EXHIBIT 99.04



Financial Statements



Standard Gypsum LP



Years ended December 28, 2002, December 29, 2001 and December 30, 2000 with Report of Independent Auditors





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Standard Gypsum LP



Financial Statements



Years ended December 28, 2002, December 29, 2001 and December 30, 2000



CONTENTS



|                                         |  |  
|---------------------------------------- |  | -
|Report of Independent Auditors           |  | 1
|Report of Independent Public Accountants |  | 2
|                                         | 
|Audited Financial Statements             |  |  
|                                         | 
|Balance Sheets                           |  | 3
|Statements of Operations                 |  | 4
|Statements of Partners/Members Equity  |  | 5
|Statements of Cash Flows                 |  | 6
|Notes to Financial Statements            |  | 7





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Report of Independent
Auditors



The Partners

Standard Gypsum LP



We have audited the accompanying balance sheet of Standard Gypsum LP (Standard) as of December 28, 2002, and the related statements of operations, partners equity and cash flows for the year then
ended. These financial statements are the responsibility of Standards management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Standard as of December 29, 2001, and
for the year then ended were audited by other auditors who have ceased operations and whose report dated February 1, 2002 expressed an unqualified opinion on those financial statements before the reclassification adjustments described in Note 2.



We conducted our audit in accordance with auditing standards generally
accepted in the 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 audit provides a reasonable basis for our opinion.



In our
opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Standard Gypsum LP as of December 28, 2002 and the results of its operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States.



As discussed above, the financial statements of Standard as of December 29, 2001, and for the year then ended were audited by other auditors who have ceased operations. As described in Note 2, these financial statements have been revised.
We audited the reclassification adjustments described in Note 2 that were applied to revise the 2001 financial statements. In our opinion, such reclassification adjustments are appropriate and have been properly applied. However, we were not engaged
to audit, review, or apply any procedures to the 2001 financial statements of Standard other than with respect to such reclassification adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2001 financial
statements taken as a whole.



/s/ ERNST & YOUNG LLP



Austin, Texas

March 28, 2003





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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Partners of

Standard Gypsum LP:



We have audited the accompanying consolidated balance sheet of STANDARD GYPSUM LP (a Delaware limited partnership and formerly Standard Gypsum LLC, a Delaware limited liability company) as of December 29, 2001 and
December 30, 2000 and the related statements of operations, partners/members equity, and cash flows for the years then ended. These financial statements are the responsibility of the Companys management. Our responsibility is to
express an opinion on these financial statements based on our audits.



We
conducted our audits in accordance with auditing standards generally accepted in the 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 financial statements referred to above present fairly, in all material respects, the financial position of Standard Gypsum LP as of December 29, 2001
and December 30, 2000, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.



ARTHUR ANDERSEN LLP



Atlanta, Georgia

February 1, 2002



NOTE: The report of Arthur Andersen LLP presented above is a copy of a previously issued
Arthur Andersen LLP report and said report has not been reissued by Arthur Andersen LLP nor has Arthur Andersen LLP provided a consent to the inclusion of its report in this Form 10-K.



2



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Standard Gypsum LP



Balance Sheets

(In Thousands)



|                                                                                                            |  |                   |         |   |                   |   |         |  
|----------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                            |  | DECEMBER 28, 2002 |         |   | DECEMBER 29, 2001 |  
|ASSETS                                                                                                      |  |                   |         |   |                   |   |         |  
|Current assets:                                                                                             |  |                   |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                   |  | $                 | 1,297   |   |                   | $ | 4,065   |  
|Accounts receivable, net of allowance for doubtful accounts of $404 and $311 at 2002 and 2001, respectively |  |                   | 7,141   |   |                   |   | 5,325   |  
|Related-party receivables                                                                                   |  |                   | 3,028   |   |                   |   | 1,553   |  
|Inventories                                                                                                 |  |                   | 1,737   |   |                   |   | 2,188   |  
|Prepaid expenses                                                                                            |  |                   | 477     |   |                   |   | 106     |  
|                                                                                                            |  |                   |         |   |                   |   |         |  
|Total current assets                                                                                        |  |                   | 13,680  |   |                   |   | 13,237  |  
|                                                                                                            |  |                   |         |   |                   |   |         |  
|Property, plant, and equipment:                                                                             |  |                   |         |   |                   |   |         |  
|Land and internal properties                                                                                |  |                   | 2,234   |   |                   |   | 2,234   |  
|Buildings                                                                                                   |  |                   | 20,552  |   |                   |   | 20,552  |  
|Machinery and equipment                                                                                     |  |                   | 66,071  |   |                   |   | 65,543  |  
|Construction in progress                                                                                    |  |                   | 1,312   |   |                   |   | 1,141   |  
|                                                                                                            |  |                   |         |   |                   |   |         |  
|                                                                                                            |  |                   | 90,169  |   |                   |   | 89,470  |  
|Less accumulated depreciation and depletion                                                                 |  |                   | (23,375 | ) |                   |   | (19,232 | )
|                                                                                                            |  |                   |         |   |                   |   |         |  
|Property, plant, and equipment, net                                                                         |  |                   | 66,794  |   |                   |   | 70,238  |  
|                                                                                                            |  |                  
|Other assets                                                                                                |  |                   | 304     |   |                   |   | 525     |  
|                                                                                                            |  |                   |         |   |                   |   |         |  
|Total assets                                                                                                |  | $                 | 80,778  |   |                   | $ | 84,000  |  
|                                                                                                            |  |                   |         |   |                   |   |         |  
|LIABILITIES AND PARTNERS EQUITY                                                                            |  |                   |         |   |                   |   |         |  
|Current liabilities:                                                                                        |  |                   |         |   |                   |   |         |  
|Accounts payable                                                                                            |  | $                 | 3,204   |   |                   | $ | 2,356   |  
|Related-party payables                                                                                      |  |                   | 239     |   |                   |   | 275     |  
|Accrued expenses                                                                                            |  |                   | 2,905   |   |                   |   | 1,985   |  
|Deferred revenue                                                                                            |  |                   | 86      |   |                   |   | 7       |  
|                                                                                                            |  |                   |         |   |                   |   |         |  
|Total current liabilities                                                                                   |  |                   | 6,434   |   |                   |   | 4,623   |  
|                                                                                                            |  |                  
|Long-term debt                                                                                              |  |                   | 56,200  |   |                   |   | 56,200  |  
|Postretirement pension benefits                                                                             |  |                   | 20      |   |                   |   | 17      |  
|                                                                                                            |  |                  
|Partners equity                                                                                            |  |                   | 18,124  |   |                   |   | 23,160  |  
|                                                                                                            |  |                   |         |   |                   |   |         |  
|Total liabilities and partners equity                                                                      |  | $                 | 80,778  |   |                   | $ | 84,000  |  
|                                                                                                            |  |                   |         |   |                   |   |         |  



See
accompanying notes.



3



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Standard Gypsum LP



Statements of Operations

(In Thousands)



|                                              |  |                   |        |   |                   |   |        |                   |  |   |        |  
|--------------------------------------------- |  | ----------------- | ------ | - | ----------------- | - | ------ | ----------------- |  | - | ------ | -
|                                              |  | YEAR ENDED        |       
|                                              |  | DECEMBER 28, 2002 |        |   | DECEMBER 29, 2001 |   |        | DECEMBER 30, 2000 | 
|Sales                                         |  | $                 | 98,558 |   |                   | $ | 71,297 |                   |  | $ | 96,338 |  
|Cost of sales                                 |  |                   | 72,455 |   |                   |   | 65,411 |                   |  |   | 71,608 |  
|                                              |  |                   |        |   |                   |   |        |                   |  |   |        |  
|Gross profit                                  |  |                   | 26,103 |   |                   |   | 5,886  |                   |  |   | 24,730 |  
|Selling, general, and administrative expenses |  |                   | 7,222  |   |                   |   | 5,594  |                   |  |   | 6,554  |  
|                                              |  |                   |        |   |                   |   |        |                   |  |   |        |  
|Income from operations                        |  |                   | 18,881 |   |                   |   | 292    |                   |  |   | 18,176 |  
|Interest expense, net                         |  |                   | (830   | ) |                   |   | (1,403 | )                 |  |   | (1,673 | )
|Other expense                                 |  |                   | (1,687 | ) |                   |   | (781   | )                 |  |   | (1,787 | )
|                                              |  |                   |        |   |                   |   |        |                   |  |   |        |  
|Net income (loss)                             |  | $                 | 16,364 |   |                   | $ | (1,892 | )                 |  | $ | 14,716 |  
|                                              |  |                   |        |   |                   |   |        |                   |  |   |        |  



See
accompanying notes.



4



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Standard Gypsum LP



Statements of Partners/Members Equity

(In Thousands)



|                                  |  |                 |         |   |                                         |   |         |                           |  |   |                     |   |  |                                |         |   |  |   |         |  
|--------------------------------- |  | --------------- | ------- | - | --------------------------------------- | - | ------- | ------------------------- |  | - | ------------------- | - |  | ------------------------------ | ------- | - |  | - | ------- | -
|                                  |  | GYPSUMMGC, INC. |         |   | TEMPLE-INLANDFOREST PRODUCTSCORPORATION |   |         | McQUEENYGYPSUMCOMPANY,LLC |  |   | TEMPLEGYPSUMCOMPANY |   |  | TOTALPARTNERS /MEMBERSEQUITY |        
|Balance, December 25, 1999        |  | $               | 19,668  |   |                                         | $ | 19,668  |                           |  | $ |                    |   |  | $                              |        |   |  | $ | 39,336  |  
|Distributions to members          |  |                 | (13,782 | ) |                                         |   | (13,782 | )                         |  |   |                    |   |  |                                |        |   |  |   | (27,564 | )
|Contributions from partners       |  |                 |        |   |                                         |   |        |                           |  |   | 282                 |   |  |                                | 282     |   |  |   | 564     |  
|Conversion to limited partnership |  |                 | (5,762  | ) |                                         |   | (5,762  | )                         |  |   | 5,762               |   |  |                                | 5,762   |   |  |   |        |  
|Net income                        |  |                 | 147     |   |                                         |   | 147     |                           |  |   | 7,211               |   |  |                                | 7,211   |   |  |   | 14,716  |  
|                                  |  |                 |         |   |                                         |   |         |                           |  |   |                     |   |  |                                |         |   |  |   |         |  
|Balance, December 30, 2000        |  |                 | 271     |   |                                         |   | 271     |                           |  |   | 13,255              |   |  |                                | 13,255  |   |  |   | 27,052  |  
|Distributions to partners         |  |                 | (20     | ) |                                         |   | (20     | )                         |  |   | (980                | ) |  |                                | (980    | ) |  |   | (2,000  | )
|Net loss                          |  |                 | (19     | ) |                                         |   | (19     | )                         |  |   | (927                | ) |  |                                | (927    | ) |  |   | (1,892  | )
|                                  |  |                 |         |   |                                         |   |         |                           |  |   |                     |   |  |                                |         |   |  |   |         |  
|Balance, December 29, 2001        |  |                 | 232     |   |                                         |   | 232     |                           |  |   | 11,348              |   |  |                                | 11,348  |   |  |   | 23,160  |  
|Distribution to partners          |  |                 | (214    | ) |                                         |   | (214    | )                         |  |   | (10,486             | ) |  |                                | (10,486 | ) |  |   | (21,400 | )
|Net income                        |  |                 | 163     |   |                                         |   | 163     |                           |  |   | 8,019               |   |  |                                | 8,019   |   |  |   | 16,364  |  
|                                  |  |                 |         |   |                                         |   |         |                           |  |   |                     |   |  |                                |         |   |  |   |         |  
|Balance, December 28, 2002        |  | $               | 181     |   |                                         | $ | 181     |                           |  | $ | 8,881               |   |  | $                              | 8,881   |   |  | $ | 18,124  |  
|                                  |  |                 |         |   |                                         |   |         |                           |  |   |                     |   |  |                                |         |   |  |   |         |  



See
accompanying notes.



5



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Standard Gypsum LP



Statements of Cash Flows

(In Thousands)



|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------ | ----------------- |  | - | ------- | -
|                                                                                         |  | YEAR ENDED        |        
|                                                                                         |  | DECEMBER 28, 2002 |         |   | DECEMBER 29, 2001 |   |        | DECEMBER 30, 2000 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                     |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Net income (loss)                                                                        |  | $                 | 16,364  |   |                   | $ | (1,892 | )                 |  | $ | 14,716  |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Depreciation, amortization, and depletion                                                |  |                   | 4,915   |   |                   |   | 4,996  |                   |  |   | 5,110   |  
|Provision for doubtful accounts                                                          |  |                   | 120     |   |                   |   | 130    |                   |  |   | 130     |  
|Loss on sale/retirement of assets                                                        |  |                   | 27      |   |                   |   | 11     |                   |  |   | (21     | )
|Changes in operating assets and liabilities:                                             |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Accounts receivable                                                                      |  |                   | (1,936  | ) |                   |   | (889   | )                 |  |   | 4,874   |  
|Related-party receivables                                                                |  |                   | (1,475  | ) |                   |   | 1,193  |                   |  |   | (2,746  | )
|Inventories                                                                              |  |                   | 451     |   |                   |   | 901    |                   |  |   | 3,564   |  
|Prepaid expenses                                                                         |  |                   | (371    | ) |                   |   | (2     | )                 |  |   | 23      |  
|Accounts payable                                                                         |  |                   | 848     |   |                   |   | (178   | )                 |  |   | (815    | )
|Related-party payables                                                                   |  |                   | (36     | ) |                   |   | (321   | )                 |  |   | 289     |  
|Accrued expenses                                                                         |  |                   | 923     |   |                   |   | (959   | )                 |  |   | (726    | )
|Deferred revenue                                                                         |  |                   | 79      |   |                   |   | (57    | )                 |  |   | 65      |  
|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Net cash provided by operating activities                                                |  |                   | 19,909  |   |                   |   | 2,933  |                   |  |   | 24,463  |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                     |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Purchases of property and equipment                                                      |  |                   | (1,277  | ) |                   |   | (1,117 | )                 |  |   | (5,168  | )
|Proceeds from sale of assets                                                             |  |                   |        |   |                   |   | 1      |                   |  |   | 127     |  
|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Net cash used in investing activities                                                    |  |                   | (1,277  | ) |                   |   | (1,116 | )                 |  |   | (5,041  | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                                     |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Distributions to partners                                                                |  |                   | (21,400 | ) |                   |   | (2,000 | )                 |  |   | (27,564 | )
|Contributions from partners                                                              |  |                   |        |   |                   |   |       |                   |  |   | 564     |  
|Funds held by trustee                                                                    |  |                   |        |   |                   |   |       |                   |  |   | 2,818   |  
|Payment of bond issue costs                                                              |  |                   |        |   |                   |   |       |                   |  |   | (602    | )
|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Net cash used in financing activities                                                    |  |                   | (21,400 | ) |                   |   | (2,000 | )                 |  |   | (24,784 | )
|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Net change in cash and cash equivalents                                                  |  |                   | (2,768  | ) |                   |   | (183   | )                 |  |   | (5,362  | )
|Cash and cash equivalents, beginning of year                                             |  |                   | 4,065   |   |                   |   | 4,248  |                   |  |   | 9,610   |  
|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Cash and cash equivalents, end of year                                                   |  | $                 | 1,297   |   |                   | $ | 4,065  |                   |  | $ | 4,248   |  
|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                        |  |                   |         |   |                   |   |        |                   |  |   |         |  
|Cash paid for interest                                                                   |  | $                 | 841     |   |                   | $ | 1,680  |                   |  | $ | 2,160   |  
|                                                                                         |  |                   |         |   |                   |   |        |                   |  |   |         |  



See accompanying notes.



6



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Standard Gypsum LP



Notes to Financial Statements



December 28, 2002



|1. | OPERATIONS
|-- | ----------



Standard Gypsum LP (Standard), was formed effective April 1, 1996 by two members: Caraustar Industries, Inc. (Caraustar) and Temple-Inland Forest Products Corporation (Temple).
Prior to April 1, 1996, Standard operated as a wholly owned subsidiary of Caraustar (the Predecessor). Effective April 1, 1996, Caraustar contributed substantially all of the operating assets and liabilities of the Predecessor at its
historical basis to Standard. Simultaneous with this contribution, Caraustar sold a 50% interest in Standard to Temple in exchange for $10,774,000. Additionally, Caraustar and Temple each contributed capital of $250,000 to Standard.



Standard manufactures and distributes gypsum wallboard and operates a gypsum rock quarry.
Effective December 28, 2000, Standard converted to a limited partnership and, as such, changed its name to Standard Gypsum LP. The conversion was effected through the transfer of equity between the general partners, Caraustar and Temple, and newly
formed limited partners. Caraustars 50% interest in Standard is now owned by two wholly owned subsidiaries of Caraustar, Gypsum MGC, Inc. (1%) and McQueeney Gypsum Company, LLC (49%). Temples 50% interest in Standard is now owned
directly by Temple (1%) and through a wholly owned subsidiary, Temple Gypsum Company (49%).



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



FISCAL YEAR



Fiscal year-end is the Saturday closest to December 31.



CASH AND CASH EQUIVALENTS



All short-term investments
purchased with original maturities of three months or less are considered cash equivalents.



7



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Standard Gypsum LP



Notes to Financial Statements (continued)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | ------------------------------------------------------



INVENTORIES



Inventories are stated at the lower of cost or market on a first-in, first-out basis.



Inventories consisted of the following (in thousands):



|               |  |                   |       |                   |   |      
|-------------- |  | ----------------- | ----- | ----------------- | - | -----
|               |  | DECEMBER 28, 2002 |       | DECEMBER 29, 2001
|Raw materials  |  | $                 | 834   |                   | $ | 861  
|Finished goods |  |                   | 903   |                   |   | 1,327
|               |  |                   |       |                   |   |      
|               |  | $                 | 1,737 |                   | $ | 2,188
|               |  |                   |       |                   |   |      



PROPERTY, PLANT, AND EQUIPMENT



Property, plant, and equipment are stated at historical cost.
Depreciation of all buildings and some equipment is computed using the straight-line method over the estimated useful lives of the assets. In 1999, Standard placed certain equipment in service at its new Cumberland City facility, utilizing the units
of production method of depreciation. The estimated useful lives of these assets under the units of production depreciation method is 5 to 25 years, consistent with depreciable lives under the straight-line method.



Standard completed an assessment of the estimated useful lives of certain production
equipment and buildings, which resulted in a revision of estimated useful lives. Accordingly, beginning October 2002, Standard began computing depreciation of certain production equipment and buildings using revised estimated useful lives. As a
result of these revisions in estimated useful lives, depreciation expense during the year ended December 28, 2002 was reduced by approximately $450,000.



Depreciation and depletion expense was approximately $4,694,000, $4,794,000 and $4,217,000 for the years ended December 28, 2002, December 29, 2001 and December 30, 2000,
respectively. Expenditures for maintenance and repairs are expensed as incurred, while major additions and improvements are capitalized. Upon disposition, the cost and related accumulated depreciation are removed from the accounts, and the resulting
gain or loss is reflected in the results of operations.



8



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Standard Gypsum LP



Notes to Financial Statements (continued)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | ------------------------------------------------------



PROPERTY, PLANT, AND EQUIPMENT (CONTINUED)



The estimated lives used in determining depreciation are as follows:



|                        |  |               
|----------------------- |  | --------------
|Buildings               |  | 10 to 40 years
|Machinery and equipment |  | 5 to 25 years 



OTHER ASSETS



Other assets consist of deferred financing costs, which are amortized ratably over the terms
of the applicable debt (see Note 4). Amortization expense related to these assets was approximately $221,000, $202,000 and $893,000 for the years ended December 28, 2002, December 29, 2001 and December 30, 2000, respectively.



TAXES



Standard is a partnership and its income or loss is allocated to the partners for inclusion in their income tax returns, and accordingly, no
provision for income taxes is included in the accompanying financial statements.



During 2000, since Standard was organized as a limited liability company, Standard paid franchise tax to the state governments of Texas and Tennessee. Standard incurred expense of $881,000 during the year ended December 30, 2000. During
2001, Standard converted to a limited partnership. As a limited partnership, Standard does not owe franchise tax to the state of Texas. However, Standard must pay franchise tax to the state of Tennessee. During the years ended December 28, 2002 and
December 29, 2001, Standard incurred expenses of $315,000 and $111,000 related to franchise tax due to the state of Tennessee. Also during the year ended December 29, 2001, Standard reversed approximately $326,000 of amounts previously expensed for
franchise tax since franchise tax paid was ultimately less than the amount initially expensed. All amounts related to franchise tax expense are recorded in other expense in the accompanying statements of operations for the years ended December 28,
2002, December 29, 2001 and December 30, 2000.



9



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Standard Gypsum LP



Notes to Financial Statements (continued)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | ------------------------------------------------------



PARTNERS EQUITY



Under the terms of the partnership agreement, income and distributions of Standard are allocated to the partners based on their respective
ownership interests. Distributions to partners/members totaled $21,400,000, $2,000,000 and $27,564,000 in 2002, 2001 and 2000, respectively.



REVENUE



Revenue is recognized upon passage of title to the customer, which generally occurs at the time the product is delivered to the customer subject to inconsequential or perfunctory conditions normally associated with
the sale of goods within the industry.



Amounts billed to customers for
shipping and handling are included in sales and the related costs thereof are included in cost of sales. Total shipping and handling costs were $14,937,000, $12,779,000 and $11,900,000 for the years ended December 28, 2002, December 29, 2001 and
December 30, 2000, respectively.



LONG-LIVED ASSETS



Standard periodically reviews the carrying amounts of its long-lived assets to determine
whether current events or circumstances, as defined in Statements of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment of Long-Lived Assets, warrant adjustments to such carrying amounts by considering, among
other things, the future cash inflows expected to result from the use of the assets and their eventual disposition less the future cash outflows expected to be necessary to obtain those inflows. At this time, estimated future cash inflows are
expected to exceed the carrying value of these assets; thus, no impairment loss has been recognized. Management reviews the valuation and amortization periods of long-lived assets on a periodic basis, taking into consideration any events or
circumstances have occurred to warrant a diminished fair value or reduction in the useful life of long-lived assets.



10



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Standard Gypsum LP



Notes to Financial Statements (continued)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|-- | ------------------------------------------------------



USE OF ESTIMATES



The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.



RECLASSIFICATIONS



Beginning in 2002, the costs related to shipping and handling were
classified within cost of sales. In the prior year, such amounts were classified as operating expenses. Prior year amounts have been reclassified to conform to the current presentation. The reclassification had no impact on reported income (loss) or
partners equity.



|3. | RECENTLY ISSUED ACCOUNTING STANDARDS
|-- | ------------------------------------



In June 2001, the Financial Accounting Standard Board (FASB) issued SFAS No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived
Assets. It requires the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, and the associated asset retirement costs be capitalized as
part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002 with early adoption encouraged. There was no material impact from adoption of this statement as of December 29, 2002.



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Standard Gypsum LP



Notes to Financial Statements (continued)



|4. | LONG-TERM DEBT
|-- | --------------



In 1999, Standard received financing from two Industrial Revenue Bond (the Bonds) issuances by the Stewart County, Tennessee, Development Authority totaling $56,200,000. The proceeds of the debt issuances
were used to repay borrowings outstanding under a previous credit facility and fund the construction of the gypsum wallboard facility in Cumberland City, Tennessee. The Bonds accrue interest at a variable rate, as defined, and mature in 2034.



Under the terms of the bond agreement, both Caraustar and Temple are required
to maintain certain financial conditions. Additionally, Caraustar and Temple severally guarantee the Bonds. Their guarantees are supported by letters of credit. After year-end, the letter of credit issuer notified Standard that the letter of credit
would not be renewed. The letter of credit issuer subsequently agreed to renew its letter of credit after Caraustar obtained a separate letter of credit supporting its guarantee obligation. The bond agreement also prohibits Standard from incurring
certain additional indebtedness, limits certain investments, and restricts substantial asset sales. At December 28, 2002, Standard was in compliance with all covenants of the bond agreement, as amended.



|5. | RETIREMENT PLAN
|-- | ---------------



Standard participates in a Temple-sponsored 401(k) retirement plan which provides for voluntary contributions by employees not to exceed 16% of their gross salaries and wages or $12,000 in 2002, $11,000 in 2001 and
$10,500 in 2000, whichever is lower. Standard matches 50% of the first 6% of each employees contribution (maximum of 3% and $3,000). The amounts incurred for Standards matching contributions totaled $319,000, $391,000 and $186,000 in
2002, 2001 and 2000, respectively.



|6. | RELATED-PARTY TRANSACTIONS
|-- | --------------------------



Under the terms of a paper supply agreement dated April 1, 1996 between Standard and Caraustar. Standard is obligated to purchase all of its paperboard requirements from
Caraustar through December 31, 2006. For the years ended December 28, 2002, December 29, 2001 and December 30, 2000, Standard purchased, at market prices, approximately $15,994,000, $13,978,000 and $17,806,000, respectively, of paperboard from
Caraustar. As of December 28, 2002 and December 29, 2001, amounts due Caraustar for paperboard purchases totaled approximately $45,000 and $39,000, respectively.



For the years ended December 28, 2002, December 29, 2001 and December 30, 2000, Standard purchased, at market prices, approximately
$529,000, $749,000 and $520,000, respectively, of Temples production. As of December 28, 2002 and December 29, 2001, amounts due to Temple totaled approximately $194,000 and $235,000, respectively.



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Standard Gypsum LP



Notes to Financial Statements (continued)



|6. | RELATED-PARTY TRANSACTIONS (CONTINUED)
|-- | --------------------------------------



Pursuant to an indemnification agreement between Caraustar and Temple, Caraustar is obligated to reimburse Standard for certain environmental costs incurred by Standard.
At December 28, 2002 and December 29, 2001, amounts due to Standard from Caraustar totaled $5,000 and $0, respectively, related to these and other costs.



On April 1, 2000, Standard entered into an amended and restated marketing agreement with Temple whereby Temple continues to serve as the exclusive marketing agent for
Standards products. Under the terms of this agreement, which expires March 31, 2006, Temple is responsible for all marketing, sales, distribution, invoicing, and collection of customer accounts. During 2002, 2001 and 2000, Standard incurred
and paid Temple marketing fees of $2,439,000, $1,699,000 and $2,515,000, respectively, for performing these services. Additionally, Temple collected on Standards behalf amounts due for sales to various customers. As of December 28, 2002 and
December 29, 2001, Standard was due $3,028,000 and $1,553,000, respectively, from Temple for amounts previously collected.



On April 1, 2000, Standard entered into an amended and restated management agreement with Temple, employing Temple as exclusive manager of the Standards operations.
The agreement is subject to automatic annual extensions unless Standard or Temple elects to terminate the agreement. Under the terms of this agreement, Standard incurred and paid Temple for management service fees of $500,000 for each of the years
ended December 28, 2002, December 29, 2001 and December 30, 2000.



|7. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------



OPERATING LEASES



Certain equipment utilized by the Partnership is subject to operating leases. At December 28, 2002, the future minimum rental payments under operating leases that have initial or remaining noncancelable lease terms in
excess of one year are as follows:



|      |  |   |       
|----- |  | - | ------
|2003  |  | $ | 28,335
|2004  |  |   | 27,082
|2005  |  |   | 19,595
|2006  |  |   | 2,286 
|      |  |   |       
|Total |  | $ | 77,298



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Standard Gypsum LP



Notes to Financial Statements (continued)



|7. | COMMITMENTS AND CONTINGENCIES (CONTINUED)
|-- | -----------------------------------------



The total rental expense incurred during 2002, 2001 and 2000 was approximately $84,000, $77,000 and $277,000, respectively.



LEGAL MATTERS



Standard is subject to certain lawsuits and claims incidental to its business. In the opinion of management, based on its examination of
such matters and discussions with counsel, the ultimate resolution of pending or threatened litigation, claims, and assessments will have no material adverse effect upon Standards financial position, liquidity, or results of operations.



SHIPPING COMMITMENTS



During 2000, Standard entered into a five-year agreement with its primary rail carriers
whereby Standard guaranteed the use of a minimum number of rail cars annually and over the contract period, as defined in the agreement. If the minimum number of rail cars is not met, Standard must pay its primary rail carriers a penalty for each
shortfall carload. The maximum annual penalty related to the minimum usage commitments during 2003 and 2004 is $400,000, while the maximum aggregate penalty related to the minimum usage commitments is $800,000 through the end of the contract period.
As annual minimums were not met during 2002 and 2001, Standard recorded a liability for minimum usage obligations of approximately $440,000 and $326,000 at December 28, 2002 and December 29, 2001, respectively. Management currently believes the
minimum levels defined are obtainable, and any further obligation for failure to meet the usage requirements, if any, is neither material nor estimable. As such, no provision has been recorded for any potential shortfall as of December 28, 2002.



|8. | SIGNIFICANT CUSTOMERS
|-- | ---------------------



During 2002, 2001 and 2000, there were no customers who individually accounted for more than 10% of total sales.



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