================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                ----------------

                                    FORM 10-Q
             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2001

                          Commission File No. 333-72321

                              BGF Industries, Inc.
             (Exact name of registrant as specified in its charter)

         Delaware                       2221                    56-1600845
 (State of incorporation)   (Primary Standard Industrial     (I.R.S. Employer
                             Classification Code Number)    Identification No.)


  3802 Robert Porcher Way, Greensboro, North Carolina             27410
   (Address of registrants' principal executive office)        (Zip Code)

                                 (336) 545-0011
              (Registrants' telephone number, including area code)

                                ----------------

Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports) and (2) have been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:  Indicate the number of shares outstanding
of each of the issuer's  classes of common stock,  as of the latest  practicable
date: 1,000 shares of common stock, $1.00 par value, as of May 10, 2001.



================================================================================
<PAGE>

                              BGF INDUSTRIES, INC.
           QUARTERLY REPORT FOR THE THREE MONTHS ENDED MARCH 31, 2001

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                               Page No.
                                                                                               --------

PART I.        FINANCIAL INFORMATION

<S>                                                                                               <C>
Item  1.       Consolidated Financial Statements

               Consolidated Balance Sheets as of March 31, 2001 (unaudited)
               and December 31, 2000                                                              1

               Consolidated Statements of Operations for the three months ended
               March 31, 2001 and 2000 (unaudited)                                                2
               Consolidated Statements of Cash Flows for the three months ended
               March 31, 2001 and 2000 (unaudited)                                                3

               Notes to the Consolidated Financial Statements                                     4

Item 2.        Management's Discussion and Analysis of Financial Condition
               and Results of Operations
                      Overview                                                                    8
                      Results of Operations                                                       9
                      Liquidity and Capital Resources                                            10
                      Disclosure Regarding Forward-Looking Statements                            11

Item 3.        Quantitative and Qualitative Disclosures About Market Risk                        12

</TABLE>
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                           CONSOLIDATED BALANCE SHEETS
                    (dollars in thousands, except share data)

<TABLE>
<CAPTION>
                                                                             March 31,       December 31,
                                                                               2001              2000
                                                                               ----              ----
                                                                           (unaudited)

                                  ASSETS
Current assets:
<S>                                                                         <C>               <C>
     Cash and cash equivalents                                              $      13         $       8
     Trade accounts receivable, net                                            22,611            28,709
     Inventories                                                               44,879            36,745
     Other current assets                                                       3,537             3,070
                                                                            ---------         ---------
           Total current assets                                                71,040            68,532
Net property, plant and equipment                                              56,824            54,488
Other noncurrent assets, net                                                   12,956            13,373
                                                                            ---------         ---------
     Total assets                                                           $ 140,820         $ 136,393
                                                                            =========         =========

              LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)

Current liabilities:
     Book overdraft                                                         $   4,172         $   5,652
     Accounts payable                                                          11,449            11,233
     Accrued liabilities                                                       11,904            13,906
     Current portion of long-term debt                                          3,812             3,106
                                                                            ---------         ---------
           Total current liabilities                                           31,337            33,897
Long-term debt, net of discount of $1,567 and $1,617, respectively            119,821           114,477
Post-retirement benefit and pension obligation                                  3,825             3,596
                                                                            ---------         ---------
     Total liabilities                                                        154,983           151,970
                                                                            ---------         ---------

Commitments and contingencies

Stockholder's equity (deficit):
     Common stock, $1.00 par value. Authorized 3,000 shares; issued
       and outstanding 1,000 shares                                                 1                 1
     Capital in excess of par value                                            34,999            34,999
     Retained earnings                                                         77,199            75,733
     Accumulated other comprehensive income (loss)                                (52)                -
     Loan to parent                                                          (126,310)         (126,310)
                                                                            ---------         ---------
           Total stockholder's equity (deficit)                               (14,163)          (15,577)
                                                                            ---------         ---------
           Total liabilities and stockholder's equity (deficit)             $ 140,820         $ 136,393
                                                                            =========         =========


 The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                      -1-
<PAGE>


                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                          For the Three Months
                                                             Ended March 31,
                                                        ------------------------
                                                            2001         2000
                                                        ------------------------
                                                               (unaudited)
<S>                                                      <C>           <C>
Net sales                                                $  46,558     $  46,736
Cost of goods sold                                          38,301        38,846
                                                         ---------     ---------
         Gross profit                                        8,257         7,890
Selling, general and administrative expenses                 2,700         2,145
                                                         ---------     ---------
     Operating income                                        5,557         5,745
Interest expense                                             3,296         3,665
Other income, net                                             (121)         (122)
                                                         ---------     ---------
     Income before income taxes                              2,382         2,202
Income tax expense                                             916           840
                                                         ---------     ---------
         Net income                                      $   1,466     $   1,362
                                                         =========     =========









The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                      -2-
<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                               For the Three Months
                                                                                   Ended March 31,
                                                                         --------------------------------
                                                                                2001            2000
                                                                         --------------------------------
                                                                                      (unaudited)
<S>                                                                           <C>            <C>
Cash flows from operating activities:
    Net income                                                                $  1,466       $  1,362
    Adjustments to reconcile net income to net cash (used in)
      provided by operating activities:
        Depreciation                                                             2,112          2,043
        Amortization                                                               242            243
        Amortization of discount on notes                                           50             50
        Deferred income taxes                                                   (1,132)        (1,326)
        Post-retirement benefit obligation                                         229            (88)
        (Gain) loss on disposal of equipment                                       184              -
    Change in assets and liabilities:
        Trade accounts receivable, net                                           6,098         (1,240)
        Other current assets                                                       665            109
        Inventories                                                             (8,134)        (2,008)
        Other assets                                                               175              -
        Accounts payable                                                        (1,645)         3,314
        Accrued liabilities                                                     (2,054)        (1,457)
                                                                              --------       --------
           Net cash (used in) provided by operating activities                  (1,744)         1,002
                                                                              --------       --------

Cash flows from investing activities:
    Purchases of property, plant and equipment                                  (2,771)          (704)
                                                                              --------       --------
           Net cash used in investing activities                                (2,771)          (704)
                                                                              --------       --------

Cash flows from financing activities:
    Book overdraft                                                              (1,480)          (294)
    Proceeds from revolving credit facility                                     10,000          5,000
    Payments on revolving credit facility                                       (4,000)        (5,000)
                                                                              --------       --------
          Net cash provided by (used in) financing activities                    4,520           (294)
                                                                              --------       --------

Net increase in cash and cash equivalents                                            5              4
Cash and cash equivalents at beginning of period                                     8             17
                                                                              --------       --------
Cash and cash equivalents at end of period                                    $     13       $     21
                                                                              ========       ========

Supplemental disclosure of non-cash investing activities:
    Property and equipment financed in accounts payable                       $  1,861       $    692
                                                                              ========       ========




The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                      -3-
<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (dollars in thousands)


1.    Basis of Presentation

      The accompanying unaudited interim consolidated financial statements of
BGF Industries, Inc. have been prepared in accordance with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X, and accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of items of a normal recurring nature) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2001 are not necessarily indicative of the results
to be expected for the full year. The Company believes that the disclosures are
adequate to make the information presented not misleading.

      These financial statements should be read in conjunction with the audited
consolidated financial statements of BGF Industries, Inc. as of and for the year
ended December 31, 2000 on file with the Securities and Exchange Commission in
the 2000 Annual Report on Form 10-K for the year ended December 31, 2000.

      Certain amounts from the prior consolidated financial statements have been
reclassified to conform to the current presentation. In order to conform with
recent technical literature from the Emerging Issues Task Force, net sales and
cost of goods sold have been adjusted to reflect the inclusion of shipping and
handling costs as a component of cost of goods sold instead of a reduction of
net sales.

      Effective at the beginning of the first quarter of 2001, the Company
adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," and related amendments. SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. Due to the
limited use of derivative instruments, the adoption of SFAS No. 133 did not have
a significant effect on the Company's financial condition or statement of
operations.

      Total comprehensive income for the quarter ended March 31, 2001 includes
net income and the change in unrealized loss on derivative instruments as shown
below:


                                      -4-
<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                             (dollars in thousands)


1.   Basis of Presentation (Continued)






       Net income                                                  $1,466
       Other comprehensive income (loss):
            Cumulative effect of change in accounting                 183
            principle (net of tax)
            Change in fair value of cash flow hedge (net             (235)
            of tax)                                                ------


       Total comprehensive income                                  $1,414
                                                                   ======


      As of March 31, 2001, approximately $52 of deferred net losses on
derivative instruments included in accumulated other comprehensive income are
expected to be reclassified to net income during the next twelve months.


2.    Inventories

     Inventories consist of the following:

                                         March 31,     December 31,
                                           2001           2000
                                       ------------   ------------
                                       (unaudited)
     Supplies                            $   1,952      $   1,896
     Raw materials                           4,100          4,607
     Stock-in-process                        6,958          6,536
     Finished goods                         31,869         23,706
                                          --------       --------
                                          $ 44,879       $ 36,745
                                          ========       ========

                                      -5-
<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                             (dollars in thousands)

3.   Other Noncurrent Assets

     Other noncurrent assets consist of the following:

<TABLE>
<CAPTION>
                                                                                March 31,      December 31,
                                                                                  2001             2000
                                                                               -----------     -------------
                                                                               (unaudited)
<S>                                                                              <C>             <C>
     Excess of acquisition cost over assigned value of net assets acquired       $  5,809        $  5,809
     Debt issuance costs                                                            6,143           6,143
                                                                                 --------        --------
                                                                                   11,952          11,952
     Accumulated amortization                                                      (2,759)         (2,515)
                                                                                 --------        --------
                                                                                    9,193           9,437
     Deferred income taxes                                                          3,387           3,387
     Other                                                                            376             549
                                                                                 --------        --------
                                                                                 $ 12,956        $ 13,373
                                                                                 ========        ========
</TABLE>

4.   Accrued Liabilities

     Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                                                                March 31,      December 31,
                                                                                  2001             2000
                                                                               -----------     -------------
                                                                               (unaudited)
<S>                                                                               <C>              <C>
     Income Taxes                                                                $  6,809        $  4,883
     Payroll                                                                          204             173
     Profit sharing and other benefits                                                759           2,664
     Interest                                                                       2,216           4,817
     Other                                                                          1,916           1,369
                                                                                 --------        --------
                                                                                 $ 11,904        $ 13,906
                                                                                 ========        ========
</TABLE>

5.   Long-term Debt

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                                March 31,      December 31,
                                                                                  2001             2000
                                                                               -----------     -------------
                                                                               (unaudited)
<S>                                                                                <C>              <C>
     Senior Credit Facility:
        Amortizing Term Loan                                                     $ 19,200        $ 19,200
        Revolving Credit Facility                                                   6,000               -
     Senior Subordinated Notes, net of amortized discount                          98,433          98,383
                                                                                 --------        --------
                                                                                  123,633         117,583
     Less current portion                                                           3,812           3,106
                                                                                 --------        --------
     Long-term debt                                                              $119,821        $114,477
                                                                                 ========        ========

</TABLE>

                                      -6-
<PAGE>

                              BGF INDUSTRIES, INC.
               (a wholly owned subsidiary of Glass Holdings Corp.)
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                             (dollars in thousands)


6.   Segment Information

     BGF operates in one business segment that manufactures specialty woven and
non-woven fabrics for use in a variety of industrial and commercial
applications. BGF's principal market is the United States. Net sales information
by geographic area is presented below, with sales based on the location of the
customer. BGF does not have any long-lived assets outside the United States.


                                       For the Three Months Ended
                                                March 31,
                                      ------------------------------
                                           2001           2000
                                      ------------------------------
                                               (unaudited)
     United States                       $43,935        $43,666
     Foreign                               2,623          3,070
                                         -------        -------
                                         $46,558        $46,736
                                         =======        =======


7.   Commitments and Contingencies

      From time to time, BGF is involved in various legal proceedings and
environmental matters arising in the ordinary course of business. Management
believes, however, that the ultimate resolution of such matters will not have a
material adverse impact on BGF's financial position or results or operations.


                                      -7-
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

         This Quarterly Report contains forward-looking statements with respect
to our operations, industry, financial condition and liquidity. These statements
reflect our assessment of a number of risks and uncertainties. Our actual
results could differ materially from the results anticipated in these
forward-looking statements as a result of certain factors set forth in this
Quarterly Report. An additional statement made pursuant to the Private
Securities Litigation Reform Act of 1995 and summarizing certain of the
principal risks and uncertainties inherent in our business is included herein
under the caption "Disclosure Regarding Forward-Looking Statements." You are
encouraged to read this statement carefully.

         You should read the following discussion and analysis in conjunction
with the accompanying consolidated financial statements and related notes, and
with our audited consolidated financial statements and related notes as of and
for the year ended December 31, 2000 set forth in our 2000 Annual Report on Form
10-K.

Overview

         Our business focuses on the production of value-added specialty woven
and non-woven fabrics made from glass, carbon and aramid yarns. Both in revenue
and market share, we believe we are the second largest manufacturer of glass
fiber fabrics and a leading producer of other high performance fabrics in North
America. Our fabrics are a critical component in the production of a variety of
electronic, filtration, composite, insulation, construction and commercial
products. Our glass fiber fabrics are used by our customers in printed circuit
boards, which are integral to virtually all advanced electronic products,
including computers and cellular telephones. Our fabrics are also used by our
customers to strengthen, insulate and enhance the dimensional stability of
hundreds of products that they make for their own customers in various markets,
including aerospace, transportation, construction, power generation and oil
refining.

                                      -8-
<PAGE>

Results of Operations

The following table summarizes our historical results of operations as a
percentage of net sales:

                                                        For the Three Months
                                                           Ended March 31,
                                                    ----------------------------
                                                        2001         2000
                                                    ----------------------------
                                                            (unaudited)
Net sales                                              100.0 %      100.0 %
Cost of goods sold                                      82.3 %       83.1 %
                                                     -------      -------
  Gross profit                                          17.7 %       16.9 %
Selling, general and administrative expenses             5.8 %        4.6 %
                                                     -------      -------
  Operating income                                      11.9 %       12.3 %
Interest expense                                         7.1 %        7.8 %
Other income, net                                       (0.3)%       (0.2)%
                                                     -------      -------
      Income before income taxes                         5.1 %        4.7 %
Income tax expense                                       2.0 %        1.8 %
                                                     -------      -------
      Net income                                         3.1 %        2.9 %
                                                     =======      =======


         EBITDA, as presented below, is defined as net income before interest
expense, income taxes, depreciation, amortization expense and non-recurring
non-cash charges. EBITDA is calculated as follows (in thousands):

                                                        For the Three Months
                                                           Ended March 31,
                                                  ------------------------------
                                                        2001         2000
                                                  ------------------------------
                                                           (unaudited)
Net income                                          $  1,466     $  1,362
Depreciation and amortization                          2,157        2,089
Interest                                               3,296        3,665
Taxes                                                    916          840
                                                     -------      -------
EBITDA                                               $ 7,835      $ 7,956
                                                     =======      =======

         EBITDA for the quarter ended March 31, 2001 decreased $0.2 million, or
2.5%, to $7.8 million from $8.0 million for the quarter ended March 31, 2000.

         We believe that EBITDA is a widely accepted financial indicator of a
company's ability to service and/or incur indebtedness. EBITDA does not
represent and should not be considered as an alternative to net income or cash
flow from operations as determined by generally accepted accounting principles,
and EBITDA does not necessarily indicate whether cash flow will be sufficient
for cash requirements. Not every company calculates EBITDA in exactly the same
fashion. As a result, EBITDA as presented above may not necessarily be
comparable to similarly titled measures of other companies.

                                      -9-
<PAGE>

Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

         Net Sales. Net sales decreased $0.1 million, or 0.2%, to $46.6 million
in the three months ended March 31, 2001, from $46.7 million in the three months
ended March 31, 2000, primarily due to a decrease in our sales of filtration,
construction and insulation products of $2.9 million, or 25.3%, in these
markets, offset by an increase of $2.6 million, or 23.3%, in sales of glass,
carbon and aramid fibers used in various composite materials. Our sales to the
electronics markets remained relatively flat in the three months ended March 31,
2001 compared to the three months ended March 31, 2000. However, due to current
inventory adjustments in the electronics industry, we expect sales to the
electronics market to decrease in the second quarter of 2001.

         Gross Profit. Gross profit margins increased to 17.7% in the three
months ended March 31, 2001, from 16.9% in the three months ended March 31,
2000, primarily due to the shifts in product mix discussed above, as well as
price increases in the electronics and filtration markets.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to 5.8% of net sales in the three months ended
March 31, 2001 from 4.6% of net sales in the three months ended March 31, 2000.
This was primarily due to increased accruals for profit sharing and management
fees.

         Operating Income. As a result of the aforementioned factors, operating
income decreased $0.1 million to $5.6 million, or 11.9% of net sales, in the
three months ended March 31, 2001, from $5.7 million, or 12.3% of net sales, in
the three months ended March 31, 2000.

         Interest Expense. Interest expense decreased $0.4 million to $3.3
million, or 7.1% of net sales, in the three months ended March 31, 2001 from
$3.7 million, or 7.8% of net sales, in the three months ended March 31, 2000,
due to payments on the term loan offset by increased borrowings on the revolving
credit facility.

         Income Tax Expense. The effective tax rate in the three months ended
March 31, 2001 and 2000 of 38.5% and 38.1% respectively, was higher than the
federal statutory rate of 35.0% primarily due to the effect of state income
taxes.

         Net Income. As a result of the aforementioned factors, net income
increased $0.1 million to $1.5 million in the three months ended March 31, 2001,
from $1.4 million in the three months ended March 31, 2000.


Liquidity and Capital Resources

         Our primary sources of liquidity are cash flows from operations and
borrowings under our credit facilities. Our future need for liquidity will arise
primarily from interest payments on our 10 1/4% Series B Senior Subordinated
Notes due 2009 and our senior credit facility, principal payments on the senior
credit facility, and the funding of our capital expenditures and working capital
requirements. There are no mandatory principal payments on our notes scheduled
prior to their maturity.

         At March 31, 2001, we had outstanding $123.6 million of long-term debt,
consisting of $19.2 million under the term loan of our senior credit facility,
$6.0 million under the revolving credit facility and $98.4 million under our
notes (net of discount of $1.6 million). We had $54.0 million available under
our revolving credit facility.

                                      -10-
<PAGE>

         Net Cash Used in Operating Activities. Net cash used in operating
activities was $1.7 million for the three months ended March 31, 2001 and was
primarily the result of an increase in inventory of $(8.1) million and a
decrease in accounts payable and accrued liabilities of $(3.7) million offset by
a decrease in accounts receivable of $6.1 million.

         Net Cash Used in Investing Activities. Net cash used in investing
activities was $2.8 million for the three months ended March 31, 2001 and was
the result of purchases of property, plant and equipment.

         We have historically financed our capital expenditures through cash
flow from operations and borrowings under our credit facilities. We anticipate
total capital expenditures in 2001 to be approximately $19.5 million. However,
depending upon our operating performance, our actual capital expenditures during
2001 may be less than our planned capital expenditures. We have purchased 78 new
looms in the three months ended March 31, 2001, for our heavyweight production
facility in South Hill, Virginia in order to change part of the fabric
production at that location from heavyweight fabrics to lightweight fabrics in
order to meet ongoing changes in market demand for these products. We are in the
process of expanding our lightweight fabric production facility in South Hill,
Virginia to accommodate additional looms and finishing units.

         Net Cash Used in Financing Activities. Net cash used in financing
activities was $4.5 million for the three months ended March 31, 2001 and was
primarily the result of borrowings on the revolving credit facility offset by a
decrease in book overdraft.

         Our ability to make scheduled payments of principal or to pay the
interest or liquidated damages, if any, or to refinance our indebtedness,
including the notes, or to fund planned capital expenditures will depend on our
future performance. Our future performance, to some extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. Based upon the current level of our
operations, we believe that cash flow from operations and available cash,
together with availability under the senior credit facility, will be adequate to
meet our future liquidity needs for at least the next two years. However, we
cannot assure you that we will generate sufficient cash flow from operations or
that future borrowings will be available under our senior credit facility in an
amount sufficient to enable us to service our indebtedness, including the notes,
or to fund our other liquidity needs. In addition, we may need to refinance all
or a portion of the principal of the notes on or prior to maturity. We cannot
assure you that we will be able to effect any refinancing on commercially
reasonable terms or at all.


Disclosure Regarding Forward-Looking Statements

         Some of the information in this Quarterly Report may contain
forward-looking statements. These statements include, in particular, statements
about our plans, strategies and prospects within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. You can identify forward-looking statements by our use of forward-looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"continue" or other similar words. Although we believe that our plans,
intentions and expectations reflected in or suggested by such forward-looking
statements are reasonable, we

                                      -11-
<PAGE>

cannot assure you that our plans, intentions or expectations will be achieved.
Such statements are based on our current plans and expectations and are subject
to risks and uncertainties that exist in our operations and our business
environment that could render actual outcomes and results materially different
from those predicted.

         When considering such forward-looking statements, you should keep in
mind the following important factors that could cause our actual results to
differ materially from those contained in any forward-looking statements:

     o   the impact of Owens Corning's unpredictable bankruptcy proceeding on
         the ongoing operations of Advanced Glassfiber Yarns which could result
         in the risk that obtaining raw materials from sources other than
         Advanced Glassfiber Yarns would be more costly;
     o   our significant level of indebtedness and limitations on our ability to
         incur additional debt;
     o   our dependence upon some of our suppliers to provide us with materials
         and services;
     o   a downturn in the electronics industry and the movement of electronics
         industry production outside of North America;
     o   our concentrated customer base and the competitive nature of our
         markets;
     o   a disruption of production at one of our facilities;
     o   an easing of import restrictions and duties with respect to glass fiber
         fabrics;
     o   our ability to comply with environmental and safety and health laws and
         requirements;
     o   our ability to address technological advances in the markets we serve;
         and
     o   changes in economic conditions generally.

         This list of risks and uncertainties, however, is not intended to be
exhaustive. You should also review the other cautionary statements we make in
this Quarterly Report and in our 2000 Annual Report on Form 10-K. All
forward-looking statements attributable to us or persons acting for us are
expressly qualified in their entirety by our cautionary statements.

         We do not have, and expressly disclaim, any obligation to release
publicly any updates or changes in our expectations or any changes in events,
conditions or circumstances on which any forward-looking statement is based.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

              The effects of potential changes in currency exchange rates and
interest rates are discussed below. Our market risk discussion includes
"forward-looking statements" and represents an estimate of possible changes in
fair value that would occur assuming hypothetical future movements in interest
and currency exchange rates. These disclosures are not precise indicators of
expected future losses, but only indicators of reasonably possible losses. As a
result, actual future results may differ materially from those presented. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Disclosure Regarding Forward-Looking Statements."

         Our senior credit facility is subject to market risks, including
interest rate risk. Our financial instruments are not currently subject to
commodity price risk. We are exposed to market risk related to changes in
interest rates on borrowings under our senior credit facility. The senior credit
facility bears interest based on LIBOR. Our risk management strategy is to use
derivative financial instruments, such as swaps, to hedge interest rate
exposures. In addition, we are exposed

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<PAGE>

to foreign currency exchange rate risk mainly as a result of our purchases of
fixed assets from Japanese sources. Our risk management strategy is to use
derivative financial instruments to hedge these foreign currency exposures. Our
overall objective is to limit the impact of foreign currency and interest rate
changes on earnings and cash flows. We do not enter into derivatives for
trading or speculative purposes.

         At March 31, 2001, we had an interest rate swap agreement effective
through September 30, 2004 on a notional amount of $19.2 million. Under this
agreement, we have secured a fixed LIBOR rate of interest of 5.04% on the
notional amount that is reduced in a manner consistent with the amortization of
the principal on our term loan. This swap effectively changes our payment of
interest on $19.2 million of variable rate debt to a fixed rate for the contract
period.

         The fair value of the interest rate swap agreement represents the
estimated receipts or payments that would be made to terminate the agreement. At
March 31, 2001, we would have paid approximately $80,000 to terminate the
agreement. A 100 basis point decrease in LIBOR would increase the amount paid by
approximately $295,000. The fair value is based on dealer quotes, considering
current interest rates. The unrealized loss on this derivative instrument is a
component of other comprehensive income (loss).

         We entered into two Japanese Yen hedges on October 6, 2000, in order to
hedge purchases of fixed assets in Japanese Yen in 2001. The fixed assets were
received in February 2001 with payment anticipated in October and November 2001.
As of March 31, 2001, the notional value of our foreign currency hedging
instruments was $2.0 million, and the approximate fair value was $(340,000). The
potential fair value of this financial instrument resulting from a hypothetical
10% decrease in the Japanese Yen relative to the U.S. dollar would be
approximately $(160,000) as of March 31, 2001. The potential fair value of the
financial instrument resulting from a hypothetical 10% increase in the Japanese
Yen relative to the U.S. dollar would be approximately $(500,000) as of March
31, 2001. The fair value is based on dealer quotes, considering current exchange
rates.

         Actual gains and losses in the future may differ materially from the
above analysis, however, based on changes in the timing and amount of interest
rate and foreign currency exchange rate movements and our actual exposures and
hedges.

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<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                    BGF INDUSTRIES, INC.


                                    /s/ Philippe R. Dorier
                                    --------------------------------------------

                                    Philippe R. Dorier
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

Date:  May 10, 2001