<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-K

                       FOR ANNUAL AND TRANSITIONAL REPORTS
                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the Fiscal Year Ended December 31, 2004

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                          COMMISSION FILE NO. 333-33572

                        DIAMOND TRIUMPH AUTO GLASS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S>                                         <C>
               DELAWARE                                  23-2758853
     (State or Other Jurisdiction           (I.R.S. Employer Identification No.)
   of Incorporation or Organization)
</TABLE>

<TABLE>
<S>                                                      <C>
    220 DIVISION STREET, KINGSTON,
             PENNSYLVANIA                                   18704
(Address of Principal Executive Office)                  (Zip Code)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (570) 287-9915

                                   ----------

           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]

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes [ ] No [X]

                                   ----------

     THERE IS NO PUBLIC MARKET FOR THE REGISTRANT'S STOCK. DIAMOND HAD 1,011,366
SHARES OF COMMON STOCK (THE "COMMON STOCK"), PAR VALUE $0.01 PER SHARE, AND
35,000 SHARES OF SERIES A 12% SENIOR REDEEMABLE CUMULATIVE PREFERRED STOCK (THE
"PREFERRED STOCK"), PAR VALUE $0.01 PER SHARE, OUTSTANDING AS OF APRIL 4, 2005.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      None.
<PAGE>
                                     PART I

                 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K contains certain "forward-looking statements"
(as defined in Section 21E of the Securities Exchange Act of 1934) that reflect
Diamond's expectations regarding its future growth, results of operations,
performance and business prospects and opportunities. Words such as
"anticipates," "believes," "expects," "intends," "estimates", "will" and similar
expressions have been used to identify these forward-looking statements, but are
not the exclusive means of identifying these statements. These statements
reflect Diamond's current beliefs and expectations and are based on information
currently available to Diamond. Accordingly, these statements are subject to
known and unknown risks, uncertainties and other factors that could cause
Diamond's actual growth, results of operations, performance and business
prospects and opportunities to differ from those expressed in, or implied by,
these statements. As a result, no assurance can be given that Diamond's future
growth, results of operations, performance and business prospects and
opportunities covered by such forward-looking statements will be achieved. Such
factors include, among others: (1) Diamond's growth is dependent on business
conditions and access to capital; (2) Diamond's substantial indebtedness; (3)
Diamond's business is affected by seasonality and weather; (4) Diamond's
business is affected by general economic conditions; (5) Diamond's competitive
business environment, which may reduce demand for automotive glass replacement
and repair services; and (6) Diamond's ability to attract and retain key
employees. For purposes of this annual report on Form 10-K, any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. Diamond is not obligated and has no intention to
update or revise these forward-looking statements to reflect new events,
information or circumstances.

ITEM 1. BUSINESS

OVERVIEW

     Diamond is a leading provider of automotive glass replacement and repair
services in the United States. At December 31, 2004, Diamond operated a network
of 249 automotive glass service centers, approximately 1,000 mobile installation
vehicles and six distribution centers in 44 states. Diamond serves all of its
customers' automotive glass replacement and repair needs, offering windshields,
tempered glass and other related products. Sales and net loss for the year ended
December 31, 2004, were $208.4 million and $41.2 million,
respectively. Approximately $40.0 million of net loss was attributable to a
valuation allowance established against Diamond's deferred tax asset that
resulted in a 100% reserve of its deferred tax asset at December 31, 2004. See
"- Critical Accounting Policies - Income Tax" for a discussion of Diamond's tax
treatment of its 1998 recapitalization and the related valuation allowance
established in 2004 in respect of the deferred tax asset established in
connection with such recapitalization.

     Diamond believes that, due to its sole focus on automotive glass
replacement and repair, it has one of the lowest cost structures in the
automotive glass replacement and repair industry. Diamond's low cost structure
enables it to serve all markets of the industry, which is comprised of: (1)
individual consumers; (2) commercial customers, including commercial fleet
leasing companies, rental car companies, car dealerships, body shops, utilities
and government agencies; and (3) insurance customers, including referrals from
local agents, claims offices and centralized call centers. Diamond's 2004 sales
to individual consumers, commercial customers and insurance customers
represented approximately 26.8%, 40.8% and 32.4% of total sales, respectively.
While the largest participant in the industry primarily focuses on servicing
automotive glass insurance claims (including providing related insurance claims
processing services) and also manufactures automotive glass, Diamond has
strategically positioned itself solely as a provider of automotive glass
replacement and repair services to a balanced mix of individual, commercial and
insurance customers.

     Diamond's sole focus on automotive glass replacement and repair, combined
with its aggressive cost controls, strong purchasing power and efficient
internal distribution system, have positioned Diamond as one of the lowest cost
providers of automotive glass replacement and repair services. These competitive
attributes, together with localized marketing efforts, have enabled Diamond's
new service centers to quickly establish a base of local consumer and commercial
installation business from which Diamond services all three of its customer
markets.


                                      -1-
<PAGE>
     Diamond's financial performance reflects attractive service center-level
economics. The cash required to open a new service center, including inventory
net of trade payables, averages approximately $46,000. In 2004, approximately
87% of Diamond's installations and repairs were performed by mobile technicians
at a customer's home or workplace. Due to the high percentage of mobile
installations and repairs which Diamond performs, service centers are typically
located in commercial or industrial areas, where rents are generally available
at low cost. In 2004, Diamond's 227 mature service centers (service centers open
for four years or longer) averaged approximately $820,000 in sales and
approximately $104,000 of branch operating profit per location.

     Management believes that the high volume of its automotive glass purchases
position Diamond as an important customer of the primary automotive glass
manufacturers, thereby reducing Diamond's exposure to product shortages and
maximizing its ability to purchase automotive glass at the lowest available
cost. Diamond's purchasing program utilizes the major domestic original
equipment manufacturers for truckload and spot purchases, and importation of
containers from the larger manufacturers throughout the world. Management
believes that the scope and flexibility of Diamond's purchasing program and its
efficient distribution system have enabled Diamond to achieve higher service
levels and a lower cost of goods than most of its competitors.

HISTORY

     Diamond was founded in 1923 by the grandfather of Kenneth Levine and
Richard Rutta, Diamond's Chairman and former Co-Chairman of the Board,
respectively. Diamond continues to operate a service center at the location of
its original store in Scranton, Pennsylvania. Messrs. Levine and Rutta joined
Diamond in 1979, when Diamond operated only one service center, and acquired
Diamond in 1987, when Diamond operated ten service centers in Pennsylvania and
New York. Under the management of Messrs. Levine and Rutta, Diamond expanded its
service center and distribution network to serve 249 locations at the end of
2004. On October 21, 2004, Mr. Rutta resigned as the Co-Chairman and a member of
the Board of Directors of Diamond in order to pursue personal endeavors. Mr.
Levine continues to serve as Chairman of the Board and remains active in the
management of Diamond.

INDUSTRY OVERVIEW

     The market for the installation of automotive glass is highly fragmented.
Many industry participants are small "mom and pop" installers who compete less
effectively against large, geographically diversified providers of automotive
glass installation services, such as Diamond. Consequently, the industry has
been consolidating.

     Demand for automotive glass is influenced by several factors. Replacement
volume increases as the total vehicle population and the number of miles driven
increases. Severe weather and road conditions can also increase demand for
automotive glass repair and replacement. However, consumers may defer fixing
minor damage to a windshield until a vehicle trade-in, sale or inspection for
new license tags. Therefore, new automobile sales, turnover of used vehicles and
state automobile inspection laws also influence automotive glass demand.

     Sales growth in the automotive glass replacement and repair industry has
been attributable primarily to an increase in the aggregate number of vehicles
on the road and to an increase in the aggregate number of miles driven per
vehicle per year. Growth in industry sales has also been driven by the use of
larger, more complex and more expensive automotive glass in new vehicles.

PRICING

     The price of replacement automotive glass is based in part on list prices
developed by the National Auto Glass Specification ("NAGS"), an independent
third party. Prices charged by participants in the automotive glass replacement
industry are independently determined using varying percentage discounts from
the NAGS price list. The impact of NAGS price changes on Diamond's financial
results depends on the level of discounts Diamond grants to its customers and
the level of discounts that Diamond can obtain from its glass suppliers. NAGS
periodically modifies its published list prices which has resulted in overall
list price decreases of approximately 2% to 5% annually over the past two years.
Effective February 28, 2005, NAGS significantly modified its published list
prices of automotive glass in order to bring actual prices more in line with
published list prices, however, under this modified pricing structure NAGS has
made allowances for installation charges such as labor, installation kits and


                                      -2-
<PAGE>
other ancillary charges which were previously included in the net list price.
While Diamond does not expect to be negatively impacted by these recent NAGS
modifications, other factor's affecting overall pricing in the industry may
continue to be an original concern.

PRODUCTS

     Diamond's primary installation products are automotive windshields which
are made of laminated safety glass. Safety glass consists of two layers of glass
bound together with a thin layer of vinyl which adds strength to the glass and
makes it very difficult for an object to penetrate a windshield upon impact. As
part of Diamond's commitment to serve all of its customers' automotive glass
replacement needs, Diamond also offers tempered automotive glass. Tempered glass
is generally used for side and rear automobile and truck windows and is
significantly stronger than regular glass due to specialized processing which
causes tempered glass to shatter into dull-edged pebbles, reducing glass related
injuries. In addition, Diamond offers automotive glass repair services.

CUSTOMERS AND MARKETING

     Diamond provides automotive glass replacement services to each of the
industry's customer markets, which include individual consumers, commercial
customers and insurance customers. Management believes that, in addition to
capturing additional consumer sales, Diamond's national geographic coverage
should facilitate Diamond's efforts to obtain an increased share of the national
insurance and fleet markets, whose participants generally establish multiple
providers for their automotive glass replacement requirements. In 2004,
Diamond's top ten customer accounts comprised approximately 23.4% of total sales
and no single customer account exceeded approximately 6.6% of total sales.

     Diamond's marketing is conducted through a combination of prominent Yellow
Pages advertising and by a direct sales force of 180 representatives. Yellow
Pages advertising is supported by customer service representatives and extended
hour call centers that answer telephone inquiries, schedule service appointments
and arrange emergency service. Sales representatives market Diamond's services
to insurance claim centers, local agents, fleet operators, automobile dealers
and body shops and have established relationships at all levels of the major
insurance, fleet and rental car company organizations.

     INDIVIDUAL CONSUMERS. The marketing focus to the individual consumer market
is low price and speed of service. Diamond's consumer customers consist of
individuals who are not associated with a related automobile insurance claim.
Customers in this market typically do not have automobile glass insurance
coverage, have a high insurance deductible or do not want to file a claim with
their insurance carrier. These customers are primarily concerned with price,
quality, convenience and speed of service. Substantial portions of the
industry's consumer sales are generated as a result of localized marketing
efforts, such as Yellow Pages advertising. In order to attract consumer
customers, Diamond's Yellow Pages advertisements are designed to appear in the
first group of display advertisements and promote Diamond's competitive pricing
and fast mobile service. When a customer calls, Diamond's service
representatives are trained to emphasize Diamond's low price guarantee and
prompt service capabilities. The majority of Diamond's services can be provided
by its mobile installation technicians at a customer's home or workplace.

     COMMERCIAL CUSTOMERS. Diamond markets to commercial customers through its
direct sales force, which emphasizes high quality service at a low cost.
Diamond's commercial market customers include commercial fleet leasing
companies, rental car companies, car dealerships, body shops, utilities and
government agencies. Diamond's customers in the commercial market include Avis
Rent-A-Car, Inc., Enterprise Rent-A-Car, U-Haul, and Federal Express. Management
believes that Diamond's national geographic coverage will position Diamond to
obtain an increased share of the national fleet automotive glass replacement
business.

     INSURANCE CUSTOMERS. Diamond markets its services to all levels of the
insurance industry, including local agents, claims offices and centralized call
centers. In addition to marketing directly to insurance companies through its
direct sales force, Diamond participates as an approved service provider within
glass replacement networks administered by third parties, including certain of
Diamond's competitors. These third party networks act as outsourced claims
administrators under contract to an insurance company. Historically, insurance
companies that participate in these networks have required that more than one
service provider provide automotive glass


                                      -3-
<PAGE>
replacement and repair services in order to ensure competitive pricing and high
quality service. Diamond is an approved service provider for many national
insurance carriers, including State Farm Insurance Company, Allstate Insurance
Company and Travelers Property Casualty Corporation.

SERVICE CENTERS

     Diamond's repair and installation service is performed either on-site at a
service center location or at a customer's home or workplace by a mobile
technician. At December 31, 2004, Diamond operated a network of 249 automotive
glass service centers, approximately 1,000 mobile installation vehicles and six
distribution centers in 44 states. In 2004, 87% of Diamond's installations and
repairs were performed by mobile technicians at a customer's home or workplace.
Due to the high percentage of mobile installations and repairs which Diamond
performs, service centers are typically located in commercial or industrial
areas, where rents are generally available at low cost.

Diamond's automotive glass service centers are operated under the following
service marks: Triumph Auto Glass and Diamond Auto Glass in the Northeast and
Mid-Atlantic; and Triumph Auto Glass in the Midwest, Southeast, Southwest and
Western. Any expansion into new states will be under the Triumph Auto Glass
registered service mark. Diamond did not open any new service centers in 2004,
as Diamond continued to focus on improving the performance of recently opened
service centers, and utilizing its new management and information systems
infrastructure to leverage costs throughout the organization while exploring
opportunities to broaden its revenue base. As a result of a concerted effort to
improve its performance, Diamond consolidated 28 service centers in 2004 with
minimal or no disruptions in service. These consolidations reduced redundant
overhead and administrative costs, provided for enhanced operational performance
as a result of more centralized management, while allowing Diamond to continue
to service almost all of its existing geographical markets. Diamond will
continue to consolidate service centers to improve operational performance
during 2005, and will consider opening new service centers in geographical
markets where it believes it can capture additional market share.

     The following chart provides information concerning Diamond's service
center openings from 1990 to 2004:

<TABLE>
<CAPTION>
                                         SERVICE
                                         CENTERS         % CHANGE
YEAR       OPENINGS   CONSOLIDATIONS   AT YEAR END   OVER PRIOR YEAR
----       --------   --------------   -----------   ---------------
<S>        <C>        <C>              <C>           <C>
1990 ...       6            --              24             33.3%
1991 ...       7            --              31             29.2%
1992 ...      12            --              43             38.7%
1993 ...      17            --              60             39.5%
1994 ...      31            --              91             51.7%
1995 ...      17             3             105             15.4%
1996 ...      39             2             142             35.2%
1997 ...      33             1             174             22.5%
1998 ...      33             1             206             18.4%
1999 ...      24             4             226              9.7%
2000 ...       7             1             232              2.7%
2001 ...      24            --             256             10.3%
2002 ...      23             1             278              8.6%
2003 ...       1             2             277             -0.4%
2004 ...      --            28             249            -10.1%
</TABLE>

     Service centers are open for business from 8:00 a.m. to 5:00 p.m. Monday
through Friday and 8:00 a.m. to 12:00 p.m. on Saturday. Service center employees
perform installation services and process customer inquiries during regular
business hours. After-hours customer inquiries are handled by Diamond's
emergency and extended hour call center. Operators at this call center answer
customer inquiries, schedule mobile installation services and arrange emergency
service from service centers throughout Diamond's network.


                                      -4-
<PAGE>
DISTRIBUTION SYSTEM

     Diamond currently operates five distribution centers which operate seven
days a week and are located in Kingston, Pennsylvania; Columbus, Ohio; Atlanta,
Georgia; Rock Island, Illinois and Denver, Colorado. Diamond's efficient
distribution system enables Diamond to make regular deliveries to substantially
all of its service centers both to replenish stock and to provide automotive
glass that is not carried in service center inventories. Through its
distribution centers, Diamond supports a significant portion of its sales with
internally distributed product, with the remainder being purchased from the spot
market. Diamond's efficient distribution system, combined with a successful
inventory management program at its service centers, enables Diamond to meet
immediate service demands at a lower cost than if larger quantities of
automotive glass were required to be purchased in the spot market.

SUPPLIERS

     Management believes that the high volume of its automotive replacement
glass ("ARG") purchases position Diamond as an important customer of the primary
automotive glass manufacturers, thereby reducing Diamond's exposure to product
shortages and maximizing its ability to purchase ARG at the lowest available
cost. Diamond's purchasing program utilizes the major domestic original
equipment manufacturers for truckload and spot purchases, and importation of
containers from the larger manufacturers throughout the world. Management
believes that the scope and flexibility of Diamond's purchasing program and its
efficient distribution system have enabled Diamond to achieve higher service
levels and a lower cost of goods than those of most of its competitors.

     Diamond has numerous domestic and foreign suppliers, and is continuing to
expand its supplier network by utilizing additional foreign suppliers in order
to guard against product shortages and to reduce the overall cost of ARG. In
2004, only 2 suppliers represented more than 10% of Diamond's total AGR
purchases, or a combined total of approximately 33%. Due to the competitive
nature of the automotive glass manufacturing industry, Diamond does not
anticipate any substantial difficulty in sourcing its ARG requirements in the
foreseeable future.

COMPETITION

The automotive glass replacement and repair industry is highly competitive, with
customer decisions based on price, customer service, technical capabilities,
quality, advertising and geographic coverage. The competition in the industry
could result in additional pricing pressures, which would negatively affect
Diamond's results of operations. In addition, certain of Diamond's competitors
provide insurance companies with claims management services, including
computerized referral management, policyholder call management, electronic
auditing and billing services and management reporting. While the market is
generally highly fragmented, Diamond competes against several other large
competitors in this market in regards to glass replacement and repair services,
the largest three of whom are Safelite Glass Corporation, LYNX Services from
PPG, L.L.C. and Glass Doctor, a subsidiary of the Dwyer Group. Diamond does not
compete against these competitors in regards to claims management, policyholder
call management, electronic auditing and billing services, management reporting
or any other similar services.

EMPLOYEES

     As of December 31, 2004, Diamond employed 1,826 persons. None of Diamond's
employees are covered by a collective bargaining agreement, and Diamond believes
that its relationships with its employees are good.

                      FACTORS AFFECTING FUTURE PERFORMANCE

DIAMOND IS SUBSTANTIALLY LEVERAGED AND HAS SIGNIFICANT DEBT SERVICE OBLIGATIONS
WHICH COULD IMPAIR ITS ABILITY TO PAY THE AMOUNTS DUE UNDER THE NOTES.

     Diamond is substantially leveraged and has significant debt service
obligations, which could impair its ability to pay the amounts due under the 9
1/4% Senior Notes (the "Notes"). As of December 31, 2004, Diamond's


                                      -5-
<PAGE>
aggregate consolidated indebtedness was approximately $80.0 million, and Diamond
had $77.7 million (liquidation preference) of outstanding Preferred Stock and a
stockholders' deficit of $146.1 million.

     The degree to which Diamond is leveraged may impair Diamond's ability to
pay the amounts due under the Notes. Possible adverse consequences of Diamond's
degree of leverage include the following:

     -    Diamond's ability to obtain additional financing for working capital,
          capital expenditures or general corporate purposes may be impaired;

     -    a substantial portion of Diamond's cash flow from operations goes to
          the payment of interest and principal on its outstanding debt, thereby
          reducing the funds available to Diamond for other purposes;

     -    Diamond's indebtedness under the credit facility is at variable rates
          of interest, which makes Diamond vulnerable to increases in interest
          rates;

     -    Diamond's substantial degree of leverage will limit its ability to
          adjust rapidly to changing market conditions, reduce its ability to
          withstand competitive pressures, and make it more vulnerable in the
          event of a downturn in general economic conditions, repeated years of
          mild weather conditions or other adverse events in its business.

     If Diamond is unable to generate sufficient cash flows from operations in
the future to service its indebtedness, it may be required to refinance all or a
portion of its indebtedness, including the Notes, or to obtain additional
financing or to dispose of material assets or discontinue certain of its
operations. The credit facility and the indenture governing the Notes restrict
Diamond's ability to sell assets and/or use the proceeds therefrom. Diamond
cannot give the assurance that any refinancing or asset sales would be possible
under its debt instruments existing at that time and that the proceeds which
Diamond could realize from such refinancing or asset sales would be sufficient
to meet its obligations then due or that Diamond could obtain any additional
financing.

THE NOTES ARE SUBORDINATED TO DIAMOND'S SECURED INDEBTEDNESS.

     The Notes are:

     -    senior, unsecured obligations of Diamond and will rank senior in right
          and priority of payment to any indebtedness of Diamond that by its
          terms is expressly subordinated to the Notes.

     -    subordinated to secured indebtedness of Diamond (including
          indebtedness under the credit facility) with respect to the assets
          securing such indebtedness. The credit facility is secured by a first
          priority lien on substantially all of Diamond's assets.

     -    subordinated to claims of creditors of Diamond's subsidiaries, except
          to the extent that holders of the Notes may be creditors of such
          subsidiaries pursuant to guarantees.

     Diamond's obligations with respect to the Notes will be guaranteed, jointly
and severally, on a senior, unsecured basis by certain of its future
subsidiaries. Any obligations of Diamond's subsidiaries will be senior to the
claims of the holders of the Notes with respect to the assets of any of these
subsidiaries, except to the extent that the holders of the Notes may be
creditors of a subsidiary pursuant to a guarantee. Any claim by the holders of
the Notes with respect to the assets of any subsidiary will be subordinated to
secured indebtedness (including indebtedness


                                      -6-
<PAGE>
under the credit facility) of that subsidiary with respect to the assets
securing such indebtedness. The rights of Diamond and its creditors, including
holders of the Notes, to realize upon the assets of any subsidiary upon that
subsidiary's liquidation or reorganization (and the consequent rights of holders
of the Notes to participate in those assets) will be subject to the prior claims
of that subsidiary's creditors, except to the extent that Diamond may itself be
a creditor with recognized claims against that subsidiary or to the extent that
the holders of the Notes may be creditors with recognized claims against that
subsidiary pursuant to the terms of a guarantee (subject, however, to the prior
claims of creditors holding secured indebtedness of any subsidiary with respect
to the assets securing that indebtedness). The credit facility is secured by a
first priority lien on substantially all of Diamond's assets. In addition, the
indenture governing the Notes restricts the amount of indebtedness that
subsidiaries are permitted to incur.

DIAMOND MAY NOT BE ABLE TO COMPLY WITH CERTAIN PROVISIONS IN THE AGREEMENTS
GOVERNING ITS OUTSTANDING DEBT THAT RESTRICT DIAMOND'S ACTIONS AND REQUIRE
DIAMOND TO MAINTAIN FINANCIAL RATIOS.

     The credit facility and the indenture governing the Notes include certain
covenants that, among other things, restrict Diamond's ability to:

     -    make investments;

     -    incur additional indebtedness;

     -    grant liens;

     -    merge or consolidate with other companies;

     -    change the nature of its business;

     -    dispose of assets;

     -    make loans;

     -    pay dividends or redeem capital stock;

     -    guarantee the debts of other persons;

     -    make capital expenditures; and

     -    engage in transactions with affiliates.

     Prior to March 30, 2005, the credit facility required Diamond to maintain a
minimum EBITDA (as defined in the credit facility), calculated monthly, for each
12-month period, ending as of the end of each month, of at least $10.5 million.
Diamond amended the credit facility on November 15, 2004 with respect to the
EBITDA levels required to be maintained through December 31, 2004. At December
31, 2004, the EBITDA level required to be maintained by Diamond for the prior
12-month period was $8.5 million, which reverted back to $10.5 million as of
January 1, 2005. Diamond also obtained a covenant waiver for the credit facility
on March 4, 2005, with respect to the EBITDA levels required to be maintained
for January and February of 2005. On March 30, 2005, Diamond amended the credit
facility, to, among other things, replace the minimum EBITDA covenant under the
credit facility with a Fixed Charge Coverage Ratio (as defined in amendment
number ten to the credit facility). The credit facility, as amended, requires
Diamond to maintain as of the end of each fiscal month through December 31,
2005, a Fixed Charge Coverage Ratio of not less than 1.0:1.0 for the then
trailing 12-month period. As of the end of each fiscal month thereafter, Diamond
is required to maintain a Fixed Charge Coverage Ratio of not less than 1.1:1.0
for the then trailing 12-month period. Furthermore, at any time that the average
daily Availability (as defined in the credit facility) for any month is less
than $4.0 million, Diamond is required to maintain EBITDA for the trailing
three-month period of at least $2.0 million.


                                      -7-
<PAGE>
     Diamond's ability to comply with the provisions of its credit facility may
be affected by events beyond its control. Diamond's breach of any of these
covenants could result in a default under the credit facility, in which case the
lender would, among other things, be entitled to elect to declare all amounts
owing under the credit facility, together with accrued interest, to be due and
payable. If Diamond were unable to repay these borrowings, the lender could
proceed against its collateral. If the payment on indebtedness under the credit
facility were accelerated, Diamond cannot assure you that its assets would be
sufficient to repay in full that indebtedness and Diamond's other indebtedness,
including the Notes.

THE NOTES ARE SUBJECT TO FRAUDULENT CONVEYANCE LAWS.

     Diamond's obligations under the Notes may be subject to review under
relevant federal and state fraudulent conveyance laws in the event that a
bankruptcy, reorganization or rehabilitation case by or on behalf of unpaid
creditors of Diamond were to occur. Under these laws, Diamond's obligation to
repay the Notes could be voided, or the Notes could be subordinated to all other
creditors of Diamond, if, at the time Diamond issued the Notes, any of the
following were true:

     -    Diamond intended to hinder, delay or defraud any existing or future
          creditor or contemplated insolvency in order to prefer one or more
          creditors to the exclusion in the whole or in part of others;

     -    Diamond was insolvent or was rendered insolvent by reason of issuing
          the Notes;

     -    Diamond was engaged in a business or transaction with unreasonably
          small capital; or

     -    Diamond intended to incur, or believed that it would incur, debts
          beyond its ability to pay those debts as they matured.

     In the event that in the future the Notes are guaranteed by subsidiary
guarantors, the guarantees may also be subject to review under federal and state
fraudulent transfer laws. If a court were to determine that, at the time a
subsidiary guarantor became liable under its guarantee, it satisfied certain of
the conditions stated above, the court could void the guarantee and direct the
repayment of amounts paid thereunder.

     The measure of insolvency under fraudulent conveyance statutes varies
depending upon the laws of the jurisdiction being applied. Generally, however,
Diamond would be considered insolvent if, at the time it issued the Notes,
either (1) the sum of its debts was greater than all of its property at a fair
valuation; or (2) if the present fair salable value of its assets is less than
the amount that it would be required to pay on its existing debts as they become
absolute and matured. The obligations of each subsidiary guarantor under its
guarantee, however, will be limited in a manner intended to avoid it being
deemed a fraudulent conveyance under applicable law.

     Additionally, under federal bankruptcy or applicable state insolvency law,
if a bankruptcy or insolvency proceeding were initiated by or against Diamond
within 90 days after it made any payment with respect to the Notes, or if
Diamond anticipated becoming insolvent at the time of that payment, all or a
portion of the payment could be avoided as a preferential transfer and the
recipient of that payment could be required to return that payment.

     Diamond does not know what standard a court would use to determine whether
Diamond was insolvent at the time the Notes were issued, nor can Diamond assure
you that a court would not find Diamond to be insolvent on that date or that,
regardless of Diamond's solvency, that the issuances of the Notes constituted
fraudulent conveyances on another of the grounds summarized above.


                                       -8-
<PAGE>
DIAMOND MAY NOT BE ABLE TO COMPLY WITH ITS OBLIGATIONS UNDER THE INDENTURE
GOVERNING THE NOTES TO PURCHASE ALL OF THE NOTES UPON A CHANGE OF CONTROL.

     Upon the occurrence of a change of control, the indenture governing the
Notes requires Diamond to make an offer to repurchase all outstanding Notes at a
price equal to 101% of the aggregate principal amount thereof, together with
accrued and unpaid interest thereon to the date of repurchase. However, the
credit facility prohibits Diamond from repurchasing any Notes, unless and until
Diamond has paid the indebtedness under the credit facility in full. Diamond's
failure to repurchase the Notes would result in a default under the indenture
governing the Notes and the credit facility. Diamond's inability to pay the
indebtedness under the credit facility, if accelerated, would also constitute a
default under the indenture governing the Notes, which could have adverse
consequences to Diamond and to the holders of the Notes. In the event of a
change of control, Diamond cannot assure you that it would have sufficient
assets to satisfy all of its obligations under the credit facility and the
Notes.

DIAMOND'S FUTURE GROWTH MAY BE HINDERED BY ITS LACK OF SUFFICIENT CAPITAL OR
OTHER FACTORS, WHICH WOULD ADVERSELY AFFECT DIAMOND'S ABILITY TO GROW.

Diamond's growth depends to a significant degree on its ability to open new
service centers in existing and new markets and to operate these service centers
on a profitable basis. Diamond's ability to grow will depend, in part, on
business conditions and the availability of qualified managers and service
representatives, and sufficient capital. Diamond did not open any new service
centers during 2004, as Diamond continued to focus on improving the performance
of recently opened service centers, and utilizing its new management and
information systems infrastructure to leverage costs throughout the organization
while exploring opportunities to broaden its revenue base. As a result of a
concerted effort to improve its performance, Diamond consolidated 28 service
centers in 2004 with minimal or no disruptions in service. These consolidations
reduced redundant overhead and administrative costs, provided for enhanced
operational performance as a result of more centralized management, while
allowing Diamond to continue to service almost all of its existing geographical
markets. Diamond will continue to consolidate service centers to improve
operational performance during 2005,and will consider opening new service
centers in geographical markets where it believes it can capture additional
market share. A decline in Diamond's overall financial performance may adversely
impact its ability to grow in the future. Diamond expects that the net cash
generated from operations, together with borrowings under the credit facility,
should enable it to finance the expenditures related to its future growth.
However, Diamond cannot assure you that:

     -    it will possess sufficient funds to finance the expenditures related
          to its growth;

     -    new service centers can be opened on a timely basis;

     -    new service centers can be operated on a profitable basis; or that

     -    Diamond will be able to hire, train and integrate employees.

     In the event net cash generated from operations together with working
capital reserves and borrowings under the credit facility are insufficient to
finance the expenditures related to Diamond's growth, Diamond might be required
to reduce its growth in the future.

DIAMOND'S OPERATING RESULTS ARE AFFECTED BY SEASONALITY AND WEATHER.

     Weather has historically affected Diamond's sales and net income, with
severe weather generating increased sales and net income and mild weather
resulting in lower sales and net income. In addition, Diamond's business is
somewhat seasonal, with the fourth quarter traditionally its slowest period of
activity. Diamond believes these seasonal trends will continue for the
foreseeable future.


                                       -9-
<PAGE>
DIAMOND COMPETES AGAINST OTHER LARGE COMPANIES THAT MAY BE BETTER EQUIPPED TO
PROVIDE CUSTOMERS WITH AUTOMOTIVE GLASS REPLACEMENT AND REPAIR SERVICES.

     The automotive glass replacement and repair industry is highly competitive,
with customer decisions based on price, customer service, technical
capabilities, quality, advertising and geographic coverage. The competition in
the industry could result in additional pricing pressures, which could
negatively affect Diamond's results of operations. In addition, certain of
Diamond's competitors provide insurance companies with claims management
services, including computerized referral management, policyholder call
management, electronic auditing and billing services and management reporting.
While the market is generally highly fragmented, Diamond also competes against
several other large competitors in this market in regards to glass replacement
and repair services, the largest three of whom are Safelite Glass Corporation,
LYNX Services from PPG, L.L.C. and Glass Doctor, a subsidiary of the Dwyer
Group. Diamond does not compete against these competitors in regards to claims
management, policyholder call management, electronic auditing and billing
services, management reporting or any other similar services. Many of Diamond's
competitors have substantially less leverage than Diamond, which may allow them
greater flexibility in managing their operations. Diamond cannot assure you that
it will be able to continue to compete effectively with these or other
competitors. See "Business--Competition."

DIAMOND IS DEPENDENT ON ITS KEY PERSONNEL AND THE LOSS OF KEY PERSONNEL COULD
ADVERSELY AFFECT ITS RESULTS OF OPERATIONS.

     Diamond's success is largely dependent upon the abilities and experience of
its senior management team, including Kenneth Levine, Norman Harris and Michael
A. Sumsky. The loss of services of one or more of these senior executives could
adversely affect Diamond's results of operations.

OWNERSHIP OF DIAMOND IS CONCENTRATED IN GREEN EQUITY INVESTORS II, L.P., WHOSE
INTERESTS MAY CONFLICT WITH THOSE OF THE HOLDERS OF NOTES.

     Green Equity Investors II, L.P., an investment partnership managed by
Leonard Green and Partners, L.P. ("LGP"), owns approximately 76.1% of the
outstanding shares of Diamond's Common Stock and 80.0% of the outstanding shares
of Diamond's Preferred Stock. As a result, Green Equity Investors II, L.P. has
the power to elect all of the members of Diamond's board of directors, to
approve all amendments to Diamond's certificate of incorporation and bylaws and
to effect fundamental corporate transactions such as mergers, asset sales and
public offerings. Diamond cannot assure you that the interests of Green Equity
Investors II, L.P. will not conflict with the interests of the holders of the
Notes. See "Security Ownership of Certain Beneficial Owners and Management."

DIAMOND'S RESULTS OF OPERATIONS MAY BE ADVERSELY AFFECTED BY A DOWNTURN IN
GENERAL ECONOMIC CONDITIONS OR AN INCREASE IN FUEL PRICES.

     Diamond's revenues are dependent on the annual number of windshields
replaced, which in turn is influenced by the aggregate number of vehicles on the
road and the number of miles driven per vehicle per year. As a result, a general
economic downturn or higher fuel prices could have a material adverse effect on
Diamond's results of operations.

DIAMOND'S BUSINESS INVOLVES THE POTENTIAL FOR PRODUCT LIABILITY CLAIMS AGAINST
DIAMOND, WHICH MAY ADVERSELY AFFECT DIAMOND'S BUSINESS, FINANCIAL CONDITION AND
RESULTS OF OPERATIONS IF THE COST OF THOSE CLAIMS EXCEEDS DIAMOND'S INSURANCE
COVERAGE.

     The replacement of windshields entails risk of product liability claims,
particularly if the windshields Diamond uses in its business are defective.
Diamond is involved in legal proceedings in the ordinary course of its business.
Management believes that the amounts which may be awarded or assessed against
Diamond in connection with these matters, if any, will not have a material
adverse effect on Diamond's financial condition, operating results or liquidity.
In addition, management believes that Diamond has appropriate insurance coverage
to operate its business, including insurance for its mobile installation units
and technicians. However, a successful product liability claim (or series of
claims) against Diamond in excess of its insurance coverage could have a
material adverse affect on Diamond's business, financial condition and results
of operations.


                                      -10-
<PAGE>
ITEM 2. PROPERTIES

     The following chart provides information concerning Diamond's headquarters,
distribution facilities and emergency call centers, all of which are leased:

<TABLE>
<CAPTION>
          FACILITY                  FUNCTION        AREA IN SQUARE FEET
          --------                  --------        -------------------
<S>                           <C>                   <C>
Kingston, PA...............   Headquarters                206,080
                              Distribution Center
                              Call Center
Columbus, OH...............   Distribution Center          26,000
                              Call Center
Atlanta, GA................   Distribution Center          20,000
Rock Island, IL............   Distribution Center          16,000
Denver, CO.................   Distribution Center           9,400
</TABLE>

     The following chart provides information concerning the number and location
of Diamond's service centers, all of which are leased:

<TABLE>
<CAPTION>
                           NUMBER OF
                            SERVICE
STATE                       CENTERS
-----                   ---------------
<S>                     <C>
Alabama..............           6
Arkansas.............           1
Arizona..............           2
California...........           9
Colorado.............           5
Connecticut..........           6
Delaware.............           2
Florida..............           9
Georgia..............           9
Idaho...............            2
Illinois.............           5
Indiana..............           7
Iowa.................           2
Kansas...............           1
Kentucky.............           3
Louisiana............           5
Maine................           3
Maryland.............           8
Massachusetts........           9
Michigan.............           6
Minnesota............           2
Mississippi..........           1
Missouri.............           3
Nebraska.............           1
Nevada...............           2
New Hampshire........           6
New Jersey...........          11
New Mexico...........           1
New York.............          28
North Carolina.......           9
Ohio.................          11
Oklahoma.............           1
Oregon...............           2
Pennsylvania.........          28
Rhode Island.........           1
South Carolina.......           3
Tennessee............           5
Texas................           7
Utah.................           1
Vermont..............           3
Virginia.............          12
West Virginia........           4
Washington...........           2
Wisconsin............           5
</TABLE>

     Diamond believes that its facilities are adequate for its current needs and
that suitable additional distribution centers and service locations will be
available to satisfy Diamond's growth needs.


                                      -11-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS AND INSURANCE

     On May 2, 2002, Diamond filed an amended Complaint with the United States
District Court, Middle District of Pennsylvania against Safelite Glass
Corporation (the "Defendant"). Diamond alleges, among other things, that the
Defendant's conduct as (i) an operator of national telephone call centers which
takes first notice of loss calls from insurers of several of the largest
automobile insurers in the United States (the "Insurers"); (ii) a provider of
various claims processing services to the Insurers as a third-party
administrator and; (iii) an operator of a network of retail repair and
replacement facilities who perform work for the Insurers as Safelite affiliates,
violated certain federal and state laws and give rise to other legal and
equitable claims against the Defendant. Diamond alleges that the Defendant
engaged in various practices designed to divert customers away from Diamond to
the Defendant, and that Diamond has suffered damages as a result of this conduct
in an amount to be determined at trial.

     On November 1, 2002 and February 2, 2004, the Defendant filed a counter
claim and second amended counterclaim, respectively, against Diamond, alleging,
among other things, that Diamond has engaged and continues to engage in
publishing certain false and defamatory statements about the Defendant to
automobile insurance companies that are the Defendant's clients, and that
Diamond engages in improper promotional and marketing practices in return for
autoglass repair or replacement references. Defendant alleges that this alleged
conduct has injured the Defendant's goodwill and business reputation with its
insurance clients and in the autoglass repair and replacement industry. Among
other things, the Defendant is seeking damages in an amount to be determined at
trial. Diamond believes that Defendant's counterclaims are without merit.

     On February 3, 2003, Delbert Rice and Kenneth E. Springfield, Jr., on
behalf of themselves and all others similarly situated (the "Plaintiffs"), filed
a class action Complaint in the Court of Common Pleas of Luzerne County against
Diamond. Plaintiffs allege, among other things, Diamond violated certain
sections of the Pennsylvania Unfair Trade Practices and Consumer Protection Law
and common law. Plaintiffs allege that this alleged conduct has caused monetary
damages to Plaintiffs. Among other things, Plaintiffs are seeking damages in an
amount to be determined at trial. Diamond believes Plaintiffs' allegations are
without merit and plans to vigorously contest this complaint.

     Diamond is involved in other legal proceedings in the ordinary course of
its business. Management believes that the amounts which may be awarded or
assessed against Diamond in connection with these matters, if any, will not have
a material adverse effect on Diamond's financial condition, operating results or
liquidity. In addition, management believes that Diamond has appropriate
insurance coverage to operate its business, including insurance for its mobile
installation units and technicians.

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

     Not Applicable.


                                      -12-
<PAGE>
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     There is no established public market for Diamond's Common Stock or
Preferred Stock.

     At April 4, 2005, there were three holders of record of Diamond's Common
Stock and two holders of record of Diamond's Preferred Stock.


                                      -13-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

     The selected condensed financial data as of December 31, 2004, 2003, 2002,
2001 and 2000 and for each of the years then ended has been derived from
Diamond's audited financial statements.

     This summary condensed financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Diamond's Financial Statements and the related notes thereto
appearing elsewhere in this Annual Report.

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                          -----------------------------------------------------
                                                             2004       2003       2002       2001       2000
                                                          ---------   --------   --------   --------   --------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                       <C>         <C>        <C>        <C>        <C>
STATEMENT OF OPERATING DATA:
Sales .................................................   $ 208,424   $218,703   $201,623   $201,366   $184,015
Cost of sales .........................................      59,108     65,966     59,525     58,049     56,585
                                                          ---------   --------   --------   --------   --------
Gross profit ..........................................     149,316    152,737    142,098    143,317    127,430
Operating expenses ....................................     142,811    143,504    133,321    124,501    111,814
                                                          ---------   --------   --------   --------   --------
Income from operations ................................       6,505      9,233      8,777     18,816     15,616
Interest income .......................................          (7)       (22)      (221)      (191)       (57)
Interest expense ......................................       8,222      7,706      8,826     10,305     11,514
                                                          ---------   --------   --------   --------   --------
Net (loss) income before provision for income taxes ...      (1,710)     1,549        172      8,702      4,159
Provision for income taxes ............................      39,486        795        261      3,733      1,799
                                                          ---------   --------   --------   --------   --------
Net (loss) income .....................................     (41,196)       754        (89)     4,969      2,360
Preferred stock dividends .............................       8,670      7,703      6,843      6,081      5,403
                                                          ---------   --------   --------   --------   --------
Net loss applicable to common stockholders ............   $ (49,866)  $ (6,949)  $ (6,932)  $ (1,112)  $ (3,043)
                                                          =========   ========   ========   ========   ========

OTHER DATA:
EBITDA(1) .............................................   $   8,707   $ 12,039   $ 12,012   $ 21,462   $ 18,447
EBITDA margin .........................................         4.2%       5.5%       6.0%      10.7%      10.0%

Service centers operated at period end (unaudited) ....         249        277        278        256        232

BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents .............................   $     139   $     35   $  2,094   $  6,592   $     25
Total assets ..........................................      32,037     75,332     83,822     91,846     87,995
Total debt ............................................      80,008     82,258     93,000    100,000    100,500
Redeemable cumulative preferred stock .................      77,745     69,076     61,373     54,530     48,449
Stockholders' deficit .................................    (146,056)   (96,296)   (89,452)   (82,387)   (81,275)
</TABLE>

(1)  EBITDA represents earnings before interest, taxes, depreciation and
     amortization. EBITDA is a measurement of Diamond's performance that is not
     required by, or presented in accordance with, GAAP. EBITDA is not a
     measurement of Diamond's financial performance under GAAP and should not be
     considered an alternative to net income, operating income or any other
     performance measures derived in accordance with GAAP or as an alternative
     to cash flow from operating activities as a measure of its liquidity.

          Diamond presents EBITDA because it considers it an important
          supplemental measure of its performance and believes it is frequently
          used by securities analysts, investors and other interested parties in
          the evaluation of companies in its industry, many of which present
          EBITDA when reporting their results.


                                      -14-
<PAGE>
          Diamond believes issuers of "high yield" securities also present
          EBITDA because investors, analysts and rating agencies consider it
          useful in measuring the ability of those issuers to meet debt service
          obligations. Diamond believes EBITDA is an appropriate supplemental
          measure of debt service capacity, because cash expenditures on
          interest are, by definition, available to pay interest, and tax
          expense is inversely correlated to interest expense because tax
          expense goes down as deductible interest expense goes up; depreciation
          and amortization are non-cash charges.

          Diamond also uses EBITDA for the following purposes: (i) its
          executives' compensation plans base incentive compensation payments on
          its EBITDA performance measured against budgets; and (ii) its credit
          agreement and its indenture for its Notes use EBITDA to measure
          Diamond's compliance with covenants such as additional debt
          incurrence. EBITDA has limitations as an analytical tool, and should
          not be considered in isolation, or as a substitute for analysis of
          Diamond's results as reported under GAAP. Some of these limitations
          are:

          -    EBITDA does not reflect Diamond's cash expenditures, or future
               requirements, for capital expenditures or contractual
               commitments;

          -    EBITDA does not reflect changes in, or cash requirements for,
               Diamond's working capital needs;

          -    EBITDA does not reflect the significant interest expense, or the
               cash requirements necessary to service interest or principal
               payments, on Diamond's debt;

          -    Although depreciation and amortization are non-cash charges, the
               assets being depreciated and amortized will often have to be
               replaced in the future, and EBITDA does not reflect any cash
               requirements for such replacements; and

          -    Other companies in Diamond's industry may calculate EBITDA
               differently than Diamond does, limiting its usefulness as a
               comparative measure.

          Because of these limitations, EBITDA should not be considered as a
          measure of discretionary cash available to Diamond to invest in the
          growth of its business. Diamond compensates for these limitations by
          relying primarily on its GAAP results and using EBITDA only
          supplementally.

Reconciliation of EBITDA to net income follows for the periods indicated:

<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                    ------------------------------------------------
                                      2004       2003      2002      2001      2000
                                    --------   -------   -------   -------   -------
                                                     (in thousands)
<S>                                 <C>        <C>       <C>       <C>       <C>
Net (loss) income ...............   $(41,196)  $   754   $   (89)  $ 4,969   $ 2,360
Interest expense ................      8,222     7,706     8,826    10,305    11,514
Depreciation and amortization ...      2,195     2,784     3,014     2,455     2,774
Provision for income taxes ......     39,486       795       261     3,733     1,799
                                    --------   -------   -------   -------   -------
   EBITDA .......................   $  8,707   $12,039   $12,012   $21,462   $18,447
                                    ========   =======   =======   =======   =======
</TABLE>


                                      -15-
<PAGE>
QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Dollars in Thousands
                                                      --------------------------------------------------
                                                       First     Second    Third     Fourth
                                                      Quarter   Quarter   Quarter    Quarter     Total
                                                      -------   -------   -------   --------   ---------
<S>                                                   <C>       <C>       <C>       <C>        <C>
                        2004
Net Sales                                             $53,376   $56,930   $53,546   $ 44,572   $ 208,424
Gross Profit                                           38,190    40,649    38,366     32,111   $ 149,316
Net (loss) income                                         (65)      442     2,180    (43,753)   ($41,196)
Net loss applicable to common stockholders             (2,137)   (1,693)      (19)   (46,017)   ($49,866)

                        2003
Net Sales                                             $54,133   $59,790   $57,090   $ 47,690   $ 218,703
Gross Profit                                           37,896    41,254    39,581     34,006   $ 152,737
Net income (loss)                                         682     2,189       260     (2,377)  $     754
Net (loss) income applicable to common stockholders    (1,158)      292    (1,694)    (4,389)    ($6,949)

                        2002
Net sales                                             $48,157   $54,404   $52,970   $ 46,092   $ 201,623
Gross profit                                           34,520    39,354    37,112     31,112     142,098
Net income (loss)                                         166     2,038        29     (2,322)        (89)
Net (loss) income applicable to common stockholders    (1,469)      353    (1,706)    (4,110)     (6,932)
</TABLE>

     Diamond established a valuation allowance against its deferred tax asset
during 2004 that resulted in a 100% reserve of this asset at December 31, 2004,
or approximately $40.0 million. The entire reserve was recorded during the
fourth quarter of 2004. See "--Critical Accounting Policies--Income Tax" for a
discussion of Diamond's tax treatment of its 1998 recapitalization and the
related valuation allowance established in 2004 in respect of the deferred tax
asset established in connection with such recapitalization.

                                      -16-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS

OVERVIEW

     Diamond is a leading provider of automotive glass replacement and repair
services in the United States. At December 31, 2004, Diamond operated a network
of 249 automotive glass service centers, approximately 1,000 mobile installation
vehicles and six distribution centers in 44 states. Diamond serves all of its
customers' automotive glass replacement and repair needs, offering windshields,
tempered glass and other related products. Sales, net loss and EBITDA for the
year ended December 31, 2004 was $208.4 million, $41.2 million and $8.7 million,
respectively. Approximately $40.0 million of net loss was attributable to a
valuation allowance established against Diamond's deferred tax asset that
resulted in a 100% reserve of its deferred tax asset at December 31, 2004. See
"- Critical Accounting Policies - Income Tax" for a discussion of Diamond's tax
treatment of its 1998 recapitalization and the related valuation allowance
established in 2004 in respect of the deferred tax asset established in
connection with such recapitalization.

     Weather has historically affected Diamond's sales and net income, with
severe weather generating increased sales and net income and mild weather
resulting in lower sales and net income. In addition, Diamond's business is
somewhat seasonal, with the fourth quarter traditionally its slowest period of
activity. Diamond believes these seasonal trends will continue for the
foreseeable future.

     The price of replacement automotive glass is based in part on list prices
developed by the National Auto Glass Specification ("NAGS"), an independent
third party. Prices charged by participants in the automotive glass replacement
industry are independently determined using varying percentage discounts from
the NAGS price list. The impact of NAGS price changes on Diamond's financial
results depends on the level of discounts Diamond grants to its customers and
the level of discounts that Diamond can obtain from its glass suppliers. NAGS
periodically modifies its published list prices which has resulted in overall
list price decreases of approximately 2% to 5% annually over the past two years.
Effective February 28, 2005, NAGS significantly modified its published list
prices of automotive glass in order to bring actual prices more in line with
published list prices, however, under this modified pricing structure NAGS has
made allowances for installation charges such as labor, installation kits and
other ancillary charges which were previously included in the net list price.
While Diamond does not expect to be negatively impacted by these recent NAGS
modifications, other factor's affecting overall pricing in the industry may
continue to be an ongoing concern.

     Diamond believes that, due to its sole focus on automotive glass
replacement and repair, it has one of the lowest cost structures in the
automotive glass replacement and repair industry. Diamond's low cost structure
enables it to serve all markets of the industry, which is comprised of: (1)
individual consumers; (2) commercial customers, including commercial fleet
leasing companies, rental car companies, car dealerships, body shops, utilities
and government agencies; and (3) insurance customers, including referrals from
local agents, claims offices and centralized call centers. Diamond's 2004 sales
to individual consumers, commercial customers and insurance customers
represented approximately 26.8%, 40.8% and 32.4% of total sales, respectively.
While the largest participant in the industry primarily focuses on servicing
automotive glass insurance claims (including providing related insurance claims
processing services) and also manufactures automotive glass, Diamond has
strategically positioned itself solely as a provider of automotive glass
replacement and repair services to a balanced mix of individual, commercial and
insurance customers.


                                      -17-
<PAGE>
RESULTS OF OPERATIONS

     The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the audited Financial Statements of Diamond and
the notes thereto included elsewhere in this Annual Report.

     The following table summarizes Diamond's historical results of operations
and historical results of operations as a percentage of sales for the years
ended December 31, 2004, 2003 and 2002.

<TABLE>
<CAPTION>
                                                                  YEARS ENDED DECEMBER 31,
                                                       ---------------------------------------------
                                                            2004            2003            2002
                                                       -------------   -------------   -------------
                                                         $       %       $       %       $       %
                                                       -----   -----   -----   -----   -----   -----
                                                                   (DOLLARS IN MILLIONS)
<S>                                                    <C>     <C>     <C>     <C>     <C>     <C>
Sales ..............................................   208.4   100.0   218.7   100.0   201.6   100.0
Cost of Sales ......................................    59.1    28.4    66.0    30.2    59.5    29.5
                                                       -----   -----   -----   -----   -----   -----

Gross Profit .......................................   149.3    71.6   152.7    69.8   142.1    70.5
Operating Expenses .................................   142.8    68.5   143.5    65.6   133.3    66.1
                                                       -----   -----   -----   -----   -----   -----
Income from Operations .............................     6.5     3.1     9.2     4.2     8.8     4.4

Interest Income ....................................     0.0     0.0     0.0     0.0    (0.2)   (0.1)
Interest Expense ...................................     8.2     3.9     7.7     3.5     8.8     4.4
                                                       -----   -----   -----   -----   -----   -----
                                                         8.2     3.9     7.7     3.5     8.6     4.3
                                                       -----   -----   -----   -----   -----   -----

(Loss) Income before Provision for Income Taxes ....    (1.7)   (0.8)    1.5     0.7     0.2     0.1
Provision for Income Taxes .........................    39.5    19.0     0.8     0.4     0.3     0.1
                                                       -----   -----   -----   -----   -----   -----
Net (Loss) Income ..................................   (41.2)  (19.8)    0.8     0.3    (0.1)   (0.0)
                                                       =====   =====   =====   =====   =====   =====

Net Loss Applicable to Common

Stockholders .......................................   (49.9)  (23.9)   (6.9)   (3.2)   (6.9)   (3.4)
                                                       =====   =====   =====   =====   =====   =====

Net (Loss) Income ..................................   (41.2)  (19.8)     .8     0.3    (0.1)   (0.0)

Interest Expense ...................................     8.2     3.9     7.7     3.5     8.8     4.4
Provision for Income Taxes .........................    39.5    19.0     0.8     0.4     0.3     0.1
Depreciation and Amortization ......................     2.2     1.1     2.8     1.3     3.0     1.5
                                                       -----   -----   -----   -----   -----   -----
EBITDA (1) .........................................     8.7     4.2    12.0     5.5    12.0     6.0
                                                       =====   =====   =====   =====   =====   =====
</TABLE>

(1)  EBITDA and the related ratios presented in this table are measures of
     Diamond's performance that are not required by, or presented in accordance
     with, GAAP. EBITDA is not measurements of Diamond's financial performance
     under GAAP and should not be considered as alternatives to net income,
     operating income or any other performance measures derived in accordance
     with GAAP or as an alternative to cash flow from operating activities as a
     measure of its liquidity.

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

     Sales. Sales for 2004 decreased by $10.3 million, or 4.7%, to $208.4
million from $218.7 million for 2003. Installation units sold decreased 3.5%
compared to 2003. Revenue per installation unit for 2004 decreased 1.8% compared
to 2003. The decrease in revenue per installation unit is primarily due to a
series of price changes made to the list prices developed by NAGS, an
independent third party. Prices charged by participants in the automotive glass
replacement industry are independently determined using varying percentage
discounts from the NAGS price list. The impact of NAGS price changes on
Diamond's financial results depends on the level of discounts Diamond


                                      -18-
<PAGE>
grants to its customers and the level of discounts that Diamond can obtain from
its glass suppliers. The decrease in revenue per installation unit is also due
to pricing pressures experienced within our insurance customer sector. The
decrease in Sales is due to the decrease in installation unit sold and the
decrease in revenue per installation unit, as discussed above.

     Gross Profit. Gross profit for 2004 decreased by $3.4 million, or 2.2%, to
$149.3 million from $152.7 million for 2003. Gross margin increased as a
percentage of sales to 71.6% for 2004 from 69.8% for 2003. The decrease in gross
profit is due to a decrease in net sales as discussed above. The increase in
gross profit percentage is primarily due to decreased product costs, which is
due to the continued leveraging of Diamond's purchasing power and to enhanced
inventory management as a result of increased system functionality from our
upgraded MIS platform.

     Operating Expenses. Operating expenses for 2004 decreased by $0.7 million,
or 0.5%, to $142.8 million from $143.5 million for 2003. Operating expenses
increased as a percentage of sales to 68.5% for 2004 from 65.6% for 2003. The
decrease in operating expenses was due to decreases in advertising and
promotional, depreciation and shop maintenance expense categories. Vehicle
maintenance expense also decreased which is a result of continued efforts in our
fleet management to reduce repair expenditures. These decreases were partially
offset by increases in vehicle gas expense due to rising prices, an increase in
occupancy costs primarily due to normal rental rate increases and an increase in
health insurance costs due to rising prices in the health care industry. Vehicle
lease expense increased due to the continued replacement of owned vehicles that
are replaced with leased vehicles, and shortened leasing terms in order to more
closely align our lease obligations upon termination of the lease with expected
vehicle market values.

     Depreciation and amortization expense for 2004 decreased by $0.6 million,
or 21.4%, to $2.2 million from $2.8 million for 2003. The decrease is primarily
due to decreases in depreciation expense for capitalized computer costs that
became fully depreciated.

     Income from Operations. Income from operations for 2004 decreased by $2.7
million, or 29.3%, to $6.5 million from $9.2 million for 2003. This decrease was
primarily due to the decrease in gross profit, which was partially offset by
decreased operating expenses, as discussed above.

     Interest Expense. Interest expense for 2004 increased by $0.5 million, or
6.5%, to $8.2 million from $7.7 million for 2003. The increase in interest
expense is primarily due to the recording of a net gain of $1.1 million from the
repurchase of senior notes during the year ended December 31, 2003, which
reduced interest expense for that period. There was no similar repurchase
activity during the twelve months ended December 31, 2004. The increase for the
twelve months ended December 31, 2004 was partially offset by decreased interest
expense as a direct result of the repurchase of $13.2 million face amount of
senior notes during 2003.

     Net (Loss) Income . Diamond recorded $41.2 million of net loss in 2004
compared to $0.8 million of net income in 2003. Net (loss) income as a
percentage of sales decreased by 20.1% for 2004 as compared to 2003. The change
in net (loss) income and net (loss) income margin during 2004 compared to 2003
was primarily due to the $40.0 million valuation allowance established against
Diamond's deferred tax asset. See "- Critical Accounting Policies - Income Tax"
for a discussion on Diamond's tax treatment of the Recapitalization and related
valuation allowance against its deferred tax asset.

     Net Loss Applicable to Common Stockholders. Net loss applicable to common
stockholders for 2004 increased $43.0 million to $49.9 million from $6.9 million
for 2003. The increase was primarily due to the change in net (loss) income as
discussed above and the increase in preferred stock dividend.

     EBITDA. EBITDA for 2004 decreased by $3.3 million, or 27.5%, to $8.7
million from $12.0 million for 2003. EBITDA as a percentage of sales decreased
to 4.2% for 2004 from 5.5% for 2003. The decrease in EBITDA and EBITDA margin
was primarily due to the decrease in gross profit as discussed above.


                                      -19-
<PAGE>
YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

     Sales. Sales for 2003 increased by $17.1 million, or 8.5%, to $218.7
million from $201.6 million for 2002. Installation units sold increased 13.6%
compared to 2002. Revenue per installation unit for 2003 decreased 4.7% compared
to 2002. The increase in sales and installation units sold was primarily due to
increased demand due to the harsh winter weather conditions and to increased
volume in our maturing service centers. The decrease in revenue per installation
unit is primarily due to a series of price changes made to the list prices
developed by NAGS, an independent third party. Prices charged by participants in
the automotive glass replacement industry are independently determined using
varying percentage discounts from the NAGS price list. The impact of NAGS price
changes on Diamond's financial results depends on the level of discounts Diamond
grants to its customers and the level of discounts that Diamond can obtain from
its glass suppliers. These price changes, effective January 2003, have resulted
in a 4% to 5% decrease in overall list prices. The decrease in revenue per
installation unit is also due to pricing pressures experienced within our
insurance customer sector.

     Gross Profit. Gross profit for 2003 increased by $10.6 million, or 7.5%, to
$152.7 million from $142.1 million for 2002. Gross margin decreased as a
percentage of sales to 69.8% for 2003 from 70.5% for 2002. The decrease in gross
profit percentage is due to a decrease in average revenue per installation unit.

     Operating Expenses. Operating expenses for 2003 increased by $10.2 million,
or 7.6%, to $143.5 million from $133.3 million for 2002. Operating expenses
decreased as a percentage of sales to 65.6% for 2003 from 66.1% for 2002.
Approximately $2.7 million of increased operating expense is a direct result of
the incremental costs absorbed during 2003 for new service centers opened during
2002, primarily for wages and wage related expenses, advertisement and
promotional expenses and occupancy costs. The incremental costs are due to the
fact that these new service centers were opened at various times during 2002 and
did not incur a full year of operating expenses during 2002. The increase in
operating expenses was also due to an increase in wages and wage related
expense, primarily at the service centers, due to an increase in unit demand and
to general wage increases, an increase in insurance expense due to rising
insurance premiums, an increase in advertisement and promotional expenses and an
increase in vehicle fuel costs due to rising prices and increased consumption.
Diamond also experienced an increase in vehicle lease expense due to an increase
in fleet size to support expansion and continued replacement of owned vehicles
with leased vehicles.

     Depreciation and amortization expense for 2003 decreased by $0.2 million,
or 6.7%, to $2.8 million from $3.0 million for 2002. The decrease is primarily
due to increased use of a master fleet leasing program for the lease of mobile
installation and distribution service vehicles in favor of owned vehicles which
was partially offset by increases in depreciation and amortization expense
related to certain sales, billing, and financial system software and computer
hardware that started being depreciated during 2002.

     Income from Operations. Income from operations for 2003 increased by $0.4
million, or 4.5%, to $9.2 million from $8.8 million for 2002. This increase was
primarily due to the increase in gross profit which was partially offset by the
increase in operating expenses discussed above.

     Interest Expense. Interest expense for 2003 decreased by $1.1 million, or
12.5%, to $7.7 million from $8.8 million for 2002. The decrease was due to
reduced interest expense realized by the repurchase of $20.2 million in
aggregate principal amount of senior notes since December 2002, which was
partially offset by increased interest on credit facility borrowings throughout
the year.

     Net Income (Loss). Diamond recorded $0.8 million of net income in 2003
compared to $0.1 million net loss in 2002. Net income (loss) as a percentage of
sales increased by 0.3% for 2003 as compared to 2002. The increase in net income
(loss) and net income (loss) margin during 2003 compared to 2002 was primarily
due to the reduced interest expense realized from the repurchase of senior notes
during 2003 and 2002, which was partially offset by the impact of decreased
gross profit percentage and increased operating costs discussed above.

     Net Loss Applicable to Common Stockholders. Net loss applicable to common
stockholders for 2003 remained steady at $6.9 million compared to 2002. The
increase in net income as discussed above was offset by an increase in preferred
stock dividends.


                                      -20-
<PAGE>
     EBITDA. EBITDA for 2003 of $12.0 million remained flat compared to 2002.
EBITDA as a percentage of sales decreased to 5.5% for 2003 from 6.0% for 2002.
The decrease in EBITDA margin for 2003 was primarily due to the decrease in
gross profit percentage and increased operating costs discussed above..

LIQUIDITY AND CAPITAL RESOURCES

     Diamond's need for liquidity will arise primarily from interest payable on
the Notes, the credit facility and the funding of Diamond's capital expenditures
and working capital requirements. There are no mandatory principal payments on
the Notes prior to their maturity on April 1, 2008 and, except to the extent
that the amount outstanding under the credit facility exceeds the borrowing
base, no required payments of principal on the credit facility prior to its
expiration on March 27, 2007. Diamond may from time to time repurchase Notes in
the open market.

     Net Cash Provided by Operating Activities. Net cash provided by operating
activities for 2004 decreased $5.5 million to $2.8 million from $8.3 million for
2003. The decrease in cash provided by operating activities for 2004 was
primarily due to a decrease in Diamond's net earnings and related tax effect.
Net cash provided by operating activities for 2003 increased $4.0 million to
$8.3 million from $4.3 million for 2002. The increase in cash provided by
operating activities for 2003 was primarily due to an increase in Diamond's net
earnings, a decrease in inventory resulting from enhanced inventory management
capabilities as a result of the implementation of new systems software, and an
increase in accounts payable and accrued expenses.

     Net Cash Used in Investing Activities. Net cash used in investing
activities for 2004 decreased $0.8 million to $0.5 million used from $1.3
million used in investing activities for 2003. Net cash used in investing
activities for 2003 decreased $1.9 million to $1.3 million used from $3.2
million used in investing activities for 2002. The primary reason for these
variances was a decrease in capital expenditures discussed below.

     Net Cash Used in Financing Activities. Net cash used in financing
activities for 2004 decreased $6.8 million to $2.3 million from $9.1 million for
2003. This decrease is due to $11.6 million of payments for repurchase of senior
notes during 2003. There were no similar transactions during 2004. This decrease
was partially offset by a $2.3 million decrease in net borrowings during the
twelve months ended December 31, 2004 compared to the twelve months ended
December 31, 2003. Net cash used in financing activities for 2003 increased $3.5
million to $9.1 million from $5.6 million for 2002 primarily due to cash used to
purchase $13.2 million face value of senior notes for a purchase price of $11.6
million which was partially offset by net borrowings under the credit facility
in the amount of $2.5 million.

     Capital Expenditures. Capital expenditures were $0.7 million for 2004 as
compared to $1.4 million for 2003 and $3.3 million for 2002. The decrease in
capital expenditures in 2004 is primarily due to a decrease in vehicle and
software related expenditures, which were partially offset by increases in
computer hardware and leasehold improvements. Capital expenditures in 2003 were
made primarily to fund the continued upgrade of Diamond's management information
systems.

     Liquidity. Management believes that Diamond will have adequate capital
resources and liquidity to satisfy its debt service obligations, working capital
needs and capital expenditure requirements for the next 12 months. Diamond's
capital resources and liquidity are expected to be provided by Diamond's net
cash provided by operating activities and borrowings under the credit facility.
See "--Critical Accounting Policies - Income Tax" for a discussion of Diamond's
tax treatment of the Recapitalization and related valuation allowance against
its deferred tax asset.

CRITICAL ACCOUNTING POLICIES

     Certain accounting estimates and assumptions are particularly sensitive
because of their significance to the financial statements and the possibility
that future events affecting them may differ markedly. The accounting policies
of Diamond with the more critical estimates and judgments are described below.

     Allowance for Doubtful Accounts. Diamond makes assumptions related to the
uncollectability of trade accounts receivable. An allowance for doubtful
accounts is recorded to reserve against specific accounts receivable


                                      -21-
<PAGE>
that are deemed uncollectable, as well as to establish a general reserve based
on aging of receivables and historical company experience related to the amount
and aging of specific write-offs.

     Accrued Healthcare and Worker's Compensation Costs. Diamond makes
assumptions in order to estimate its healthcare and worker's compensation cost
accruals for claims that have been incurred but not yet paid for by the company.
Assumptions used in the estimate are based on continued analysis of claim
activity and time lag in processing claims. In addition, Diamond also utilizes
third party reports in the development of loss development factors to further
substantiate accounting reserves.

     Income Tax. On January 15, 1998, Diamond, Kenneth Levine, Richard Rutta,
Green Equity Investors II, L.P. and certain affiliated entities of Diamond
entered into a Second Amended and Restated Stock Purchase Agreement, pursuant to
which, among other things, Green Equity Investors II, L.P. and other investors
acquired 80.0% of the Common Stock and 80.0% of the Preferred Stock (the
"Recapitalization"). The Recapitalization was consummated on March 31, 1998. For
tax purposes, the parties made a joint election under Internal Revenue Code (the
"IRC") Section 338(h)(10), under which the assets and liabilities of the
affiliates were recorded at their fair market values for tax purposes resulting
in $118.5 million of tax deductible goodwill. A financial statement deferred tax
asset was also established on March 31, 1998 in the amount of approximately
$44.8 million with a credit to additional paid-in capital as the
Recapitalization was recorded for financial statement purposes as a
recapitalization for which purchase accounting was not applied.

     The Internal Revenue Service (the "IRS") has concluded its audit of the tax
periods ended December 31, 1998, 1999, and 2000. As a result of this audit, the
IRS issued a notice of proposed adjustments on February 20, 2002, which included
a disallowance of the tax-deductible goodwill resulting from the aforementioned
Recapitalization. The IRS has asserted that the Recapitalization did not qualify
as a stock purchase, and accordingly, that the election under IRC Section
338(h)(10) was not valid. As a result, if the IRS position were sustained,
tax-deductible goodwill would not be recognizable by Diamond. Diamond strongly
believes that the Recapitalization was properly accounted for, and has appealed
the Internal Revenue Service's proposed adjustment.

     On February 25, 2005, the Chief Financial Officer of Diamond was informed
by an IRS appeals officer that the IRS had made a determination regarding the
Diamond's election under IRC Section 338(h)(10). The IRS appeals officer
communicated that, subject to final supervisory review and the issuance of a
closing letter, the issue related to Diamond's election under the IRC Section
338(h)(10) has been resolved in Diamond's favor and that the proposed adjustment
made by the IRS on February 20, 2002 to disallow Diamond's election under the
IRC Section 338(h)(10) will be reversed. Based on this communication, Diamond
expects to receive a final written determination from the IRS during the second
calendar quarter of 2005 informing Diamond that the issue related to Diamond's
election under the IRC Section 338(h)(10) has been resolved in Diamond's favor.

     The proposed adjustments by the Internal Revenue Service would have
resulted in $7.4 million of federal tax deficiencies owed by Diamond for the
period December 31, 1998 through December 31, 2004, plus possible interest and
penalties and any resultant increases in current state tax expense for this
period. Additionally, the deferred tax asset established in 1998 would have been
eliminated, as well as net operating loss carryforwards from previous deductions
of the tax goodwill. If such appeal were ultimately unsuccessful, the Internal
Revenue Service's proposed adjustment would have a material adverse affect on
Diamond's liquidity, cash flows, balance sheet and results of operations.

     Under the asset and liability method of SFAS No. 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. In assessing the realizability
of deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during periods in which those temporary differences become
deductible. Management considers the reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this
assessment. The timing of the reversal of deferred tax liabilities and the
projection of future taxable income require the Company to make a number of
estimates.


                                      -22-
<PAGE>
     Management considered projected future taxable income, recent years taxable
income and tax planning strategies in making the assessment. Based upon the
level of taxable income over the past several years and projections of future
taxable income over the next several years, management believes it is more
likely than not that Diamond will not realize the benefits of these deductible
differences. Therefore, Diamond established a valuation allowance against its
deferred tax asset that resulted in a 100% reserve of this asset at December 31,
2004, or approximately $40.0 million. However, the amount of the deferred tax
asset considered realizable could be reinstated if estimates of future taxable
income during the amortization period are increased.

NEW ACCOUNTING STANDARDS

     In November 2004, the FASB issued SFAS No. 151, "Inventory Costs--an
amendment of ARB No. 43, Chapter 4". This Statement amends the guidance in ARB
No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and re-handling costs may be so abnormal as to require
treatment as current period charges. . . ." This Statement requires that those
items be recognized as current-period charges regardless of whether they meet
the criterion of "so abnormal." In addition, this Statement requires that
allocation of fixed production overheads to the costs of conversion be based on
the normal capacity of the production facilities. The adoption of this Statement
did not have any impact on our consolidated financial statements.

     In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets--an amendment of APB Opinion No. 29". The guidance in APB Opinion No. 29,
Accounting for Nonmonetary Transactions, is based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value of
the assets exchanged. The guidance in that Opinion, however, included certain
exceptions to that principle. This Statement amends Opinion 29 to eliminate the
exception for nonmonetary exchanges of similar productive assets and replaces it
with a general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The adoption of this Statement did not have any impact on our
consolidated financial statements.

     In December 2004, the FASB issued Statement No. 123 (revised 2004),
"Stock-Based Payment" (SFAS 123R). This statement replaces SFAS 123, "Accounting
for Stock-Based Compensation," supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25) and amends SFAS 95, "Statement of Cash
Flows," to require that excess tax benefits be reported as a financing cash
inflow rather than as a reduction of taxes paid. SFAS 123R is effective the
first interim or annual reporting period that begins after June 15, 2005, which
will be for the period covered by our quarterly report on Form 10-Q for the
third quarter of 2005. We currently account for stock option grants using the
intrinsic-value method in accordance with APB 25. Under the intrinsic-value
method, because the exercise price of Diamond's employee stock options is equal
to the market price of the underlying stock on the date of the grant, no
compensation expense is recognized. If we would have applied the fair value
recognition provisions of SFAS 123R, we would have had a charge to earnings of
approximately $9,000 for stock-based employee compensation, net of related
income taxes, for 2004.


                                      -23-
<PAGE>
CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

     The following summarizes Diamond's contractual cash obligations and other
commercial commitments as of December 31, 2004. These amounts do not include a
factor for interest, that may be due under any of these obligations.

<TABLE>
<CAPTION>
                                            PAYMENTS DUE BY PERIOD (DOLLARS IN THOUSANDS)
                                     ----------------------------------------------------------
                                      2005     2006     2007      2008    2009   2010    TOTAL
                                     ------   ------   ------   -------   ----   ----   -------
<S>                                  <C>      <C>      <C>      <C>       <C>    <C>    <C>
CONTRACTUAL CASH OBLIGATIONS
Long Term Debt                                         $  250   $79,758                 $80,008
Real Estate Leases                   $4,335   $2,147   $1,140   $   770   $631   $544   $ 9,567
Vehicle Operating Leases             $1,507                                             $ 1,507
                                     ------   ------   ------   -------   ----   ----   -------
Total Contractual Cash Obligations   $5,842   $2,147   $1,390   $80,528   $631   $544   $91,082
                                     ======   ======   ======   =======   ====   ====   =======
</TABLE>

<TABLE>
<CAPTION>
                                                              AMOUNT OF COMMITMENT
                                                              EXPIRATION PER PERIOD
                                                             (DOLLARS IN THOUSANDS)
                                                         ------------------------------
                                                           2005    THEREAFTER    TOTAL
                                                         -------   ----------   -------
<S>                                                      <C>        <C>         <C>
OTHER COMMERCIAL COMMITMENTS
Standby Letters of Credit                                $    --     $6,841     $ 6,841
Operating Lease - Contingent Guaranteed Residual Value    11,946         --      11,946
                                                         -------     ------     -------
Total Commercial Commitments                             $11,946     $6,841     $18,787
                                                         =======     ======     =======
</TABLE>

INFLATION

     Diamond believes that inflation has not had a material impact on its
results of operations for 2002, 2003 or 2004.

EFFECT OF WEATHER CONDITIONS AND SEASONALITY

     Weather has historically affected Diamond's sales and net income, with
severe weather generating increased sales and net income and mild weather
resulting in lower sales and net income. In addition, Diamond's business is
somewhat seasonal, with the fourth quarter traditionally its slowest period of
activity. Diamond believes such seasonal trends will continue for the
foreseeable future. See "--Sales."


                                      -24-
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Diamond has a revolving Credit Facility that provides for revolving
     advances of up to $25.0 million, and matures in March 2007. Borrowings
     under the Credit Facility bear interest, at Diamond's discretion, at either
     the Chase Manhattan Bank Rate (as defined in the Credit Facility) or LIBOR,
     plus a margin of 0.50% for the Chase Manhattan Rate and 2.25% - 2.75% for
     the LIBOR Rate. In addition, a commitment fee of 0.25% is charged against
     any unused balance of the Credit Facility. Interest rates are subject to
     increases or reductions based upon the level of Diamond's borrowings under
     the Credit Facility. At December 31, 2004, Diamond had $0.3 million of
     outstanding borrowings under the Credit Facility.


                                      -25-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS

     The following financial statements of Diamond, together with the reports of
the independent auditors thereon, are presented on pages F-1 through F-22 hereof
as set forth below:

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Report of Independent Registered Public Accounting Firm
   (Current auditors)....................................................    F-2

Report of Independent Registered Public Accounting Firm
   (Former auditors).....................................................    F-3

Consolidated Balance Sheets, December 31, 2004 and 2003..................    F-4

Consolidated Statements of Operations for the Years Ended
   December 31, 2004, 2003 and 2002......................................    F-6

Consolidated Statements of Stockholders' Deficit for the
   Years Ended December 31, 2004, 2003 and 2002..........................    F-7

Consolidated Statements of Cash Flows for the Years Ended
   December 31, 2004, 2003 and 2002......................................    F-8

Notes to Consolidated Financial Statements...............................    F-9
</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
     FINANCIAL DISCLOSURE

     None.

ITEM 9A. CONTROLS AND PROCEDURES

     Diamond maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in Diamond's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms and that
such information is accumulated and communicated to Diamond's management,
including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.

     As required by SEC Rule 13a-15(b), Diamond carried out an evaluation, under
the supervision and with the participation of Diamond's management, including
the Chief Executive Officer and the Company's Chief Financial Officer, of the
effectiveness of the design and operation of Diamond's disclosure controls and
procedures as of the end of the period covered by this report. Based on the
foregoing, Diamond's Chief Executive Officer and Chief Financial Officer
concluded that Diamond's disclosure controls and procedures were effective at
the reasonable assurance level.

     There has been no change in Diamond's internal controls over financial
reporting during its fourth fiscal quarter covered by this report that has
materially affected, or is reasonably likely to materially affect, Diamond's
internal controls over financial reporting.


                                      -26-
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

     The Board of Directors does not have a separate audit committee and does
not have an "audit committee financial expert" as that term is defined in the
Securities and Exchange Commission rules and regulations. However, the Board of
Directors believes that each of its members has demonstrated that they are
capable of analyzing and evaluating Diamond's financial statements and
understanding internal controls and procedures for financial reporting. As the
Board of Directors believes that its current members are qualified to carry out
all of their duties and responsibilities, the Board of Directors does not
believe that it is necessary at this time to actively search for an outside
person to serve on the Board of Directors who would qualify as an audit
committee financial expert.

     Diamond has adopted a Code of Ethics that applies to all of its directors,
officers and employees, including its principal executive officer, principal
financial officer, principal accounting officer or controller, and persons
performing similar functions. Diamond intends to post amendments to or waivers
from its Code of Ethics, of the type referred to in Item 5.05 of Form 8-K, to
the extent applicable to its principal executive officer, principal financial
officer, principal accounting officer or controller, and persons performing
similar functions, on our website. Diamond shall provide to any person without
charge, upon request, a copy of its Code of Ethics. The request should be in
writing and sent to Diamond at 220 Division Street, Kingston, Pennsylvania,
18704 (Attn: General Counsel).

     The following table sets forth certain information concerning Diamond's
directors and executive officers:

<TABLE>
<CAPTION>
              NAME                  AGE   POSITION
              ----                  ---   --------
<S>                                 <C>   <C>
Kenneth Levine...................    51   Chairman of the Board and Director
Norman Harris....................    50   Chief Executive Officer
Michael A. Sumsky................    46   President, Chief Financial Officer and
                                          General Counsel
Jonathan A. Seiffer..............    33   Director
John G. Danhakl..................    49   Director
Jonathan D. Sokoloff.............    47   Director
</TABLE>

     KENNETH LEVINE has been Diamond's Co-Chairman of the Board since March 1998
and a Director of Diamond since March 1987. Mr. Levine served as Co-Chief
Executive Officer from March 1998 until January 2002. Mr. Levine joined Diamond
in 1979 and served as Diamond's effective Co-President from 1987 to March 1998.
In 1987, Mr. Levine, together with Richard Rutta, purchased all of Diamond's
outstanding stock.

     NORMAN HARRIS was appointed Diamond's Chief Executive Officer in January
2002. Mr. Harris served as Diamond's Executive Vice President from 1995 until
March 1998 and as President from March 1998 until January 2002. Mr. Harris
joined Diamond in 1993. From 1991 through 1993, Mr. Harris served as President
of Inveauto C.A. of Maracay, Venezuela, a fabricator of automotive glass and
parts. From 1977 until 1991, Mr. Harris was employed by Safelite Glass
Corporation.

     MICHAEL A. SUMSKY was appointed Diamond's President in January 2002. Mr.
Sumsky continues to serve as Chief Financial Officer and General Counsel since
joining Diamond in 1995. Before his appointment as Diamond's President, Mr.
Sumsky served as Executive Vice President since 1995. Prior to joining Diamond,
Mr. Sumsky was the co-founder of a distributorship of seasonal gift electronics
and other consumer products since 1991. Mr. Sumsky was employed by Emerson Radio
Corporation in various financial and legal capacities from 1986 to 1989 and from
1990 to 1991. From 1989 to 1990, Mr. Sumsky was an associate at Parker, Duryee,
Rosoff & Haft, a New York City law firm.

     JONATHAN A. SEIFFER has been a Director of Diamond since November 2001. Mr.
Seiffer has been a partner of Leonard Green & Partners, L.P. "LGP", since
January 1999. Mr. Seiffer joined LGP as an Associate in October 1994. Prior to
October 1994, Mr. Seiffer was a member of the corporate finance department of
Donaldson, Lufkin & Jenrette Securities Corporation "DLJ". Mr. Seiffer is also a
director of Dollar Financial Group, Inc., Liberty Group Publishing, Inc. and
several private companies.


                                      -27-
<PAGE>
     JOHN G. DANHAKL has been a Director of Diamond since March 1998. Mr.
Danhakl has been a partner of LGP since 1995. Mr. Danhakl had previously been a
Managing Director at DLJ and had been with DLJ since 1990. Prior to joining DLJ,
Mr. Danhakl was a Vice President at Drexel Burnham Lambert Incorporated (
"Drexel "). Mr. Danhakl is also a director of The Arden Group, Inc., Petco
Animal Supplies, Inc., Rite Aid Corporation, MEMC Electronic Materials, Leslie's
Poolmart, Inc., Big 5 Corporation, Liberty Group Publishing, Inc., VCA Antech,
Inc. and several private companies.

     JONATHAN D. SOKOLOFF has been a Director of Diamond since March 1998. Mr.
Sokoloff has been a partner of LGP since its formation in 1994. Since 1990, Mr.
Sokoloff had been a partner at a merchant-banking firm affiliated with LGP. Mr.
Sokoloff had previously been a Managing Director at Drexel. Mr. Sokoloff is also
a director of The Sports Authority, Rite Aid Corporation, Dollar Financial
Group, Inc. and several private companies.

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

     SUMMARY COMPENSATION TABLE. The following table provides information about
the compensation paid by Diamond to its Chairman of the Board and its two other
executive officers during the fiscal years ended December 31, 2004, 2003 and
2002. The Chairman of the Board and the two other executive officers of Diamond
are collectively referred to as the "Named Executive Officers."

<TABLE>
<CAPTION>
                                                                       LONG-TERM COMPENSATION
                                                                 ---------------------------------
                                                                          AWARDS           PAYOUTS
                                        ANNUAL COMPENSATION      -----------------------   -------
                                    --------------------------                SECURITIES
                                                        OTHER                   UNDER-                 ALL
                                                        ANNUAL   RESTRICTED      LYING                OTHER
                                                       COMPEN-     STOCK        OPTION/      LTIP     COMPEN
NAME AND PRINCIPAL                   SALARY    BONUS    SATION    AWARD(S)       SARS      PAYOUTS   -SATION
     POSITION                YEAR      ($)      ($)      ($)        ($)           (#)        ($)       ($)
------------------           ----   --------   -----   -------   ----------   ----------   -------   -------
<S>                          <C>    <C>        <C>     <C>       <C>          <C>          <C>       <C>
Kenneth Levine               2004   $108,692     --       --           --       --          --       $2,174(2)
Chairman of the Board and    2003   $308,077     --       --           --       --          --       $4,000(2)
Director                     2002   $300,000     --       --           --       --          --       $3,667(2)
Norman Harris                2004   $400,000     --       --     $105,408(1)    --          --       $4,333(2)
Chief Executive Officer      2003   $407,692     --       --     $105,408(1)    --          --       $4,000(2)
                             2002   $367,902     --       --     $166,899(1)    --          --       $3,667(2)
Michael A. Sumsky            2004   $350,000     --       --           --       --          --       $4,333(2)
President, Chief Financial   2003   $346,346     --       --           --       --          --       $4,000(2)
Officer, General Counsel     2002   $321,460     --       --           --       --          --       $3,667(2)
</TABLE>

----------
(1)  Income earned in accordance with Restrictive Stock Agreement..

(2)  Represents Diamond's net contribution on behalf of the Named Executive
     Officer to Diamond's 401(k) Profit Sharing Plan.


                                      -28-
<PAGE>
     AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES. The following table provides information regarding the exercise price of
stock options during the fiscal year ended December 31, 2004 for each of
Diamond's Named Executive Officers and the year-end value of unexercised options
held by the Named Executive Officers.

<TABLE>
<CAPTION>
                                                               NUMBER OF SECURITIES     VALUE OF UNEXERCISED
                                                              UNDERLYING UNEXERCISED        IN-THE-MONEY
                                                              OPTIONS/SARS AT FISCAL   OPTIONS/SARS AT FISCAL
                                                                   YEAR-END (#)             YEAR-END ($)
                    SHARES ACQUIRED ON                             EXERCISABLE/             EXERCISABLE/
       NAME            EXERCISE (#)      VALUE REALIZED ($)        UNEXERCISABLE            UNEXERCISABLE
       ----         ------------------   ------------------   ----------------------   ----------------------
<S>                 <C>                  <C>                  <C>                      <C>
Kenneth Levine              N/A                 N/A                     N/A                      N/A
Norman Harris                --                  --                    0/450                     0/0
Michael A. Sumsky            --                  --                    0/450                     0/0
</TABLE>

COMMITTEES OF THE BOARD OF DIRECTORS

     There are no committees of the Board of Directors.

COMPENSATION OF DIRECTORS

     Diamond's officers, as well as Messrs. Danhakl, Sokoloff and Seiffer, do
not receive any compensation directly for their service on Diamond's Board of
Directors. Diamond has agreed, however, to pay LGP certain fees for various
management, consulting and financial planning services, including assistance in
strategic planning, providing market and financial analyses, negotiating and
structuring financing and exploring expansion opportunities. See "Certain
Relationships and Related Transactions."

STOCK OPTION PLAN

     In September 1998, Diamond's Board of Directors and stockholders approved
and adopted the Diamond Triumph Auto Glass, Inc. 1998 Management Stock Option
Plan (the "1998 Plan"). The purpose of the 1998 Plan is to provide key employees
of Diamond and its subsidiaries with an incentive to remain in the service of
Diamond or its subsidiaries, to enhance Diamond's long-term performance and to
afford key employees the opportunity to acquire a proprietary interest in
Diamond. Currently, the 1998 Plan is administered by Diamond's Board of
Directors. An aggregate of 30,000 shares of Common Stock are authorized for
issuance under the 1998 Plan. As of December 31, 2004, the Board of Directors
had granted options to purchase a total of 21,575 shares of Common Stock under
the 1998 Plan. These options vest in five equal annual installments, commencing
on the first anniversary of the date of grant. Vested options may not be
exercised until the earlier of: (1) 90 days after Diamond's Common Stock has
become publicly traded and (2) 91 days prior to the tenth anniversary of the
date of grant. The 1998 Plan expires in September 2008.

EMPLOYMENT AGREEMENTS

     On June 1, 2002, Diamond entered into an employment agreement with Norman
Harris pursuant to which Mr. Harris agreed to serve as the Chief Executive
Officer of Diamond at an annual salary of $400,000, subject to annual review
based on Diamond's and the executive's performance. The agreement with Mr.
Harris also provides for the following:

     (1)  An initial term of four years, which began on June 1, 2002, and ends
          on June 1, 2006.

     (2)  In the event the executive is terminated by Diamond for cause (as
          defined in the employment agreement) or in the event the executive
          resigns, Diamond will pay the executive the executive's base salary
          through the date of termination.


                                      -29-
<PAGE>
     (3)  In the event the executive is terminated due to death or disability
          (as defined in the employment agreement), the executive will receive:

          -    his base salary for a period of 12 months (but in no event beyond
               June 1, 2006); and

          -    the amount of any bonus payable through the date of termination.

     (4)  In the event the executive is terminated by Diamond for any other
          reason than as provided in clauses (3) and (4) above, the executive
          will receive:

          -    his base salary through the date of termination;

          -    the amount of any bonus payable through the date of termination;
               and

          -    in lieu of any further compensation, severance pay equal to the
               base salary that the executive would have otherwise received
               during the period beginning on the date of termination and ending
               on the earlier of (1) the scheduled termination date of the
               executive's employment period under the employment agreement and
               (2) such time as the executive would have obtained other
               permanent employment for compensation in an amount reasonably
               comparable to his base salary with Diamond.

     (5)  Customary non-competition, non-solicitation provisions, non-disclosure
          and assignment of inventions provisions.

     On June 1, 2002, Diamond entered into a Restricted Stock Agreement with Mr.
Harris (the "Agreement") pursuant to which the executive purchased from Diamond
26,366 shares (the "Restricted Shares") of Diamond's common stock, par value
$0.01 per share, for nominal consideration. The Agreement generally restricts
the sale or transferability of shares of Common Stock held by the executive
before the Restrictions (as defined in the Agreement) have lapsed. The executive
has all rights and privileges of a stockholder with respect to the Restricted
Shares, including voting rights and the right to receive dividends paid with
respect to the Restricted Shares. Generally, the Restricted Shares vest and the
Restrictions lapse: (i) with respect to 20% of the Restricted Shares on the
Grant Date; and (ii) with respect to 20% of the Restricted Shares on each
subsequent anniversary of the Grant Date until the Restricted Shares are fully
vested. Compensation expense, unearned restricted stock compensation, and
proceeds from common stock issued have been recognized based on the vesting
periods and an estimated fair market value of $20 per share. Compensation
expense related to the Agreement was approximately $105,000, $105,000 and
$167,000 for 2004, 2003 and 2002, respectively.

     On October 21, 2004, Diamond entered into an employment agreement with
Michael A. Sumsky pursuant to which Mr. Sumsky agreed to serve as the President,
Chief Financial Officer, Secretary and General Counsel of Diamond at an annual
salary of $350,000, subject to annual review based on Diamond's and the
executive's performance. The agreement with Mr. Sumsky also provides for the
following:

     (1)  An initial term of approximately fourteen months, beginning on October
          21, 2004 and ending on December 31, 2005.

     (2)  In addition to his base salary, for each calendar year beginning on
          January 1, 2005, the executive is entitled to receive an annual bonus
          equal to a percentage of Diamond's EBITDA in excess of specified
          thresholds, not to exceed $180,000.

     (3)  In the event the executive is terminated by Diamond for cause (as
          defined in the employment agreement) or in the event the executive
          resigns, Diamond will pay the executive the executive's base salary
          through the date of termination.


                                      -30-
<PAGE>
     (4)  In the event the executive is terminated due to death or disability
          (as defined in the employment agreement), the executive will receive:

          -    his base salary for a period of 12 months (but in no event beyond
               December 31, 2005); and

          -    the amount of any bonus payable through the date of termination.

     (5)  In the event the executive is terminated by Diamond for any other
          reason than as provided in clauses (3) and (4) above, the executive
          will receive:

          -    his base salary through the date of termination;

          -    the amount of any bonus payable through the date of termination;
               and

          -    in lieu of any further compensation, severance pay equal to the
               base salary that the executive would have otherwise received
               during the period beginning on the date of termination and ending
               on the earlier of (1) the scheduled termination date of the
               executive's employment period under the employment agreement and
               (2) such time as the executive obtains other permanent employment
               for compensation in an amount reasonably comparable to his base
               salary with Diamond.

     (6)  Customary non-competition, non-solicitation provisions, non-disclosure
          and assignment of inventions provisions.

     On November 17, 2003, Diamond entered into employment agreements with each
of Kenneth Levine and Richard Rutta pursuant to which they each agreed to serve
as the Co-Chairmen of the Board of Diamond. Each of the agreements with Messrs.
Levine and Rutta provided for the following:

     (1)  An initial term of one year beginning on November 17, 2003 and ending
          on November 16, 2004.

     (2)  An annual base salary of $320,000, subject to annual review based on
          Diamond's and the executive's performance. In addition, each executive
          is entitled to receive an annual bonus equal to a percentage of
          Diamond's EBITDA in excess of specified thresholds.

     (3)  In the event the executive is terminated by Diamond for cause (as
          defined in the employment agreement) or in the event the executive
          resigns, Diamond will pay the executive the executive's base salary
          through the date of termination.

     (4)  In the event the executive is terminated due to death or disability
          (as defined in the employment agreement), the executive will receive:

          -    his base salary for a period of 12 months (but in no event beyond
               November 16, 2004); and

          -    the amount of any bonus payable through the date of termination.


                                      -31-
<PAGE>
     (5)  In the event the executive is terminated by Diamond for any other
          reason than as provided in clauses (3) and (4) above, the executive
          will receive:

          -    his base salary through the date of termination;

          -    the amount of any bonus payable through the date of termination;
               and

          -    in lieu of any further compensation, severance pay equal to the
               base salary that the executive would have otherwise received
               during the period beginning on the date of termination and ending
               on the earlier of (1) the scheduled termination date of
               executive's employment period under the employment agreement and
               (2) such time as the executive obtains other permanent
               employment.

     (6)  Customary non-competition and non-solicitation provisions, which
          provisions survive for one year after the termination of the
          executive's employment, and customary non-disclosure and assignment of
          inventions provisions.

     Effective March 15, 2004, the employment agreements with Messrs. Levine and
Rutta were amended to reduce their annual base salary to $52,000. All other
aspects of their employment agreements remained unchanged.

     On October 21, 2004, Richard Rutta resigned as the Co-Chairman and a member
of the Board of Directors of Diamond . Mr. Rutta resigned to pursue personal
endeavors, and not due to a disagreement on any matter relating to Diamond's
operations, policies or practices.

     Effective February 28, 2005, the employment agreement with Mr. Levine was
amended to increase his annual base salary to $320,000, and further modified his
agreement to serve in the capacity of the Chairman of the Board during the term
of the employment agreement. All other aspects of his employment agreement
remained unchanged.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table provides information regarding the beneficial ownership
of Diamond's Common Stock and Preferred Stock, as of April 4, 2005, by (1) each
person known by Diamond to be the beneficial owner of more than 5% of the Common
Stock, (2) each director, (3) Diamond's Named Executive Officers, and (4) all of
Diamond's executive officers and directors as a group. Except as indicated in
the footnotes to this table, Diamond believes that the persons named in this
table have sole voting and investment power with respect to all of the shares of
Common Stock and Preferred Stock indicated.

<TABLE>
<CAPTION>
                                              COMMON STOCK              PREFERRED STOCK
                                           BENEFICIALLY OWNED          BENEFICIALLY OWNED
                                       -------------------------   -------------------------
                                       NUMBER OF   PERCENTAGE OF   NUMBER OF   PERCENTAGE OF
                NAME                     SHARES        CLASS         SHARES        CLASS
                ----                   ---------   -------------   ---------   -------------
<S>                                    <C>         <C>             <C>         <C>
Green Equity Investors II, L.P. (1)      770,000        76.1%       28,000          80.0%
Jonathan A. Seiffer (1)(2)               770,000        76.1%       28,000          80.0%
John G. Danhakl (1)(2)                   770,000        76.1%       28,000          80.0%
Jonathan D. Sokoloff (1)(2)              770,000        76.1%       28,000          80.0%
Kenneth Levine (1)                       200,000        19.8%        7,000          20.0%
Norman Harris (1)                         41,366         4.1%           --
All directors and executive officers
   as a group
(6 persons)(3)                         1,011,366       100.0%       35,000        100.00%
</TABLE>


                                      -32-
<PAGE>
(1)  The address of Green Equity Investors II, L.P. and Messrs. Seiffer, Danhakl
     and Sokoloff is 11111 Santa Monica Boulevard, Suite 2000, Los Angeles,
     California 90025. The address of Messrs. Levine and Harris is 220 Division
     Street, Kingston, Pennsylvania 18704.

(2)  The shares shown as beneficially owned by Messrs. Seiffer, Danhakl and
     Sokoloff represent the 770,000 shares of Common Stock and the 28,000 shares
     of Preferred Stock owned of record by Green Equity Investors II, L.P. Green
     Equity Investors II, L.P. is a Delaware limited partnership managed by LGP.
     Each of Jonathan D. Sokoloff, John G. Danhakl, Peter J. Nolan, Jonathan A.
     Seiffer, John M. Baumer and Timothy J. Flynn either directly (whether
     through ownership interest or position) or through one or more
     intermediaries, may be deemed to control LGP. As such, Messrs. Sokoloff,
     Danhakl, Nolan, Seiffer, Baumer and Flynn may be deemed to have shared
     voting and investment power with respect to all shares held by Green Equity
     Investors II, L.P. These individuals disclaim beneficial ownership of the
     securities held by Green Equity Investors II, L.P. Each of these
     individual's address is c/o Leonard Green & Partners, L.P., 11111 Santa
     Monica Boulevard, Suite 2000, Los Angeles, California, 90025.

(3)  Includes the shares referred to in Note 2 above.

     Set-out below is a table containing information as of the end of the last
fiscal year of executive compensation plan split between plans (including
individual compensation arrangements) approved by security holders and plans
that have not been approved by security holders:

<TABLE>
<CAPTION>
                                                                     NUMBER OF
                                                                     SECURITIES
                                    NUMBER OF                         REMAINING
                                  SECURITIES TO      WEIGHTED-      AVAILABLE FOR
                                    BE ISSUED         AVERAGE      FUTURE ISSUANCE
                                      UPON        EXERCISE PRICE    UNDER EQUITY
                                   EXERCISE OF          OF          COMPENSATION
                                   OUTSTANDING      OUTSTANDING         PLANS
                                    OPTIONS,         OPTIONS,        (EXCLUDING
                                  WARRANTS AND     WARRANTS AND      SECURITIES
                                     RIGHTS           RIGHTS        REFLECTED IN
                                       (A)              (B)          COLUMN (A))
                                  -------------   --------------   ---------------
<S>                               <C>             <C>              <C>
EQUITY COMPENSATION PLANS
   APPROVED BY SECURITY HOLDERS       21,575            $20             8,425
EQUITY COMPENSATION PLANS NOT
   APPROVED BY SECURITY HOLDERS           --             --                --
                                      ------            ---             -----
TOTAL                                 21,575            $20             8,425
                                      ------            ---             -----
</TABLE>


                                      -33-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED RECAPITALIZATION

MANAGEMENT SERVICES AGREEMENT

     In connection with the Recapitalization, on March 31, 1998, Diamond entered
into a Management Services Agreement with LGP pursuant to which LGP receives an
annual management fee of $685,000. This fee is subordinated in right of payment
to the Notes. The Management Services Agreement also provides that LGP may
receive reasonable and customary fees and reasonable expenses from time to time
for providing financing, advisory and investment banking services to Diamond in
connection with major financial transactions.

EMPLOYMENT AGREEMENTS

     On October 21, 2004, Diamond entered into an employment agreement with
Michael A. Sumsky, pursuant to which Mr. Sumsky agreed to serve as the
President, Chief Financial Officer, Secretary and General Counsel of Diamond at
an annual salary of $350,000, subject to annual review based on Diamond's and
Mr. Sumsky's performance. The employment agreement provides for a term
commencing on October 21, 2004 and ending on December 31, 2005. In addition to
his annual salary, Mr. Sumsky is eligible to receive a bonus based upon the
achievement of certain criteria. The employment agreement also contains various
severance, non-competition, non-solicitation provisions, non-disclosure and
assignment of inventions provisions.

     On November 17, 2003, Diamond entered into an employment agreement with
each of Kenneth Levine and Richard Rutta, pursuant to which Messrs. Levine and
Rutta agreed to serve as the Co-Chairmen of Diamond at an annual salary of
$320,000, subject to annual review based on Diamond's and Messrs. Levine and
Rutta's performance. The employment agreements provided for a term commencing on
November 17, 2003 and ending on November 16, 2004. On March 15, 2004, the
employment agreements were amended to reduce the annual salary for Messrs.
Levine and Rutta to $52,000. On October 21, 2004, Richard Rutta resigned as the
Co-Chairman and a member of the Board of Directors of Diamond. Mr. Rutta
resigned to pursue personal endeavors, and not due to a disagreement on any
matter relating to Diamond's operations, policies or practices. In addition to
his annual salary, Mr. Levine is eligible to receive a bonus based upon the
achievement of certain criteria.

     Effective February 28, 2005, the employment agreement with Mr. Levine was
amended to increase his annual base salary to $320,000, and further modified his
agreement to serve in the capacity of the Chairman of the Board during the term
of the employment agreement. All other aspects of his employment agreement
remained unchanged. The employment agreement also contains various severance,
non-competition, non-solicitation provisions, non-disclosure and assignment of
inventions provisions. (See Executive Compensation--Employment Agreements.)

LEASE

     Kenneth Levine and Richard Rutta are the sole partners of a partnership,
which leases to Diamond, Diamond's headquarters and distribution facility in
Kingston, Pennsylvania and 18 service center locations. Following the
Recapitalization, at Diamond's request, Kenneth Levine and Richard Rutta caused
the partnership to renew or extend the leases on the facilities through December
31, 2010, on terms substantially similar to those applicable to those facilities
on January 15, 1998, provided that the monthly rental amounts increase 4.0% each
calendar year beginning January 1, 1999. Rental payments to the partnership for
the facilities aggregated $979,000 $675,000 and $611,000 in 2004, 2003 and 2002,
respectively.

     On November 1, 2003, Diamond entered into an amendment to that certain
lease agreement dated July 1, 2000 between Richard Rutta & Kenneth Levine Real
Estate Partnership, a partnership wholly owned by Richard Rutta and Kenneth
Levine, and Diamond for certain leased premises located at 220 Division Street,
Kingston, PA 18704. The amendment increased the square footage being leased to
Diamond from 102,075 square feet to 206,080 square feet and increased the total
annual rent from $236,000 to $466,000. The annual rent will be increased by four
percent on January 1, 2004 and each calendar year beginning January 1
thereafter.


                                      -34-
<PAGE>
STOCKHOLDERS AGREEMENT

     On March 31, 1998, Green Equity Investors II, L.P., Kenneth Levine, Richard
Rutta and Diamond entered into a Stockholders Agreement. The Stockholders
Agreement generally restricts the transferability of shares of Common Stock held
by Kenneth Levine and Richard Rutta. The Stockholders Agreement also established
a right of first refusal in favor of Green Equity Investors II, L.P. or Diamond
in the event Kenneth Levine or Richard Rutta seek to transfer any of their
shares of Common Stock to a third party pursuant to a bona fide offer. In
addition, Green Equity Investors II, L.P. has certain "drag-along" rights and
certain sales of Common Stock by Green Equity Investors II, L.P. are subject to
"tag-along" rights of Kenneth Levine and Richard Rutta to participate in those
sales. The Stockholders Agreement also grants demand registration rights to
Green Equity Investors II, L.P. and piggyback registration rights to Green
Equity Investors II, L.P., Kenneth Levine and Richard Rutta.

     On December 1, 2004, Kenneth Levine and Richard Rutta consummated a
purchase agreement, dated as of October 21, 2004, whereas Kenneth Levine, for
consideration, purchased 100,000 shares of common stock and 3,500 shares of
preferred stock from Richard Rutta, which represented all of Diamond's stock
owned by Richard Rutta on that date. In addition, as of October 21, 2004, a
letter agreement was entered into between Richard Rutta and Diamond, which,
among other things, subjects Mr. Rutta to continued compliance with the
non-competition and non-solicitation covenants set forth in the employment
agreement by and between Diamond and Mr. Rutta dated as of November 17, 2003.
(See Executive Compensation--Employment Agreements.)

     Pursuant to the Stockholders Agreement, Green Equity Investors II, L.P. and
Kenneth Levine have agreed to vote their shares of Common Stock in favor of the
election of Kenneth Levine as a director of Diamond so long as he is an
executive officer of Diamond.

     Subject to early termination of the provisions described above (other than
those relating to registration rights) at the time, if any, as the Common Stock
is publicly held, the Stockholders Agreement terminates on the tenth anniversary
of the date thereof.

MANAGEMENT SHARE AGREEMENTS

     On March 31, 1998, Diamond and Green Equity Investors II, L.P. entered into
Management Subscription and Stockholders Agreement with Norman Harris, which is
referred to as the "Management Share Agreement." Pursuant to the Management
Share Agreement, the shares of Common Stock purchased by Mr. Harris in the
transaction related to the Recapitalization are subject to various transfer
restrictions and purchase rights. The Management Share Agreement also contain
certain "piggyback," registration rights, "tag-along" sale rights, "drag-along"
sale obligations and a right of first refusal in favor of Green Equity Investors
II, L.P. or Diamond in the event Mr. Harris seeks to transfer his shares of
Common Stock to a third party pursuant to a bona fide offer.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The Board of Directors has reviewed the audit and non-audit fees that Diamond
has paid to its independent registered public accounting firm for purposes of
considering whether such fees are compatible with maintaining the auditor's
independence.

Audit Fees. Fees for services rendered by BDO Seidman, LLP for the reviews of
periodic reports and for the audits of the financial statements of Diamond were
$115,000 for 2004.

     Fees for services rendered by KPMG LLP for the reviews of periodic reports
and for the audits of the financial statements of Diamond were $20,000 for 2004
and $122,200 for 2003.

Tax Fees. Aggregate fees billed for tax services rendered by KPMG LLP to Diamond
consisted of $26,000 in 2003 and $66,140 in 2004.

The Board of Directors pre-approves the audit and non-audit services performed
by the independent auditors to assure that the provision of such services does
not impair the auditor's independence.


                                      -35-
<PAGE>
PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)  Financial Statements

     (1)  All financial statements of Diamond for the year ended December 31,
          2004 are filed herewith. See Item 8 of this Annual Report for a list
          of such financial statements.

     (2)  All financial statement schedules have been omitted as the required
          information is inapplicable or has been included in the financial
          statements and notes thereto.

     (3)  Exhibits - See response to paragraph (c) below.

(c) Exhibits.

EXHIBIT
NUMBER                                  DESCRIPTION
--------                                -----------
2.1(1)     Second Amended and Restated Stock Purchase and Sale Agreement, dated
           as of January 15, 1998, by and among, VGMC Corp., Green Equity
           Investors II, L.P., Diamond Triumph Auto Glass, Inc., Triumph Auto
           Glass, Inc., Diamond Auto Glass Works, Inc., A Above Average Glass
           Company by Diamond, inc., A-AA Triumph Auto Glass, Inc., Scranton
           Holdings, Inc., Diamond/Triumph Auto Export Sales Co. Inc., A-Auto
           Glass by Triumph, Inc., A-Auto Glass Company by Diamond, Inc. and
           Kenneth Levine and Richard Rutta.

3.1(1)     Amended and Restated Certification of Incorporation of Diamond
           Triumph Auto Glass, Inc.

3.2(1)     Certificate of Designations of Series A 12% Senior Redeemable
           Cumulative Preferred Stock of Diamond Triumph Auto Glass, Inc.

3.3(1)     Certificate of Amendment of Certificate of Incorporation of Diamond
           Triumph Auto Glass, Inc., dated April 28, 1998.

3.4(1)     Certificate of Amendment of Certificate of Incorporation of Diamond
           Triumph Auto Glass, Inc., dated September 15, 1998.

3.5(1)     By-laws of Diamond Triumph Auto Glass, Inc.

4.1(1)     Indenture, dated as of March 31, 1998, between Diamond Triumph Auto
           Glass, Inc., as Issuer, and State Street Bank and Trust Company, as
           Trustee, regarding the 91/4% Senior Notes Due 2008.

4.2(1)     Registration Rights Agreement, dated as of March 31, 1998, among
           Diamond Triumph Auto Glass, Inc., First Union Capital Markets, a
           division of Wheat First Securities, Inc., BT Alex. Brown Incorporated
           and Donaldson, Lufkin & Jenrette Securities Corporation.

4.3(1)     Note Purchase Agreement, dated March 26, 1998, among Diamond Triumph
           Auto Glass, Inc., First Union Capital Markets, a division of Wheat
           First Securities, Inc., BT Alex. Brown Incorporated and Donaldson,
           Lufkin & Jenrette Securities Corporation.

10.1(1)    Management Subscription and Stockholders Agreement, dated as of March
           31, 1998, among Diamond Triumph Auto Glass, Inc., Green Equity
           Investors II, L.P. and Norman Harris.

10.2(1)    Management Subscription and Stockholders Agreement, dated as of March
           31, 1998, among Diamond Triumph Auto Glass, Inc., Green Equity
           Investors II, L.P. and Michael Sumsky.


                                      -36-
<PAGE>
10.3(1)    Stockholders Agreement, dated as of March 31, 1998, among Green
           Equity Investors II, L.P., Kenneth Levine, Richard Rutta and Diamond
           Triumph Auto Glass, Inc.

10.4(1)    Employment Agreement, dated as of March 31, 1998, between Diamond
           Triumph Auto Glass, Inc. and Kenneth Levine.

10.5(1)    Employment Agreement, dated as of March 31, 1998, between Diamond
           Triumph Auto Glass, Inc. and Richard Rutta.

10.6(1)    Employment Agreement, dated as of March 31, 1998, between Diamond
           Triumph Auto Glass, Inc. and Norman Harris.

10.7(1)    Employment Agreement, dated as of March 31, 1998, between Diamond
           Triumph Auto Glass, Inc. and Michael Sumsky.

10.8(1)    Non-Competition Agreement, dated March 31, 1998, between Kenneth
           Levine and Diamond Triumph Auto Glass, Inc.

10.9(1)    Non-Competition Agreement, dated March 31, 1998, between Richard
           Rutta and Diamond Triumph Auto Glass, Inc.

10.10(1)   Management Services Agreement, dated as of March 31, 1998, between
           Diamond Triumph Auto Glass, Inc. and Leonard Green & Partners, L.P.

10.11(2)   Finance Agreement, dated March 27, 2000, between The CIT Business
           Group/Business Credit, Inc. and Diamond Triumph Auto Glass, Inc.

10.12(1)   Diamond Triumph Auto Glass, Inc. 1998 Management Stock Option Plan.

10.13(3)   Employment Agreement, dated June 1, 2002, between Diamond Triumph
           Auto Glass, Inc. and Norman Harris

10.14(3)   Restricted Stock Agreement, dated June 1, 2002, between Diamond
           Triumph Auto Glass, Inc and Norman Harris

10.15(3)   Letter Agreement, dated June 1, 2002, between Diamond Triumph Auto
           Glass, Inc., Green Equity Investors II, L.P., Kenneth Levine, Richard
           Rutta and Norman Harris.

10.16(3)   Amendment Agreement, dated October 30, 2002, between Diamond Triumph
           Auto Glass, Inc., Green Equity Investors II, L.P., Kenneth Levine,
           Richard Rutta and Michael A. Sumsky.

10.17(3)   Stock Sale Agreement, dated October 30, 2002, between DT Subsidiary
           Corp. and Michael A. Sumsky.

10.18(4)   Employment Agreement, dated July 1, 2003, between Diamond Triumph
           Auto Glass, Inc. and Michael A. Sumsky

10.19(5)   Amended Lease Agreement, dated November 1, 2003, between Diamond
           Triumph Auto Glass, Inc. and Richard Rutta & Kenneth Levine Real
           Estate Partnership.

10.20(6)   Employment Agreement, dated November 17, 2003, between Diamond
           Triumph Auto Glass, Inc. and Kenneth Levine

10.21(6)   Amendment of March 15, 2004 to the Employment Agreement by and
           between Diamond Triumph Auto Glass, Inc. and Kenneth Levine dated
           November 17, 2003.


                                      -37-
<PAGE>
10.22(6)   Employment Agreement, dated November 17, 2003, between Diamond
           Triumph Auto Glass, Inc. and Richard Rutta.

10.23(6)   Amendment of March 15, 2004 to the Employment Agreement by and
           between Diamond Triumph Auto Glass, Inc. and Richard Rutta dated
           November 17, 2003.

10.24(7)   Waiver and Amendment Number Eight to Financing Agreement, dated March
           27, 2000, between the CIT Business Group/Business Credit, Inc. and
           Diamond Triumph Auto Glass, Inc.

10.25(8)   Employment Agreement, dated October 21, 2004, between Diamond Triumph
           Auto Glass, Inc. and Michael A. Sumsky.

10.26(8)   Waiver and Amendment Number Nine to Financing Agreement, dated March
           27, 2000, between the CIT Business Group/Business Credit, Inc. and
           Diamond Triumph Auto Glass, Inc.

10.27      Letter Agreement dated as of October 21, 2004 between Diamond Triumph
           Auto Glass, Inc and Richard Rutta.

10.28      Amendment as of February 28, 2005 to the Employment Agreement by and
           between Diamond Triumph Auto Glass, Inc. and Kenneth Levine dated
           November 17, 2003.

10.29      Waiver to Financing Agreement, dated March 27, 2000, between the CIT
           Business Group/Business Credit, Inc. and Diamond Triumph Auto Glass,
           Inc.

10.30      Amendment Number Ten to Financing Agreement, dated March 27, 2000,
           between the CIT Business Group/Business Credit, Inc. and Diamond
           Triumph Auto Glass, Inc

14.0(6)    Code of Ethics.

31.1       Sarbanes-Oxley Section 302(a) Certification of the Chief Executive
           Officer.

31.2       Sarbanes-Oxley Section 302(a) Certification of the Chief Financial
           Officer.

32.1       Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
           to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief
           Executive Officer.

32.2       Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
           to Section 906 of the Sarbanes-Oxley Act of 2002 of the Chief
           Financial Officer.

----------
(1)  Incorporated by reference to Diamond's Registration Statement on Form S-4
     filed with the SEC on March 30, 2000.

(2)  Incorporated by reference to Diamond's Annual Report on Form 10-K for the
     fiscal year ended December 31, 1999.


                                      -38-
<PAGE>
(3)  Incorporated by reference to Diamond's Annual Report on Form 10-K for the
     fiscal year ended December 31, 2002.

(4)  Incorporated by reference to Diamond's Quarterly Report on Form 10-Q for
     the period ended June 30, 2003.

(5)  Incorporated by reference to Diamond's Quarterly Report on Form 10-Q for
     the period ended September 30, 2003.

(6)  Incorporated by reference to Diamond's Annual Report on Form 10-K for the
     fiscal year ended December 31, 2003.

(7)  Incorporated by reference to Diamond's Quarterly Report on Form 10-Q for
     the period ended March 31, 2004.

(8)  Incorporated by reference to Diamond's Quarterly Report on Form 10-Q for
     the period ended September 30, 2004.


                                      -39-
<PAGE>
                                   SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

                                        DIAMOND TRIUMPH AUTO GLASS, INC.


                                        By:
                                            ------------------------------------
                                            Name:  Kenneth Levine
                                            Title: Chairman of the Board

Dated: April 4, 2005

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THIS REPORT HAS BEEN
SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
            Signature                            Title(s)                     Date
            ---------                            --------                     ----
<S>                                 <C>                                  <C>


---------------------------------   Chairman of the Board and Director   April 4, 2005
Kenneth Levine


---------------------------------   Chief Executive Officer              April 4, 2005
Norman Harris


---------------------------------   Chief Financial Officer              April 4, 2005
Michael A. Sumsky


---------------------------------   Director                             April 4, 2005
Jonathan Seiffer


---------------------------------   Director                             April 4, 2005
John G. Danhakl


---------------------------------   Director                             April 4, 2005
Jonathan D. Sokoloff
</TABLE>


                                      -40-
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT

     The registrant has not sent an annual report or proxy material to its
security holders.


                                      -41-
<PAGE>
                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>                                                                              <C>
Report of Independent Registered Public Accounting Firm (Current auditors) ...    F-2

Report of Independent Registered Public Accounting Firm (Former auditors) ....    F-3

Consolidated Balance Sheets, December 31, 2004 and 2003 ......................    F-4

Consolidated Statements of Operations for the Years
   Ended December 31, 2004, 2003 and 2002 ....................................    F-6

Consolidated Statements of Stockholders' Deficit for the Years
   Ended December 31, 2004, 2003 and 2002 ....................................    F-7

Consolidated Statements of Cash Flows for the Years
   Ended December 31, 2004, 2003 and 2002 ....................................    F-8

Notes to Consolidated Financial Statements ...................................    F-9
</TABLE>


                                      F-1
<PAGE>
             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Diamond Triumph Auto Glass, Inc.
Kingston, PA

     We have audited the accompanying consolidated balance sheet of Diamond
Triumph Auto Glass, Inc. and subsidiary as of December 31, 2004 and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the year ended December 31, 2004. 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 audit.

     We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also 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, as well as evaluating the overall
presentation of the financial statements. We believe that our audit provides a
reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Diamond
Triumph Auto Glass, Inc. and subsidiary at December 31, 2004, and the results of
its operations and its cash flows for the year ended December 31, 2004, in
conformity with accounting principles generally accepted in the United States of
America.


/s/ BDO Seidman, LLP

Philadelphia, PA

March 24, 2005


                                      F-2
<PAGE>
            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
Diamond Triumph Auto Glass, Inc.:

     We have audited the accompanying consolidated balance sheet of Diamond
Triumph Auto Glass, Inc. and subsidiary as of December 31, 2003, and the related
consolidated statements of operations, stockholders' deficit and cash flows for
each of the years in the two-year period ended December 31, 2003. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Diamond
Triumph Auto Glass, Inc. and subsidiary as of December 31, 2003, and the results
of their operations and their cash flows for each of the years in the two-year
period ended December 31, 2003, in conformity with U.S. generally accepted
accounting principles.


/s/ KPMG LLP
Philadelphia, Pennsylvania
March 15, 2004


                                      F-3
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets

                           December 31, 2004 and 2003

                 (Dollars in Thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                        2004       2003
                                                                      --------   -------
<S>                                                                   <C>        <C>
                               ASSETS

Current assets:
   Cash and cash equivalents                                          $    139        35
   Accounts receivable, less allowance for doubtful accounts
      of $250 for 2004 and $413 for 2003                                10,160    10,353
   Other receivables                                                       431       402
   Inventories                                                          12,135    13,493
   Prepaid expenses                                                      1,838     1,783
   Deferred income taxes, less valuation allowance
      of $3,204 for 2004                                                     0     3,038
                                                                      --------   -------
      Total current assets                                              24,703    29,104
                                                                      --------   -------

Equipment and leasehold improvements:
   Vehicles                                                              4,225     5,459
   Computers and office equipment                                        3,630     3,431
   Computer software                                                     8,194     7,869
   Other equipment                                                         670       663
   Leasehold improvements                                                  694       644
                                                                      --------   -------
                                                                        17,413    18,066
   Accumulated depreciation and amortization                           (12,509)  (11,519)
                                                                      --------   -------
      Net equipment and leasehold improvements                           4,904     6,547

Unamortized deferred loan costs and senior notes discount, net           2,050     2,706

Deferred income taxes, less valuation allowance of $36,943 for 2004          0    36,473

Other assets                                                               380       502
                                                                      --------   -------
Total assets                                                          $ 32,037    75,332
                                                                      ========   =======
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-4
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets

                           December 31, 2004 and 2003

                 (Dollars in Thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                                 2004       2003
                                                                              ---------   --------
<S>                                                                           <C>         <C>
                LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable                                                           $  12,231     12,492
   Accrued expenses
      Payroll and related items                                                   4,211      4,341
      Accrued interest                                                            1,850      1,859
      Accrued income taxes                                                          466        461
      Other                                                                       1,582      1,141
                                                                              ---------   --------
         Total accrued expenses                                                   8,109      7,802
                                                                              ---------   --------

            Total current liabilities                                            20,340     20,294
                                                                              ---------   --------

Long-term debt:
   Senior notes                                                                  79,758     79,758
   Credit Facility                                                                  250      2,500
                                                                              ---------   --------
      Total long-term debt                                                       80,008     82,258
                                                                              ---------   --------

            Total liabilities                                                   100,348    102,552
                                                                              ---------   --------

Series A 12% senior redeemable cumulative preferred stock - par
   value $0.01 per share; authorized 100,000 shares; issued and outstanding
   35,000 shares in 2004 and 2003, at liquidation preference value               77,745     69,076
                                                                              ---------   --------

Stockholders' deficit:
   Common stock, 2004 and 2003 par value $0.01 per share; authorized
      1,100,000 shares; issued and outstanding 1,026,366 shares in 2004
      and 2003                                                                       10         10
   Additional paid-in capital                                                    18,574     27,244
   Deferred compensation                                                           (149)      (255)
   Accumulated deficit                                                         (164,191)  (122,995)
   Common stock in treasury, at cost, 15,000 shares in 2004 and 2003               (300)      (300)
                                                                              ---------   --------
            Total stockholders' deficit                                        (146,056)   (96,296)
                                                                              ---------   --------
Total liabilities and stockholders' deficit                                   $  32,037     75,332
                                                                              =========   ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-5
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations

                  Years Ended December 31, 2004, 2003 and 2002

                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                          2004       2003      2002
                                                        --------   -------   -------
<S>                                                     <C>        <C>       <C>
Net sales                                               $208,424   218,703   201,623
Cost of sales                                             59,108    65,966    59,525
                                                        --------   -------   -------
      Gross profit                                       149,316   152,737   142,098
                                                        --------   -------   -------

Operating expenses:
   Payroll                                                87,174    86,119    80,730
   Advertising and promotional                            12,927    13,976    12,800
   Other operating expenses                               40,515    40,625    36,777
   Depreciation and amortization                           2,195     2,784     3,014
                                                        --------   -------   -------
                                                         142,811   143,504   133,321
                                                        --------   -------   -------

      Income from operations                               6,505     9,233     8,777

Other (income) expense:
   Interest income                                            (7)      (22)     (221)
   Interest expense                                        8,222     7,706     8,826
                                                        --------   -------   -------

                                                           8,215     7,684     8,605
                                                        --------   -------   -------

      (Loss) income before provision for income taxes     (1,710)    1,549       172

Provision for income taxes                                39,486       795       261
                                                        --------   -------   -------

      Net (loss) income                                  (41,196)      754       (89)

Preferred stock dividends                                  8,670     7,703     6,843
                                                        --------   -------   -------
Net loss applicable to common stockholders              $(49,866)   (6,949)   (6,932)
                                                        ========   =======   =======
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-6
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                Consolidated Statements of Stockholders' Deficit

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

<TABLE>
<CAPTION>
                                  COMMON STOCK       ADDITIONAL
                             ---------------------     PAID-IN      DEFERRED     ACCUMULATED   TREASURY
                               SHARES      AMOUNT      CAPITAL    COMPENSATION     DEFICIT       STOCK      TOTAL
                             ----------   --------   ----------   ------------   -----------   --------   ---------
<S>                          <C>          <C>        <C>          <C>            <C>           <C>        <C>
Balance, December 31, 2001    1,000,000      $10       41,263                     (123,660)               $ (82,387)
Issuance of common stock         26,366                   527         (527)
Amortization of deferred
   compensation                                                        167                                      167
Purchase of treasury stock                                                                       (300)         (300)
Net Loss                                                                               (89)                     (89)
Preferred stock dividends                              (6,843)                                               (6,843)
                              ---------      ---       ------         ----        --------       ----     ---------
Balance, December 31, 2002    1,026,366       10       34,947         (360)       (123,749)      (300)      (89,452)
                              ---------      ---       ------         ----        --------       ----     ---------
Amortization of deferred
   compensation                                                        105                                      105
Net Income                                                                             754                      754
Preferred stock dividends                              (7,703)                                               (7,703)
                              ---------      ---       ------         ----        --------       ----     ---------
Balance, December 31, 2003    1,026,366       10       27,244         (255)       (122,995)      (300)      (96,296)
                              ---------      ---       ------         ----        --------       ----     ---------
Amortization of deferred
   compensation                                                        106                                      106
Net Loss                                                                           (41,196)                 (41,196)
Preferred stock dividends                              (8,670)                                               (8,670)
                              ---------      ---       ------         ----        --------       ----     ---------
Balance, December 31, 2004    1,026,366      $10       18,574         (149)       (164,191)      (300)    $(146,056)
                              ---------      ---       ------         ----        --------       ----     ---------
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

<TABLE>
<CAPTION>
                                                                        2004       2003     2002
                                                                      --------   -------   ------
<S>                                                                   <C>        <C>       <C>
Cash flows from operating activities:
Net (loss) income                                                     $(41,196)      754      (89)
                                                                      --------   -------   ------
Adjustments to reconcile net (loss) income to net cash
   provided by operating activities:
      Depreciation and other amortization                                2,195     2,784    3,014
      Deferred income taxes                                             39,511       698    1,442
      Amortization of deferred loan costs and senior notes discount        656       783      939
      Gain on extinguishment of debt                                        --    (1,140)  (1,430)
      Provision for doubtful accounts                                      354       482      832
      Loss (gain) on sale of fixed assets                                   46       (30)     (36)
      Amortization of deferred compensation                                106       105      167
      Changes in assets and liabilities:
         Accounts and other receivables                                   (190)      516     (600)
         Inventories                                                     1,358     2,219    1,045
         Prepaid expenses                                                  (55)     (221)    (179)
         Accounts payable                                                 (261)    2,636     (784)
         Accrued expenses                                                  307    (1,243)     (18)
                                                                      --------   -------   ------
         Net cash provided by operating activities                       2,831     8,343    4,303
                                                                      --------   -------   ------
Cash flows from investing activities:
   Capital expenditures                                                   (748)   (1,385)  (3,271)
   Proceeds from sale of equipment                                         149        89       85
   Decrease (increase) in other assets                                     122       (16)      12
                                                                      --------   -------   ------
         Net cash used in investing activities                            (477)   (1,312)  (3,174)
                                                                      --------   -------   ------
Cash flows from financing activities:
   Payment for redemption of senior notes                                   --   (11,590)  (5,276)
   Net proceeds from bank facility                                      20,750     6,500       --
   Payments on bank facility                                           (23,000)   (4,000)      --
   Deferred debt costs                                                      --        --      (51)
   Repurchase of common stock                                               --        --     (300)
                                                                      --------   -------   ------
         Net cash used in financing activities                          (2,250)   (9,090)  (5,627)
                                                                      --------   -------   ------
         Net increase (decrease) in cash and cash equivalents              104    (2,059)  (4,498)
Cash and cash equivalents, beginning of year                                35     2,094    6,592
                                                                      --------   -------   ------
Cash and cash equivalents, end of year                                $    139        35    2,094
                                                                      ========   =======   ======
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-8
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

(1)  DESCRIPTION OF ENTITY

     Diamond Triumph Auto Glass, Inc. (the "Company"), headquartered in
     Kingston, Pennsylvania, is a provider of automotive glass replacement and
     repair services in the Northeast, Mid-Atlantic, Midwest, Southwest,
     Southeast and Western regions of the United States. At December 31, 2004,
     the Company operated a network of 249 automotive glass service centers,
     approximately 1,000 mobile installation vehicles and six distribution
     centers in 44 states.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     (A)  CASH AND CASH EQUIVALENTS

     Investments with original maturities of three months or less are considered
     cash equivalents.

     (B)  INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
     using the weighted average method. Inventory consists primarily of
     replacement autoglass. In 2004, only 2 suppliers represented more than 10%
     of the Company's total replacement autoglass purchases, or a combined total
     of approximately 33%.

     (C)  EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     Equipment and leasehold improvements are recorded at cost. Depreciation and
     amortization is calculated using the straight-line method over the
     following useful lives:

<TABLE>
<S>                              <C>
Vehicles                         4 years
Computers and office equipment   5-7 years
Computer software                3-5 years
Other equipment                  5-7 years
Leasehold improvements           Lesser of lease life or 10 years
</TABLE>

     Costs related to the development of software for a new back office sales
     audit and financial accounting system and point of sale system were
     capitalized in accordance with AICPA Statement of Position 98-1 "Accounting
     for the Costs of Computer Software Developed or Obtained for Internal Use".
     Upon completion of each of the projects in 2004, 2003 and 2002, the Company
     commenced amortizing the software costs over the estimated useful life of
     five years. Unamortized computer software costs were $2,301, $2,940 and
     $3,871 at December 31, 2004, 2003 and 2002, respectively. Amortization
     expense in 2004, 2003 and 2002 for capitalized computer software costs was
     $964, $1,416 and $1,034, respectively.

     Maintenance and repairs that do not add materially to the value of the
     asset nor appreciably prolong its useful life are charged to expense as
     incurred. Gains or losses on the disposal of property and equipment are
     included in the determination of income.

     (D)  INCOME TAXES

     Under the asset and liability method of SFAS No. 109 "Accounting for Income
     Taxes", deferred tax assets and liabilities are recognized for the future
     tax consequences attributable to differences between the financial
     statement carrying amounts of existing assets and liabilities and their
     respective tax bases. Deferred tax assets and liabilities are measured
     using enacted tax rates expected to apply to taxable


                                      F-9
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

     income in the years in which those temporary differences are expected to be
     recovered or settled. Under SFAS No. 109, the effect on deferred tax assets
     and liabilities of a change in tax rates is recognized in income in the
     period that includes the enactment date of any change.

     (E)  DEFERRED LOAN COSTS AND SENIOR NOTES DISCOUNT

     Deferred loan costs and senior notes discount are amortized over the life
     of the related debt and included in interest expense.

     (F)  ACCOUNTS RECEIVABLE

     Trade accounts receivable are recorded at the invoiced amount and do not
     bear interest. The Company provides for an allowance for doubtful accounts.
     The allowance for doubtful accounts was $250 at December 31, 2004 and $413
     at December 31, 2003. Write offs against the allowance were $354, $482, and
     $632 in 2004, 2003, and 2002 respectively. The allowance for doubtful
     accounts is the Company's best estimate of the amount of probable credit
     losses in the Company's existing accounts receivable. The Company
     determines the allowance based on historical write-off experience and
     current economic and customer specific data. Past due balances over 180
     days and a specified amount are reviewed individually for collectibility.
     All other balances are reviewed on a pooled basis by customer type. Account
     balances are charged off against the allowance after all means of
     collection have been exhausted and the potential for recovery is considered
     remote. The Company does not have any off-balance sheet credit exposure
     related to its customers.

     (G)  REVENUE RECOGNITION

     Revenue from auto glass installation and related services is recognized
     when the installation is complete or the service is performed.

     (H)  ADVERTISING

     The Company expenses all advertising costs as incurred. The most
     significant advertising costs relate to yellow pages advertisements. The
     costs of yellow pages advertising are expensed at the time the yellow pages
     phone book is published. Total advertising expense was $ 8,097, $9,213 and
     $9,039 in 2004, 2003 and 2002, respectively.

     (I)  IMPAIRMENT OF LONG-LIVED ASSETS

     The Company accounts for long-lived assets in accordance with the
     provisions of SFAS No. 144, "Accounting For the Impairment or Disposition
     of Long-lived Assets. Under the provisions of this statement, the Company
     has evaluated its long-lived assets for financial impairment, and will
     continue to evaluate them as events or changes in circumstances indicate
     that the carrying amount of such assets may not be fully recoverable.

     (J)  EXTINGUISHMENT OF DEBT

     The company accounts for the extinguishment of debt in accordance with the
     provision of SFAS No. 145, "Rescission of FASB Statement No. 4, 44 and 64,
     Amendment of FASB Statement 13, and Technical Corrections", which was
     adopted in 2002. The Company recorded a reduction to interest expense of
     $1,140 and $1,430 in 2003 and 2002 respectively related to gain on
     extinguishment of debt (See Note 4 - Long-Term Debt).


                                      F-10
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

     (K)  STOCK OPTION PLAN

     The Company accounts for its stock option plan (Note - 7) using the
     intrinsic-value method in accordance with Accounting Principles Board
     Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees." Under
     the intrinsic-value method, because the exercise price of the Company's
     employee stock options is equal to the market price of the underlying stock
     on the date of grant, no compensation expense is recognized. In 1995, the
     Financial Accounting Standards Board ("FASB") issued SFAS 123, "Accounting
     for Stock-Based Compensation." SFAS 123 established a fair value based
     method of accounting for stock-based compensation plans. SFAS 123 requires
     that a company's financial statements include certain disclosures about
     stock-based employee compensation arrangements regardless of the method
     used to account for the plan. In December 2004, the FASB issued Statement
     No. 123 (revised 2004), "Stock-Based Payment" ("SFAS 123R"). This statement
     replaces SFAS 123, supersedes APB No. 25 and amends SFAS 95, "Statement of
     Cash Flows," to require that excess tax benefits be reported as a financing
     cash inflow rather than as a reduction of taxes paid. SFAS 123R is
     effective for the first interim or annual reporting period that begins
     after June 15, 2005, which will be for the period covered by our quarterly
     report on Form 10-Q for the third quarter of 2005.

     As allowed by SFAS 123, the Company has elected to continue to account for
     its employee stock-based compensation plans under APB No. 25, and adopted
     only the disclosure requirements of SFAS 123. Had compensation cost for the
     Company's common stock options been determined based upon the fair value of
     the options at the date of the grant, as prescribed under SFAS 123, as
     amended by SFAS 148, "Accounting for stock-based compensation," the
     Company's net (loss) income and earnings per share would have been reduced
     to the following pro forma amounts:

<TABLE>
<CAPTION>
                                                      2004     2003   2002
                                                    --------   ----   ----
<S>                                                 <C>        <C>    <C>
Net (loss) income                                   $(41,196)   754    (89)
   As reported
   Add stock-based employee compensation expense         105     64    167
      included in reported net income, net of tax
   Deduct total stock-based employee compensation
      expense determined under fair-value-based
      method for all rewards, net of tax                (114)   (73)  (177)
                                                    --------    ---   ----
   Pro forma net (loss) income                       (41,205)   745    (99)
                                                    ========    ===   ====
</TABLE>

     The fair value of the options granted in 2003 was $2.63 using the
     Black-Scholes option-pricing model with the following assumptions:
     risk-free interest rate of 2.82%, volatility of 0% and expected dividend
     yield of 0%.

     (L)  USE OF ESTIMATES

     Management of the Company has made a number of estimates and assumptions
     relating to the reporting of assets and liabilities and the disclosure of
     contingent assets and liabilities at the date of the financial statements
     and the reported amounts of revenues and expenses during the reporting
     period. Actual results could differ from those estimates.


                                      F-11
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

     (M)  RECENT ACCOUNTING PRONOUNCEMENTS

     In November 2004, the FASB issued SFAS No. 151, "Inventory Costs--an
     amendment of ARB No. 43, Chapter 4". This Statement amends the guidance in
     ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting for
     abnormal amounts of idle facility expense, freight, handling costs, and
     wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4, previously
     stated that ". . . under some circumstances, items such as idle facility
     expense, excessive spoilage, double freight, and rehandling costs may be so
     abnormal as to require treatment as current period charges. . . ." This
     Statement requires that those items be recognized as current-period charges
     regardless of whether they meet the criterion of "so abnormal." In
     addition, this Statement requires that allocation of fixed production
     overheads to the costs of conversion be based on the normal capacity of the
     production facilities. The adoption of this Statement did not have any
     impact on our consolidated financial statements.

     In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
     Assets--an amendment of APB Opinion No. 29". The guidance in APB Opinion
     No. 29, Accounting for Nonmonetary Transactions, is based on the principle
     that exchanges of nonmonetary assets should be measured based on the fair
     value of the assets exchanged. The guidance in that Opinion, however,
     included certain exceptions to that principle. This Statement amends
     Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
     productive assets and replaces it with a general exception for exchanges of
     nonmonetary assets that do not have commercial substance. A nonmonetary
     exchange has commercial substance if the future cash flows of the entity
     are expected to change significantly as a result of the exchange. The
     adoption of this Statement did not have any impact on our consolidated
     financial statements.

     In December 2004, the FASB issued Statement No. 123 (revised 2004),
     "Stock-Based Payment" (SFAS 123R). This statement replaces SFAS 123,
     "Accounting for Stock-Based Compensation," supersedes APB Opinion No. 25,
     "Accounting for Stock Issued to Employees" (APB 25) and amends SFAS 95,
     "Statement of Cash Flows," to require that excess tax benefits be reported
     as a financing cash inflow rather than as a reduction of taxes paid. SFAS
     123R is effective the first interim or annual reporting period that begins
     after June 15, 2005, which will be for the period covered by our quarterly
     report on Form 10-Q for the third quarter of 2005. We currently account for
     stock option grants using the intrinsic-value method in accordance with APB
     25. Under the intrinsic-value method, because the exercise price of the
     Company's employee stock options is equal to the market price of the
     underlying stock on the date of the grant, no compensation expense is
     recognized. If we would have applied the fair value recognition provisions
     of SFAS 123R, we would have had a charge to earnings of $9 for stock-based
     employee compensation, net of related income taxes, for 2004.

                                      F-12
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

(3)  FAIR VALUE OF FINANCIAL INSTRUMENTS

For purposes of estimating the fair value of financial instruments, the Company
has determined that the carrying amounts recorded on the balance sheet
approximate the fair value for cash and cash equivalents, accounts and other
receivables and current liabilities. In making this determination, the Company
considered the short-term maturity of those assets and liabilities. The fair
value of the Company's senior notes is estimated based on quoted market prices
for those or similar investments. The estimated fair value of the Company's
senior notes is $74,973 at December 31, 2004. The fair value of the Company's
Preferred Stock approximates the liquidation preference.

(4)  OTHER LIABILITIES

Accrued other expenses consists of the following:

<TABLE>
<CAPTION>
                                      2004      2003
                                     ------    ------
<S>                                  <C>       <C>
Sales Tax Payable                    $  380    $  336
Sales Credit Accrual                    232       309
Warranty Reserve                        125       107
Unearned Vehicle Rebate Receivable      844       389
                                     ------    ------
                                     $1,581    $1,141
                                     ======    ======
</TABLE>

(5)  LONG -TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                    2004     2003
                  -------   ------
<S>               <C>       <C>
Senior Notes      $79,758   79,758
Credit Facility       250    2,500
                  -------   ------
                  $80,008   82,258
                  =======   ======
</TABLE>

On March 27, 2000, the Company entered into a Credit Facility, which had an
initial term of four years and provided for revolving advances of up to the
lesser of: (1) $25,000; (2) the sum of 85% of the Company's Eligible Accounts
Receivable (as defined in the Credit Facility) plus 85% of the Company's
Eligible Inventory (as defined in the Credit Facility), less certain reserves;
or (3) an amount equal to 1.5 times the Company's EBITDA (as defined in the
Credit Facility) for the prior twelve months. On November 26, 2003, the Company
amended the Credit Facility, which, among other things, extended the term for an
additional three year period through March 27, 2007. A portion of the Credit
Facility, not to exceed $10,000, is available for the issuance of letters of
credit, which generally have an initial term of one year or less. The Company
had $6,841 in outstanding letters of credit at December 31, 2004. Borrowings
under the Credit Facility bear interest, at the Company's discretion, at either
the JPMorgan Chase Manhattan Bank Rate (as defined in the Credit Facility) or
LIBOR, plus a margin of 0.50% for the JPMorgan Chase Manhattan Rate and 2.25% -
2.75% for the LIBOR Rate. The Company shall also pay the Letter of Credit
Guaranty Fee (as defined in the Credit Facility) at an amount equal to 1.45% -
2.25% per annum, payable monthly, on the face amount of each outstanding Letter
of Credit (as defined in the Credit Facility) less the amount of any and all
amounts previously drawn under such Letters of Credit. In addition, a commitment
fee of 0.25% is charged against any unused balance of the Credit Facility.
Interest rates are subjected to increases or reductions based upon the level of
the Company's borrowings under the Credit Facility. The proceeds of the Credit
Facility are available for working capital requirements and for general
corporate purposes. The Credit Facility is secured by first priority security
interests in all of the tangible and intangible assets of the Company. In
addition, the Credit Facility contains certain restrictive covenants including,
among other things, prior to March 30, 2005, the maintenance of a minimum EBITDA
level of $10,500 for the prior twelve months, as well as restrictions on
additional indebtedness, dividends and certain other significant transactions.
The Company amended the Credit Facility on November 15, 2004 with respect to the
EBITDA levels required to be maintained through December 31, 2004. At December
31, 2004, the EBITDA level required to be maintained by the Company for the
prior 12-month period was $8,500, which reverted back to $10,500 as of January
1, 2005. The Company was in compliance with these covenants at December 31,
2004. The Company also obtained a covenant waiver for the Credit Facility on
March 4, 2005, with respect to the EBITDA levels required to be maintained for
January and February of 2005, and amended the Credit Facility


                                      F-13
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

on March 30, 2005. See footnote number 13, "Subsequent Events". $0.3 million was
outstanding under the Credit Facility at December 31, 2004.

The senior notes mature on April 1, 2008 and bear interest at a rate of 9.25%
per annum. The senior notes and the obligations of the Company under the
indenture governing the senior notes (the "Note Indenture") are unconditionally
guaranteed on a senior, unsecured basis by any subsidiary guarantor, of which
there are currently none. The senior notes are callable after five years at a
premium to par which declines to par after eight years. Upon a change of
control, as defined in the Note Indenture, the Company is required to offer to
redeem the senior notes at 101% of the principal amount plus accrued and unpaid
interest. Restrictive covenants contained in the Note Indenture include, among
other things, limitations on additional indebtedness, investments, dividends and
certain other significant transactions. The Company was in compliance with all
such covenants as of December 31, 2004.

During 2003 and 2002, the Company repurchased $13,242 and $7,000 face amount of
senior notes respectively, for a repurchase price of $11,590 and $5,276,
respectively. This repurchase resulted in a gain of $1,140 and $1,430 in 2003
and 2002, respectively, which was the difference between the carrying value of
the senior notes, including unamortized debt issuance costs, at the time of
their repurchase and the amount paid to repurchase the senior notes. This gain
was included within interest expense for 2003 and 2002.

Maturities of long-term debt are as follows:

<TABLE>
<S>          <C>
2004         $    --
2005              --
2006              --
2007             250
2008          79,758
Thereafter        --
             -------
             $80,008
             =======
</TABLE>

Deferred loan costs and accumulated amortization are summarized as follows:

<TABLE>
<CAPTION>
                                     ACCUMULATED
                           AMOUNT   AMORTIZATION   BALANCE
                           ------   ------------   -------
<S>                        <C>      <C>            <C>
DECEMBER 31, 2004
Deferred loan costs        $4,339      $3,066       $1,273
Discount on senior notes   $2,393      $1,616       $  777
                           ------      ------       ------
                           $6,732      $4,682       $2,050
                           ======      ======       ======

DECEMBER 31, 2003
Deferred loan costs        $4,339      $2,649       $1,690
Discount on senior notes    2,393      $1,377       $1,016
                           ------      ------       ------
                           $6,732      $4,026       $2,706
                           ======      ======       ======
</TABLE>


                                      F-14
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

(6)  PREFERRED STOCK

On March 27, 1998, the Company's Board of Directors adopted a Certificate of
Designation creating 35,000 in Series A 12% Senior Redeemable Cumulative
Preferred Stock (the "Preferred Stock"). The stockholders of the Company have,
effective July 1, 2003, amended its Charter with respect to its class of
Preferred Stock, which eliminated the April 1, 2010 mandatory redemption clause.
The Preferred Stock has a liquidation preference over the Common Stock equal to
the initial liquidation value of the Preferred Stock plus accrued and unpaid
dividends thereon. The Company may, at its option, redeem at any time the
Preferred Stock, in whole or in part, at 100% of the liquidation value plus
accrued and unpaid dividends. Upon a Change of Control (as defined), the Company
must offer to repurchase the Preferred Stock at 100% of its liquidation value
plus accrued and unpaid dividends, provided, however, that the Company shall not
be obligated to (and shall not) offer to repurchase the Preferred Stock if such
repurchase would violate the terms of the Credit Facility or the terms of the
Note Indenture.

The Preferred Stock bears cumulative quarterly dividends at a rate per annum
equal to 12.0% of the liquidation value. Dividends may, at the option of the
Company, be paid in cash or by adding to the then liquidation value of the
Preferred Stock an amount equal to the dividends then accrued and payable. The
terms of the Preferred Stock contain restrictions on distributions and on
purchases of junior securities. The Preferred Stock has no voting rights with
respect to general corporate matters except as provided by law or for certain
class voting rights in connection with the issuance of senior or parity equity
securities of the Company and any amendments to the Company's Certificate of
Incorporation that adversely affect the rights of the Preferred Stock.

At December 31, 2004 and 2003 the liquidation value of the Preferred Stock
recorded on the Company's balance sheet was $77,745 and $69,076, respectively,
which includes dividends of $42,745 and $34,076, respectively, added to the
liquidation value.

(7)  COMMITMENTS AND RELATED PARTY TRANSACTIONS

The Company leases service center and warehouse space and is responsible for all
related occupancy costs. Rental expense in 2004, 2003 and 2002 aggregated
$6,244, $6,099 and $5,739, respectively, of which $979 $675 and $611,
respectively, were for realty owned by a stockholder and executive officer, and
a former stockholder and executive officer. Certain of the leases with unrelated
parties contain various renewal options, and right of refusal purchase options.

In addition, the Company leases certain vehicles under operating leases having
lease terms of 367 days. The leases have monthly renewal options over periods of
up to eight years. Total rent expense for such leases amounted to $5,283 $4,934
and $4,009, for the years ended December 31, 2004, 2003 and 2002, respectively.


                                      F-15
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

Total lease commitments, including vehicles, are as follows:

<TABLE>
<CAPTION>
                         THIRD    RELATED
             VEHICLES   PARTIES   PARTIES   TOTAL
             --------   -------   -------   -----
<S>          <C>        <C>       <C>       <C>
2005          $1,507    $3,398     $937    $5,842
2006              --    $1,696     $451    $2,147
2007              --    $  671     $469    $1,140
2008              --    $  283     $487    $  770
2009                    $  124     $507    $  631
Thereafter        --    $   17     $527    $  544
</TABLE>

The vehicle lease agreement also provides for terminal lease payment for
guaranteed residual values reduced by actual proceeds from the vehicle sale in
the event the lease is not renewed over periods ranging from four to eight
years. The contingent guaranteed residual value payment commitment was $11,946
at December 31, 2004.

The Company entered into a Management Services Agreement on March 31, 1998 with
a related party pursuant to which the Company incurs an annual fee of $685.
Expense under this agreement was $685 annually in 2004, 2003 and 2002.

The Company's stockholders have entered into a Stockholders Agreement and a
Management Share Agreement, which restricts the transferability of certain
shares, establishes rights of first refusal, and establishes rights among the
parties to the agreements.

On December 1, 2004, Kenneth Levine and Richard Rutta consummated a purchase
agreement, dated as of October 21, 2004, whereas Kenneth Levine, for
consideration, purchased 100,000 shares of common stock and 3,500 shares of
preferred stock from Richard Rutta, which represented all of Diamond's stock
owned by Richard Rutta on that date. In addition, as of October 21, 2004, a
letter agreement was entered into between Richard Rutta and Diamond, which,
among other things, subjects Mr. Rutta to continued compliance with the
non-competition and non-solicitation covenants set forth in the employment
agreement by and between Diamond and Mr. Rutta dated as of November 17, 2003.

On June 1, 2002, Diamond entered into a Restricted Stock Agreement with Mr.
Harris (the "Agreement") pursuant to which the executive purchased from Diamond
26,366 shares (the "Restricted Shares") of Diamond's common stock, par value
$0.01 per share, for nominal consideration. The Agreement generally restricts
the sale or transferability of shares of Common Stock held by the executive
before the Restrictions (as defined in the Agreement) have lapsed. The executive
has all rights and privileges of a stockholder with respect to the Restricted
Shares, including voting rights and the right to receive dividends paid with
respect to the Restricted Shares. Generally, the Restricted Shares vest and the
Restrictions lapse: (i) with respect to 20% of the Restricted Shares on the
Grant Date; and (ii) with respect to 20% of the Restricted Shares on each
subsequent anniversary of the Grant Date until the Restricted Shares are fully
vested. Compensation expense,


                                      F-16
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

deferred stock compensation, and proceeds from common stock issued have been
recognized based on the vesting periods and the fair market value of $20 per
share.

On November 1, 2002 Mr. Sumsky terminated his Management Share Agreement with
Diamond. On November 1, 2002, Diamond made an aggregate investment of $300 as a
capital contribution in DT Subsidiary Corp. (the "Subsidiary"), a corporation
wholly owned by Diamond. Also, on November 1, 2002, the Subsidiary entered into
a Stock Sale Agreement with Mr. Sumsky, pursuant to which Mr. Sumsky sold to the
Subsidiary 15,000 shares of Diamond's common stock, par value $0.01 per share,
for consideration of $20 per share.

(8)  STOCK OPTION PLAN

In September 1998, the Board of Directors and stockholders of the Company
approved and adopted the Diamond Triumph Auto Glass 1998 Stock Option Plan (the
"1998 Plan"). The 1998 Plan provides for the issuance of a total of 30,000
authorized and unissued shares of common stock. As of December 31, 2004, the
Board of Directors had granted 21,575 options to key employees of the Company
with an exercise price of $20.00 per share, which approximates fair value at the
date of grant. The options vest evenly over five years and may not be exercised
until the earlier of (a) 90 days after the Company's Common Stock has become
publicly traded or (b) 91 days prior to the tenth anniversary of the date of the
grant. The 1998 Plan expires in September 2008.

Summarized stock option data is as follows:

<TABLE>
<CAPTION>
                                   EXERCISE      SHARES
                                    PRICE     UNDER OPTION
                                   --------   ------------
<S>                                <C>        <C>
Outstanding at December 31, 2001                 29,575
   Granted                              --           --
   Exercised                            --           --
   Cancelled                         20.00       (1,350)
                                                -------
Outstanding at December 31, 2002                 28,225
   Granted                           20.00          500
   Exercised                            --           --
   Cancelled                         20.00       (6,550)
                                                -------
Outstanding at December 31, 2003                 22,175
   Granted                              --           --
   Exercised                            --           --
   Cancelled                         20.00         (600)
                                                -------
Outstanding at December 31, 2004                 21,575
                                                =======
Exercisable                         $   --           --
</TABLE>


                                      F-17
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

(9) INCOME TAXES

On January 15, 1998, Diamond, Kenneth Levine, Richard Rutta, Green Equity
Investors II, L.P. and certain affiliated entities of Diamond entered into a
Second Amended and Restated Stock Purchase Agreement, pursuant to which, among
other things, Green Equity Investors II, L.P. and other investors acquired 80.0%
of the Common Stock and 80.0% of the Preferred Stock (the "Recapitalization").
The Recapitalization was consummated on March 31, 1998. For tax purposes, the
parties made a joint election under Internal Revenue Code Sec. 338(h)(10), under
which the assets and liabilities of the affiliates were recorded at their fair
market values for tax purposes resulting in $118.5 million of tax deductible
goodwill. A financial statement deferred tax asset was also established on March
31, 1998 in the amount of approximately $44.8 million with a credit to
additional paid-in capital as the Recapitalization was recorded for financial
statement purposes as a recapitalization for which purchase accounting was not
applied.

The Internal Revenue Service (the "IRS") has concluded its audit of the tax
periods ended December 31, 1998, 1999, and 2000. As a result of this audit, the
IRS issued a notice of proposed adjustments on February 20, 2002, which included
a disallowance of the tax-deductible goodwill resulting from the aforementioned
Recapitalization. The IRS has asserted that the Recapitalization did not qualify
as a stock purchase, and accordingly, that the election under IRC Section
338(h)(10) was not valid. As a result, if the IRS position were sustained,
tax-deductible goodwill would not be recognizable by Diamond. Diamond strongly
believes that the Recapitalization was properly accounted for, and has appealed
the Internal Revenue Service's proposed adjustment.

On February 25, 2005, the Chief Financial Officer of Diamond was informed by an
IRS appeals officer that the IRS had made a determination regarding the
Diamond's election under IRC Section 338(h)(10). The IRS appeals officer
communicated that, subject to final supervisory review and the issuance of a
closing letter, the issue related to Diamond's election under the IRC Section
338(h)(10) has been resolved in Diamond's favor and that the proposed adjustment
made by the IRS on February 20, 2002 to disallow Diamond's election under the
IRC Section 338(h)(10) will be reversed. Based on this communication, Diamond
expects to receive a final written determination from the IRS during the second
calendar quarter of 2005 informing Diamond that the issue related to Diamond's
election under the IRC Section 338(h)(10) has been resolved in Diamond's favor.

The proposed adjustments by the Internal Revenue Service would have resulted in
$7.4 million of federal tax deficiencies owed by Diamond for the period December
31, 1998 through December 31, 2004, plus possible interest and penalties and any
resultant increases in current state tax expense for this period. Additionally,
the deferred tax asset established in 1998 would have been eliminated, as well
as net operating loss carryforwards from previous deductions of the tax
goodwill.

If such appeal were ultimately unsuccessful, the Internal Revenue Service's
proposed adjustment would have a material adverse affect on Diamond's liquidity,
cash flows, balance sheet and results of operations.


                                      F-18
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

Income tax expense consists of:

<TABLE>
<CAPTION>
                                        APPLICABLE TO
                                ----------------------------
                                 CURRENT   DEFERRED    TOTAL
                                --------   --------   ------
<S>                             <C>        <C>        <C>
Year ended December 31, 2004:
   Federal                        $ (5)       (383)     (388)
   State                           (20)        (73)      (93)
   Valuation reserve                --      39,967    39,967
                                  ----      ------    ------
                                  $(25)     39,511    39,486
                                  ====      ======    ======
</TABLE>

<TABLE>
<CAPTION>
                                        APPLICABLE TO
                                ----------------------------
                                 CURRENT   DEFERRED    TOTAL
                                --------   --------   ------
<S>                             <C>        <C>        <C>
Year ended December 31, 2003:
   Federal                        $(24)       665       641
   State                           121         33       154
                                  ----       ----       ---
                                  $ 97        698       795
                                  ====       ====       ===
</TABLE>


<TABLE>
<CAPTION>
                                        APPLICABLE TO
                                ----------------------------
                                 CURRENT   DEFERRED    TOTAL
                                --------   --------   ------
<S>                             <C>        <C>        <C>
Year ended December 31, 2002:
   Federal                         $(953)    1,164      211
   State                            (228)      278       50
                                 -------     -----      ---
                                 $(1,181)    1,442      261
                                 =======     =====      ===
</TABLE>

Income tax expense applicable to continuing operations differed from the amounts
computed by applying the U.S. federal income tax rate of 34 percent to pretax
income as a result of the following:

<TABLE>
<CAPTION>
                                                             2004    2003   2002
                                                           -------   ----   ----
<S>                                                        <C>       <C>    <C>
Computed "expected" tax expense                            $  (581)   526     59
Increase (reduction) in income taxes resulting from:
   State income taxes, net of federal income tax benefit       (62)   102     33
   Permanent items                                             162    167    169
   Valuation reserve                                        39,967     --     --
                                                           -------    ---    ---
                                                           $39,486    795    261
                                                           =======    ===    ===
</TABLE>


                                      F-19
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

The tax effects of temporary differences that give rise to significant portions
of the deferred assets and deferred tax liabilities at December 31, 2004 and
2003 are presented below.

<TABLE>
<CAPTION>
                                                                 2004       2003
                                                               --------   -------
<S>                                                            <C>        <C>
Deferred tax assets:
   Accounts receivable, principally due to
      allowance for doubtful accounts                          $     96   $   161
   Inventories, principally due to additional
      costs inventoried for tax                                     845       752
   Intangibles for tax purposes                                  25,109    28,156
   Advertising expenses not yet
      deducted for tax purposes                                   1,548     1,685
   Net operating loss and alternative minimum
      tax credit carryforward                                    12,103     8,842
   Liabilities and accruals for financial reporting purposes        662       553
                                                               --------   -------
      Total gross deferred tax assets                            40,363    40,149
Deferred tax liabilities:
   Plant and equipment, principally due to differences
      in depreciation and capitalized interest                      396       638
                                                               --------   -------
                                                                 39,967    39,511
      Valuation reserve                                         (39,967)        0
                                                               --------   -------
      Net deferred tax assets                                  $      0   $39,511
                                                               ========   =======
</TABLE>

Under the asset and liability method of SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. In assessing the realizability
of deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during periods in which those temporary differences become
deductible. Management considers the reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this
assessment. The timing of the reversal of deferred tax liabilities and the
projection of future taxable income require the Company to make a number of
estimates.

Management considered projected future taxable income, recent years taxable
income and tax planning strategies in making the assessment. Based upon the
level of taxable income over the past several years and projections of future
taxable income over the next several years, management believes it is more
likely than not that Diamond will not realize the benefits of these deductible
differences. Therefore, Diamond established a valuation allowance against its
deferred tax asset that resulted in a 100% reserve of this asset at December 31,
2004, or approximately $40.0 million. However, the amount of the deferred tax
asset considered realizable could be reinstated if estimates of future taxable
income during the amortization period are increased


                                      F-20
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

(10) EMPLOYEE BENEFIT PLANS

The Company has a defined contribution plan covering all employees who meet the
age and service requirements. Contributions to the plan are determined by the
Company and are based upon a percentage of the annual compensation of all
participants. The expense related to the plan amounted to $376, $370 and $340
for 2004, 2003 and 2002, respectively.

(11) SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                               2004    2003     2002
                                              ------   -----   -----
<S>                                           <C>      <C>     <C>
Interest paid                                 $7,488   7,966   9,276
Noncash investing and financing activities:
   Preferred stock dividends                  $8,670   7,703   6,843
</TABLE>

(12) LEGAL PROCEEDINGS

On May 2, 2002, Diamond filed an amended Complaint with the United States
District Court, Middle District of Pennsylvania against Safelite Glass
Corporation (the "Defendant"). Diamond alleges, among other things, that the
Defendant's conduct as (i) an operator of national telephone call centers which
takes first notice of loss calls from insurers of several of the largest
automobile insurers in the United States (the "Insurers"); (ii) a provider of
various claims processing services to the Insurers as a third-party
administrator and; (iii) an operator of a network of retail repair and
replacement facilities who perform work for the Insurers as Safelite affiliates,
violated certain federal and state laws and give rise to other legal and
equitable claims against the Defendant. Diamond alleges that the Defendant
engaged in various practices designed to divert customers away from Diamond to
the Defendant, and that Diamond has suffered damages as a result of this conduct
in an amount to be determined at trial.

On November 1, 2002 and February 2, 2004, the Defendant filed a counter claim
and second amended counterclaim, respectively, against Diamond, alleging, among
other things, that Diamond has engaged and continues to engage in publishing
certain false and defamatory statements about the Defendant to automobile
insurance companies that are the Defendant's clients, and that Diamond engages
in improper promotional and marketing practices in return for autoglass repair
or replacement references. Defendant alleges that this alleged conduct has
injured the Defendant's goodwill and business reputation with its insurance
clients and in the autoglass repair and replacement industry. Among other
things, the Defendant is seeking damages in an amount to be determined at trial.
Diamond believes that Defendant's counterclaims are without merit.

On February 3, 2003, Delbert Rice and Kenneth E. Springfield, Jr., on behalf of
themselves and all others similarly situated (the "Plaintiffs"), filed a class
action Complaint in the Court of Common Pleas of Luzerne County against Diamond.
Plaintiffs allege, among other things, Diamond violated certain sections of the
Pennsylvania Unfair Trade Practices and Consumer Protection Law and common law.
Plaintiffs allege that this alleged conduct has caused monetary damages to
Plaintiffs. Among other things, Plaintiffs are seeking damages in an amount to
be determined at trial. Diamond believes Plaintiffs' allegations are without
merit and plans to vigorously contest this complaint.

The Company is involved in additional various claims and legal actions arising
in the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial statements, results of operations or liquidity. No amounts
have been recorded in the consolidated financial statements for any of these
legal actions.


                                      F-21
<PAGE>
                 DIAMOND TRIUMPH AUTO GLASS, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                  Years Ended December 31, 2004, 2003 and 2002

                 (Dollars in Thousands except per share amounts)

(13) SUBSEQUENT EVENTS

On March 30, 2005, the Company amended the Credit Facility, to, among other
things, amend the Company's Availability (as defined in amendment number ten the
Credit Facility). This amendment provides for revolving advances of up to the
lesser of: (1) $25,000; (2) the sum of 85% of the Company's Eligible Accounts
Receivable (as defined in the Credit Facility) plus 85% of the Company's
Eligible Inventory (as defined in the Credit Facility), less certain reserves;
or (3) an amount equal to 2.0 times the Company's EBITDA (as defined in the
Credit Facility) for the prior twelve months. In addition, the amendment
replaced the minimum EBITDA covenant (as defined in the Credit Facility) with a
Fixed Charge Coverage Ratio (as defined in amendment number ten to the Credit
Facility). The Credit Facility, as amended, requires the Company to maintain as
of the end of each fiscal month through December 31, 2005, a Fixed Charge
Coverage Ratio of not less than 1.0:1.0 for the then trailing 12-month period.
As of the end of each fiscal month thereafter, the Company is required to
maintain a Fixed Charge Coverage Ratio of not less than 1.1:1.0 for the then
trailing 12-month period.


                                      F-22