Mr. Macdonald: JLM Industries, of course, was originally a commodity chemical manufacturer in the area of phenol and acetone. With two world- scale plants brought simultaneously online for production in 1999 there was an early fade of the pricing for these products. As competitors scrambled to gain market share in advance of the completion of these new facilities, this caused a further deterioration in the price of phenol. Our answer to this change in the market was to expand our scope of services beyond the old core business of phenol and acetone production and marketing. In 1997, we went public to raise capital to fund the growth that expanding our market would require. Six successful acquisitions were completed in 1998 and 1999 as a result of these growth strategies. While acquisitions spur growth and diversify, there is always an anticipated period of time of less than peak performance as we reassign resources and plan for the smooth integration of the organizations, however, the integration of so many companies has taken a bit longer that we originally anticipated. Each company we acquired brought added markets and resources to our business and brought us that much closer to achieving our long term financial goals. One of our key acquisitions was Soffecia, a subsidiary of the Dreyfus Group. This decision allowed us to enter the ethanol distribution market in a large way in the United States. Merging that operation with our ethanol contracts from Sazol in South Africa, gave us an entire new unit of business that we anticipate capitalizing on in the near future. We purchased an inorganics house to diversify into specialty chemicals and also moved into the agricultural chemical market in an effort to diversify away from the commodity cycles. Some of the companies we acquired in the Pacific Rim are distribution companies that are doing extremely well and the futures of these companies look very bright. With the advent of higher pricing across the board, the marketing companies perform better. Since they are a beneficiary of increased volume and higher prices in the global chemical industry, we anticipate the profitability of the marketing companies will increase in the year 2000. The other area that we have invested in for our future is our online business strategy. While we have had a web presence for several years, we will shortly be unveiling our new interactive e-commerce website in March 2000. We recognize the importance of integrating the Internet into our existing core business to reduce overhead and to provide better service to our existing customers. In addition to providing an excellent communications forum, our Website will also offer a real time industry- to-industry transactions to all members of the JLM community. As I said earlier, we'll be introducing this shortly and will be using the web site to make further announcements for all of our businesses, including one that we are anticipating for a joint venture company in Shanghai, China. At present, the company is losing money because of the manufacturing sector. For three straight quarters, the price for phenol has deteriorated substantially. There was a spike in energy costs tracking crude, which put tremendous pressure on earnings. The margin loss in the manufacturing sector could not be made up fully by the marketing companies.
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