital stock. The indenture prohibits GEO from paying any cash dividend at any time that its fixed charge coverage ratio is less than 2.0 to 1.0 or any default exists under the indenture. In addition, GEO may not pay cash dividends in an amount exceeding 50% of its cumulative net income from the date of issuance of the notes plus 100% of the proceeds received by GEO from the sale of its capital stock or an equity contribution by its shareholders. GEO may, under the indenture, pay dividends in the form of its capital stock.

As of April 15, 2003, there were eight holders of GEO’s class A voting common stock and no holders of its class B nonvoting common stock.

ITEM 6. SELECTED FINANCIAL DATA

The table shown on the next page includes the following summary financial data of GEO:

The period-to-period comparability of the summary financial data shown below is materially affected by the three acquisitions and one disposition that GEO has completed from 1998 through 2002. See “Introduction to GEO’s Business.”

The summary financial data shown below for the years ended December 31, 2000, 2001 and 2002 and as of December 31, 2001 and 2002 has been derived from the financial statements of GEO which are included in Exhibit 99.1 to this Annual Report. The summary financial data for the years ended December 31, 1998 and 1999 and as of December 31, 1998, 1999 and 2000 has been derived from the financial statements of GEO which are not included in this Annual Report.

You should read the summary financial data presented below along with the financial statements of GEO and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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Selected Historical Financial Data

(dollars in thousands)