SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
      FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                                   (MARK ONE)

X         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-         EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999
                                       OR
__        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 For the transition period from ________ to
          ________.

                        Commission file number: 333-72321

                              BGF INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                        56-1600845
  (State or other jurisdiction                           (I.R.S. Employer
of incorporation or organization)                      Identification Number)
               3802 ROBERT PORCHER WAY, GREENSBORO, NORTH CAROLINA
              (Address of registrant's principal executive office)
                                      27410
                                   (Zip Code)

               Registrant's telephone number, including area code:
                                 (336) 545-0011
                           ---------------------------
         Securities registered pursuant to Section 12(b) of the Act:   None
         Securities registered pursuant to Section 12(g) of the Act:   None

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. X
                             --
         There is no established trading market for the Common Stock of the
registrant. All shares of Common Stock are held by an affiliate of the
registrant at March 27, 2000.

         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 March
27, 2000.

<PAGE>

                              BGF INDUSTRIES, INC.
               ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1999

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                        PAGE NO.
                                                                                                        --------
PART I.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

<S>              <C>                                                                                       <C>
Item 1.           Business...........................................................................       1

Item 2.           Properties.........................................................................       9

Item 3.           Legal Proceedings..................................................................       9

Item 4.           Submission of Matters to a Vote of Security Holders................................      10

PART II.

Item 5.           Market for Registrant's Common Equity and Related Stockholder Matters..............      11

Item 6.           Selected Financial Data............................................................      11

Item 7.           Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..........................................................      13

Item 7A.          Quantitative and Qualitative Disclosures About Market Risk.........................      26

Item 8.           Financial Statements and Supplementary Data........................................      26

Item 9.           Changes in and Disagreements with Accountants on Accounting
                  and Financial Disclosure...........................................................      26

PART III.

Item 10.          Directors and Executive Officers of the Registrant.................................      27

Item 11.          Executive Compensation.............................................................      29

Item 12.          Security Ownership of Certain Beneficial Owners and Management.....................      33

Item 13.          Certain Relationships and Related Transactions.....................................      34

PART IV.

Item 14.          Exhibits, Financial Statement Schedules and Reports on Form 8-K....................      37
</TABLE>

<PAGE>
                        PART I - FINANCIAL INFORMATION


            CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

      Some of the information in this Report may contain forward-looking
statements. Such statements include, in particular, statements about our plans,
strategies and prospects (rather than historical facts) 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 these
forward-looking statements are reasonable, we 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 the operations of the Company and its business environment that could
render actual outcomes and results materially different from those predicted. In
the preparation of this Report, where such forward-looking statements appear, we
have sought to accompany those statements with meaningful cautionary statements
identifying important factors that could cause our actual results to differ
materially from the forward-looking statements we make in this Report. Such
factors include: our significant level of indebtedness; the highly competitive
nature of our markets; our concentrated customer base; limitations on our
ability to incur additional debt; our lack of long-term customer and vendor
contracts; the adequacy of our Year 2000 efforts and those of our suppliers,
vendors and customers and other third parties on whom we rely to be Year 2000
ready; our ability to address technological advances in the markets we serve;
and 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 Report and in our Registration
Statement on Form S-4 with respect to our 10 1/4% Senior Subordinated Notes due
2009, especially the "Risk Factors" section of the Registration Statement.
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 1. BUSINESS

      GENERAL

      Our business focuses on the production of value-added specialty woven and
non-woven fabrics made from glass, carbon and aramid yarns. In both 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

                                      -1-
<PAGE>


stability of hundreds of products that they make for their own customers in
various markets, including aerospace, transportation, construction, power
generation and oil refining.

      We began our glass fiber product development efforts in cooperation with
Owens Corning in 1938. As a result of our combined research and development
efforts, glass fiber fabrics were available to the market by 1941. In 1947, we
began to manufacture and sell glass fiber fabrics independently of Owens
Corning. In 1951, we merged with Horace Linton & Brothers, a narrow tape
manufacturer that had teamed with Owens Corning to develop and market glass
fiber electrical insulation tapes. In 1956, we were acquired by Burlington
Industries, Inc. (Burlington) and remained a division of Burlington until we
were purchased in 1988 by Porcher Industries.

      BGF is a Delaware corporation. Our headquarters are located at 3802 Robert
Porcher Way, Greensboro, North Carolina 27410, and our telephone number is (336)
545-0011.

      The following is a glossary of technical terms we use throughout this
Report and in our business:

      "Aramid yarn" means a category of man-made fibers, the most commonly
      recognized of which is Kevlar(R).

      "Carbon yarn" means yarn made from carbonized fibers used in woven fabrics
      to make composites.

      "Composite" means the use of fabric in conjunction with resin to make
      moulded parts, primarily for aircraft and aerospace applications.

      "Composites market" means the market for composites. Applications include
      aircraft interiors, helicopter rotor blades and brake linings.

      "Filtration market" means the market for filtration applications,
      including cement production and carbon black production.

      "Heavyweight glass fiber fabric" means fabric made of fiberglass yarns
      used primarily in rigid printed circuit boards.

      "Lightweight glass fiber fabric" means fabric made of fiberglass yarns
      used primarily in multi-layer printed circuit boards.

      "Multi-layer printed circuit board" means a printed circuit board having
      multiple (more than two) layers of circuitry produced by stacking thin
      copper clad laminate cores.

      "Printed circuit board" means a plastic substrate on which electronic
      components are mounted within electronic devices.

      "Rigid printed circuit board" means a printed circuit board that has
      circuitry on one or both sides.

                                      -2-
<PAGE>

      INDUSTRY OVERVIEW

      Glass fiber fabrics are a critical component in the production of numerous
products in the electronics industry, including primarily printed circuit
boards, as well as products in a variety of other markets that our customers
supply to, including the aerospace, transportation, construction power
generation and oil refining markets. In general, the industry we compete in is
characterized by:

        o   a limited number of domestic producers;

        o   barriers to entry consisting primarily of a limited supply of raw
            materials;

        o   diversified downstream markets; and

        o   a lack of product substitutes.

      LIMITED NUMBER OF DOMESTIC PRODUCERS. We are one of a limited number of
major domestic manufacturers of glass fiber fabrics. We and our primary
competitor, Hexcel/Clark-Schwebel, account for approximately 90% of domestic
capacity, which is estimated to be 400 million yards. We estimate that
Hexcel/Clark Schwebel accounts for 50% of the domestic market share and BGF
accounts for 40%.

      The major competitors in the global glass fabric weaving industry are
BGF/Porcher Industries, Hexcel/Clark-Schwebel, Nitto Boseki (Japan), Nan Ya
Plastics (Taiwan) and Taiwan Glass (Taiwan). Although direct imports of glass
fiber fabrics into the U.S. have been limited, increasing imports of laminates
and rigid printed circuit boards from Asia have been impacting demand for
domestically produced heavyweight glass fiber fabrics used in rigid printed
circuit boards.

      BARRIERS TO ENTRY. There are a limited number of major global suppliers of
glass and carbon yarns to fabric producers such as BGF, and we have experienced
supply shortages from time to time. Accordingly, we believe that it would be
difficult for new competitors to ensure a constant and adequate supply of glass
and carbon yarns. Additionally, the process of producing high quality glass
fiber and other high performance fabrics requires extensive technological
expertise and research and development capability, both of which require
substantial know-how and capital compared to many less complex businesses.

      DIVERSIFIED MARKETS AND USES. The unique characteristics of our fabrics
make them critical components in a variety of products manufactured for sale in
the electronics, composites, filtration, commercial, insulation and construction
markets. Within each of these markets, our fabrics have a variety of
applications, including:

       -    Printed circuit boards
       -    Helicopter blades
       -    Telecommunications equipment


                                      -3-
<PAGE>


       -    Reinforced concrete
       -    Filtration bags
       -    Roofing materials
       -    Heat shields
       -    Wall coverings
       -    Welding curtains
       -    Filtration equipment
       -    Aircraft laminates
       -    Sporting goods

      LACK OF PRODUCT SUBSTITUTES. For many applications of our products, there
are a limited number of economical product substitutes, if any. For example,
substantially all printed circuit boards for high-end electronics applications
use glass fiber fabrics. The unique properties of glass fiber also make it a
critical component in high temperature filtration and insulation products. In
many composite products, only glass, carbon and aramid fibers can meet the
requisite strength-to-weight ratios.

      Glass fiber fabrics are the reinforcement for the vast majority of
high-end electronics products. Demand for electronics products has experienced
substantial growth in recent years and is expected to continue to grow due to
expanded applications, technological advancements and new computer products and
systems introductions. We believe this growth is primarily attributable to the
development of more complex and sophisticated electronics products, including
cellular telephones, pagers, personal computers and portable computing devices,
as well as the increasing electronic content of products in which such use has
been historically absent or limited, such as automobiles, home appliances and
medical equipment.


      Glass fiber fabrics offer an excellent combination of properties, from
high strength to fire resistance. Wide ranges of yarn sizes and weave patterns
provide broad design potential, enabling customers to choose the best
combination of material performance, economics and product flexibility. Carbon
fiber fabrics possess many of the same characteristics of glass fiber fabrics
and provide higher strength and lighter weight in the products in which they are
incorporated. Aramid fiber fabrics also share many of the same characteristics
as glass fiber fabrics and are lighter in weight and provide greater impact
resistance in the products in which they are incorporated.


      PRODUCTS AND MARKETS

      We sell our products primarily in North America and focus on the following
markets:

      ELECTRONICS. We produce glass fiber fabrics for multi-layer and rigid
printed circuit boards for use in the electronics industry. The demand for
multi-layer printed circuit boards, which primarily use lightweight glass fiber
fabrics, has been increasing. Furthermore, the demand for our heavyweight
fabrics has decreased due to competitive pressures from Asian laminate

                                      -4-
<PAGE>


producers. As a result of the increasing demand for multi-layer printed circuit
boards, which primarily use lightweight glass fiber fabrics, we have shifted our
electronics glass fiber fabrics manufacturing capacity mix in recent years from
heavyweight fabrics, which are typically used in rigid printed circuit boards,
toward more technologically advanced and higher margin lightweight fabrics.
Sales of glass fabrics to the electronics industry were $84.3 million in 1999,
representing 47.2% of our net sales. Sales of heavyweight fabrics were
negatively impacted in 1999 due to intense competition from Asia resulting in
lower volumes and prices. Sales of lightweight fabrics are slightly up compared
with 1998.

      COMPOSITES. Our glass, carbon and aramid fiber fabrics are used in various
composite materials, which are used in various applications, including
structural aircraft parts and interiors, helicopter rotor blades, tooling, brake
linings and ducting. Sales of fabrics for composites were $41.4 million in 1999,
representing 23.2% of our net sales. A weak aerospace industry resulted in lower
sales in this area compared to 1998.

      FILTRATION. We produce fabrics for high temperature dust filtration used
by industrial customers to control emissions into the environment. Our
filtration bags are sold to utilities, producers of asphalt and carbon black,
cement plants and steel mills. Sales of our filtration fabrics were $26.1
million in 1999, representing 14.6% of our net sales. Filtration sales were
strong and at record level in 1999 due to incentive programs and large
replacement orders.

      COMMERCIAL. Our glass fiber fabrics are used in commercial applications
where fire resistance and dimensional stability are critical. Applications for
these products include ceiling tile and acoustical facing fabrics, window
coverings and movie screens. Sales in this segment show a slight increase
compared to 1998.

      INSULATION. We produce materials for high-temperature, fire-resistant
insulation. Applications for these products include insulation for joints,
pipes, valves, transportation exhaust systems, heat shields and home appliances.
Sales in this segment were flat in 1999.

      CONSTRUCTION. The fire resistant qualities of glass fiber fabrics make
them a critical component of products used in the construction industry.
Applications for these products include smoke and fire barrier curtains, drywall
bonding tape, rubber mat backing and fabric structures, such as commercial tents
and roofs. Sales were down compared to 1998 due to the fact that we lost some
business in Saudi Arabia to a local company. This was only partially offset by
strong scrim sales.

      INDUSTRY SEGMENTS

      We operate in one business segment that manufactures specialty woven and
nonwoven fabrics for use in a variety of industrial and commercial applications.
All of our revenues, gross profit and assets derived or used in this segment and
information related thereto can be found in the consolidated financial
statements under Item 8 of this Report.

                                      -5-
<PAGE>

      SALES AND MARKETING

      We sell our products through a direct sales force of seven sales
representatives, four market managers and two telemarketing representatives. All
of the sales representatives and three of the four market managers have been
with us for more than ten years. Our sales representatives have geographic
territories, while the market managers are responsible for specific product
lines. The sales representatives are compensated on a salary and commission
basis and the market managers are compensated on a salary and bonus basis. Each
sales representative has a technical orientation and the necessary expertise to
sell our full line of products. We maintain an internet web site, located at
www.bgf.com, which contains extensive product information.

      We sell our products to over 400 customers, including many leading
companies in their respective industry segments, including Cytec Fiberite,
Polyclad Laminates, Isola USA, BHA Group and Chemfab. We continually seek to
strengthen and expand our relationships with our customers. Due to the stringent
quality, delivery and performance standards demanded by many of our customers
and the ultimate users of our products in various markets, our customers are
increasingly moving toward single source supply and collaborative agreements
among both fabric producers, such as BGF, and their own customers. We believe
that we are well positioned to benefit from this trend because of our strong
competitive position within the industry, our investment in technical and
manufacturing expertise and our long-term relationships with customers and
suppliers.

      Two of our customers, Cytec Fiberite and Polyclad Laminates, each
accounted for more than 10% of our net sales and together accounted for 22.6%
and 27.4% of our net sales, respectively, in 1998 and in 1999. Our top ten
customers in 1998 and in 1999 accounted for 57.2% and 57.0% of our net sales,
respectively. Our customers are not contractually required to purchase any of
our products and may terminate their relationship with us at any time.

      RESEARCH AND DEVELOPMENT

      Throughout our history, we have demonstrated that we are one of the
industry's leading innovators, by becoming the first to:

       o    Weave glass fabrics;
       o    Develop a patented process for heat cleaning glass fabrics to
            improve the physical properties of composites;
       o    Develop unidirectional fabrics;
       o    Develop a product using "DE" size (finer) filaments to improve
            composite strengths; and
       o    Weave single yarns by developing and using an improved "warp size"
            (protective coating to prevent abrasion during weaving).

      We believe our innovations have enhanced existing customer relationships
and created new applications for our fabrics.

      We maintain a research and development staff of four chemical and three
laboratory technicians who work under our Vice President of Research and
Development. We have a

                                      -6-
<PAGE>


modern, well-equipped research and development facility, located at our
headquarters in Greensboro, North Carolina, that divides its efforts among
developing new products and improving current products. The research and
development facility is divided into seven state-of-the-art laboratories
focusing on the following strategic areas of product development:

       o    Applications and development;
       o    Pilot processing;
       o    Physical testing;
       o    Composites development;
       o    Microscopy;
       o    Analytical testing; and
       o    Filtration technology

      RAW MATERIALS

      The principal materials we use to manufacture our products are glass,
aramid and carbon yarns. We purchase glass yarns from Advanced Glassfiber, PPG
Industries, Nitto Boseki and Vetrotex. Beginning in September 1998, Advanced
Glassfiber began to supply us with glass yarns produced at the South Hill,
Virginia lightweight fiber fabrics facility. The supply agreement expires on
December 31, 2008, unless extended by Advanced Glassfiber. Glass Holdings, our
parent corporation, through a wholly owned subsidiary, purchased a 51% interest
in Advanced Glassfiber from Owens Corning on September 30, 1998. Our main
suppliers of carbon yarns are Amoco, Toho and Hexcel and our main suppliers of
aramid yarns are DuPont and Akzo Nobel.

      COMPETITION

      Our primary competitor is Hexcel/Clark-Schwebel. Other competitors are
smaller and generally compete in niche markets. The major competitors in the
global glass fabric weaving industry are BGF/Porcher Industries, Hexcel/Clark-
Schwebel, Nitto Boseki (Japan), Nan Ya Plastics (Taiwan) and Taiwan Glass
(Taiwan).

      Beginning in the fourth quarter of 1997, we have experienced downward
pricing pressures on our heavyweight glass fiber fabrics due to foreign exchange
fluctuations between the dollar and various Asian currencies and over-capacity
in Asian heavyweight fabrics manufacturing, which has led to increased Asian
imports of laminates and printed circuit boards into the United States.

      EMPLOYEES

      As of December 31, 1999, we employed 1,044 full time and part time
employees, 861 of which are salaried employees and 183 of which are paid on an
hourly basis. All of our employees are located in the United States. Of these
employees, 965 were engaged in manufacturing and manufacturing related services,
and 79 were engaged in sales, marketing and administrative functions. None of
our employees is represented by a labor union. In May of 1999, we


                                      -7-
<PAGE>


eliminated 67 positions and incurred a restructuring charge of $769,000,
pre-tax. We consider our relationship with our employees to be good.


      ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS

      Our past and present operations, including our ownership and operation of
real properties, are subject to extensive and changing federal, state, local and
foreign environmental laws and requirements including those governing discharges
to air and water, the handling and disposal of soils and hazardous substances
and wastes, and the remediation of contamination associated with releases of
hazardous substances at our facilities and off-site disposal locations. Our
operations are also governed by laws and requirements relating to workplace
safety and health. We believe that we are generally in material compliance with
currently applicable environmental laws and requirements.

      In the course of a September 1998 environmental site assessment, we
discovered reportable quantities of polychlorinated biphenyls ("PCBs") in soil
at the Altavista plant in and around the former site of a heat transfer oil tank
that the previous owner of the facility had removed in 1986, before BGF's 1988
acquisition. We immediately reported the contamination to the United States
Environmental Protection Agency ("USEPA") and the Virginia Department of
Environmental Quality ("VDEQ").

      The agencies have required additional sampling and site characterization,
which is ongoing. With USEPA and VEDQ oversight, we will develop and implement a
cleanup plan. All assessment and cleanup activities have been and will be
conducted in compliance with applicable state and federal regulatory
requirements. Cleanup costs remain uncertain. We may incur costs or liabilities
relating to this and other environmental or safety and health matters in the
future, including those relating to compliance with laws and requirements,
remediation of contamination or claims by third parties.

      Like all weavers of glass, carbon and aramid fibers, we are subject to
laws and regulations designed to reduce solid wastes by requiring, among other
things, regulated wastes to be degradable in landfills, minimum levels of
recycled content, various recycling requirements, disposal fees and limits on
the use of our products. In addition, various consumer and special interest
groups have lobbied from time to time for the implementation of additional
environmental protection measures. We do not believe that the legislation
promulgated to date and currently pending initiatives will have a material
adverse effect on our business, financial condition and results of operations.
We cannot assure you, however, that any future legislation or regulatory efforts
will not have a material adverse effect on our business, financial condition and
results of operations.

      PATENTS AND TRADEMARKS

      We have several United States patents, patent applications and trademarks.
While we consider our patents to be valuable assets, we do not believe that our
competitive position is dependent on patent protection or that our operations
are dependent on any individual patent or

                                      -8-
<PAGE>


group of related patents. However, in some instances, patents and patent
protection may serve as a barrier to entry in some of our product lines, such as
commercial and insulation. Our policy is to obtain patents on our new products
and enforce our patent rights.

      SEASONALITY

      Our business is not materially subject to seasonality.


ITEM 2. PROPERTIES

      We own and operate four manufacturing facilities and a research and
development facility, together occupying over 786,000 square feet. By exchanging
manufacturing technology and expertise with our international affiliates within
Porcher Industries, we are able to develop innovative, efficient and flexible
manufacturing processes. We were the first weaver of glass fiber in the United
States to be ISO 9002 certified, which evidences our strong focus on
high-quality manufacturing processes. The following table sets forth the general
location, principal uses and approximate size of our properties and whether the
properties are leased or owned.
<TABLE>
<CAPTION>

--------------------------------------- --------------------------------- --------------------- -------------------
               FACILITY                               USE                 APPROXIMATE AREA IN    LEASED OR OWNED
                                                                              SQUARE FEET
--------------------------------------- --------------------------------- --------------------- -------------------
<S>                                        <C>                              <C>                  <C>
Greensboro, North Carolina              Headquarters; Research and        36,000                Owned
                                        Development facility
--------------------------------------- --------------------------------- --------------------- -------------------
Altavista, Virginia                     Weaving glass fiber and aramid    399,000               Owned
                                        fibers
--------------------------------------- --------------------------------- --------------------- -------------------
South Hill, Virginia Heavyweight        Weaving heavyweight glass fibers  147,000               Owned
Fiber Fabrics Facility
--------------------------------------- --------------------------------- --------------------- -------------------
South Hill, Virginia Lightweight        Weaving lightweight glass fibers  128,000               Owned
Fiber Fabrics Facility
--------------------------------------- --------------------------------- --------------------- -------------------
Cheraw, South Carolina                  Weaving carbon fibers             76,000                Owned
--------------------------------------- --------------------------------- --------------------- -------------------
Altavista, Virginia                     Warehouse                         101,000               Leased
--------------------------------------- --------------------------------- --------------------- -------------------
Altavista, Virginia                     Warehouse                         24,000                Leased
--------------------------------------- --------------------------------- --------------------- -------------------
Altavista, Virginia                     Warehouse                         6,000                 Leased
--------------------------------------- --------------------------------- --------------------- -------------------
Lynchburg, Virginia                     Warehouse                         37,000                Leased
--------------------------------------- --------------------------------- --------------------- -------------------
South Hill, Virginia                    Warehouse                         33,000                Leased
--------------------------------------- --------------------------------- --------------------- -------------------
Los Angeles, California                 Warehouse                         20,000                Leased
--------------------------------------- --------------------------------- --------------------- -------------------
</TABLE>


ITEM 3. LEGAL PROCEEDINGS

      From time to time, we are involved in various legal proceedings arising in
the ordinary course of business. None of the legal matters in which we are
currently involved, either individually or in the aggregate, is expected to have
a material adverse effect on our business,

                                      -9-
<PAGE>


financial condition and results of operations. See also "Environmental and
Safety and Health Matters."

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

      None




                                      -10-
<PAGE>


                                     PART II

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

      There is no established trading market for BGF's common stock. All shares
of BGF's issued and outstanding common stock are held by Glass Holdings.

      On January 21, 1999, BGF issued $100.0 million of 10 1/4 Senior
Subordinated Notes ($98 million net of discount) due 2009. The net proceeds to
BGF from the sales of these notes were approximately $94.9 million, after
deducting the initial purchaser's discount and expenses. The issuance was
underwritten by First Union Capital Markets, Inc. in a private placement under
Section 4(1) of the Securities Act.

      BGF used the net proceeds from the offering to repay all $65.0 million of
indebtedness under its senior subordinated credit facility and $29.9 million of
indebtedness under the revolver under its senior credit facility, which was
incurred on September 30, 1998 to fund the purchase by AGY Holdings of a 51%
interest in Advanced Glassfiber Yarns. Upon the repayment of the $65.0 million
of indebtedness under the senior subordinated credit facility, the facility was
terminated. On July 23, 1999, BGF exchanged its old notes for substantially
identical new notes that have been registered under the Securities Act.

      We did not declare any dividends or make any distributions on our common
stock in 1999. Further, we have no commitment or plans to make dividends or
other distributions in 2000 and our senior credit facility restricts our ability
to pay dividends or other distributions.

ITEM 6. SELECTED FINANCIAL DATA


      The following table sets forth certain selected financial information
derived from our audited consolidated financial statements for the five-year
period ended December 31, 1999. The table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and our consolidated financial statements and related notes and
other financial information included elsewhere in this Report.
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------
                                                          Fiscal Year Ended

                                 December 31,     December 31,   December 31,  December 31,  December 31,
                                     1995            1996           1997         1998           1999

                                                        (dollars in thousands)
-------------------------------- ---------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA:
<S>                                   <C>           <C>          <C>           <C>            <C>
Net sales....................         $176,792      $195,196     $217,889      $201,754       $178,539
Cost of goods sold...........          144,323       144,825      170,486       162,478        148,349
                                       -------       -------      -------       -------        -------
Gross profit.................           32,469        50,371       47,403        39,276         30,190
Selling, general and
   administrative expenses...            9,149        10,220        9,739         9,700          7,410
Restructuring charges (1)....              ---           ---          ---           ---            769
                                       -------       -------      -------       -------        -------
Operating income.............           23,320        40,151       37,664        29,576         22,011
Interest expense ............            2,979         1,993        2,355         4,517         15,817
Other expenses (income), net.              664       (1,868)         (73)         (112)        (1,485)
                                       -------       -------      -------       -------        -------
</TABLE>


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<PAGE>

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------
                                                          Fiscal Year Ended

                                 December 31,     December 31,   December 31,  December 31,  December 31,
                                     1995            1996           1997         1998           1999

                                                        (dollars in thousands)
-------------------------------- ---------------------------------------------------------------------
<S>                                      <C>            <C>         <C>            <C>            <C>
Income before taxes and
   extraordinary loss........           19,677        40,026       35,382        25,171           7,679
Income tax expense...........            7,093        15,996       13,652         9,854           2,911
                                         -----        ------       ------         -----           -----
Income before effect of
   extraordinary loss........           12,584        24,030       21,730        15,317           4,768
Extraordinary loss on
   write-off of debt issuance
   costs, net of income taxes
   of $639 (2)...............              ---           ---          ---           ---           1,029
                                       -------       -------      -------       -------          ------
Net income ..................          $12,584       $24,030      $21,730       $15,317          $3,739
                                       =======       =======      =======       =======          ======

OPERATING AND OTHER DATA:
Depreciation and amortization
(3) .........................           $8,223        $6,085        $6,759         $7,399        $8,206
Capital expenditures.........            8,311        21,983         7,275         11,299         6,531
EBITDA(4) ...................           30,879        48,104        44,496         37,087        31,702
Cash flows from operating
   activities...............            17,561        22,791        19,898         29,471        28,266
Cash flows from investing
   activities................           (8,268)      (25,425)       (7,275)       (11,283)       (6,472)
Cash flows from financing
   activities................          (16,666)        2,778       (12,759)       (18,199)      (21,795)
Ratio of earnings to fixed
   charges (5) ..............              6.8x         17.4x         14.5x           6.1x          1.5x

BALANCE SHEET DATA
 (AT PERIOD END):
Working capital..............          $40,745       $39,702       $51,799        $53,424       $40,509
Total assets.................           97,029       123,784       136,476        136,766       134,054
Total debt:
     Senior credit facility..               --            --            --        $86,000       $34,200
     Senior subordinated
       credit facility.......               --            --            --         65,000            --
     Exchange notes, net of
       discount..............               --            --            --             --        98,183

     Other...................          $17,500       $36,276       $25,000             --            --
                                       -------       -------       -------       --------       -------
     Total debt..............          $17,500       $36,276       $25,000       $151,000     $ 132,383
                                       =======       =======       =======       ========       =======
Stockholder's equity (deficit)         $57,614       $66,480       $83,297      $(38,176)     $(34,437)
</TABLE>
----------
(1)  In May 1999, the Company terminated 67 employees in connection with a
     restructuring plan. As a result of the restructuring plan, BGF incurred
     charges for salaried employee severance.

(2)  On January 21, 1999, BGF issued $100 million of senior subordinated notes
     ($98 million net of discount) due 2009. Net proceeds of approximately $95.3
     million were used to repay outstanding indebtedness of $65.0 million under
     the senior subordinated credit facility, interest of $0.5 million under the
     senior subordinated credit facility, and $29.8 million under the revolver.
     Interest is payable semiannually beginning in July 1999. In addition, debt
     issuance costs of $1.7 million ($1.0 million net of tax) associated with
     the termination of the senior subordinated credit facility were written off
     in the first quarter of 1999 and recorded as an extraordinary charge in the
     financial statements.

(3)  Amounts do not include amortization of debt issuance costs and original
     issue discount, which is included in interest expense.

(4)  EBITDA is defined as net income before interest expense, income taxes,
     depreciation, amortization expense and non-recurring, non-cash charges. 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. See also
     Exhibit 99.1 to this Report for a reconciliation of net income to EBITDA.

(5)  The ratio of earnings to fixed charges is computed by dividing earnings by
     fixed charges. Earnings consist of income before taxes and changes in
     accounting principles and fixed charges, excluding capitalized interest.
     Fixed charges consists of interest expense, capitalized interest,
     amortization of debt issuance costs and one-third of rental expense (the
     portion deemed representative of the interest factor). Earnings were
     adequate to cover fixed charges for the years ended December 31, 1995,
     1996, 1997, 1998 and 1999 by $19.6 million, $39.8 million, $35.4 million,
     $25.0 million and $7.6 million, respectively. See also Exhibit 12 to this
     Report for a computation of ratio of earnings to fixed charges.

                                      -12-
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

      This Report contains certain 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 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 in Part I of this Report under the caption
"Cautionary Statement Regarding Forward Looking Statements." You are encouraged
to read this statement carefully.

      You should read the following discussion together with our consolidated
financial statements and related notes contained in this Report.

      OVERVIEW

      Over the last 10 years, the demand for multi-layer printed circuit boards,
which primarily use lightweight glass fiber fabrics, has been increasing. In
contrast, over the last 24 months, the demand for our heavyweight fabrics has
been decreasing due to competitive pressures from Asian laminate producers. As a
result, we have shifted our electronics glass fiber fabrics manufacturing
capacity mix in recent years from heavyweight fabrics, which are typically used
in rigid printed circuit boards, toward more technologically advanced and
higher-margin lightweight fabrics. Beginning in the fourth quarter of 1997, we
have experienced downward pricing pressures on our heavyweight glass fiber
fabrics due to foreign exchange fluctuations between the dollar and various
Asian currencies and over-capacity in Asian heavyweight fabrics manufacturing,
which has led to increased imports of laminates and printed circuit boards into
the U.S. from Asia. However, our sales of the higher-margin, lightweight glass
fiber fabrics used in multi-layer printed circuit boards have continued to
increase. We believe that currently, there is no cost-effective substitute for
glass fiber fabrics that can satisfy the stringent quality and performance
criteria demanded of printed circuit boards.

      From 1993 to 1999, net sales of heavyweight glass fiber fabrics to the
electronics industry have decreased from $42.6 million to $22.9 million, and net
sales of lightweight glass fiber fabrics to the electronics industry have
increased from $30.6 million to $61.5 million. In 1999, net sales of glass fiber
fabrics to the electronics industry represented 47.2% of our net sales.

      In 1999, we derived approximately 37.8% of our net sales from the sale of
products to the composites and filtration markets. Our sales to the composites
market are dependent on new aircraft building programs and the refurbishment of
existing aircraft. Our sales to the filtration market are dependent on
environmental laws regulating emissions by industrial customers into the
environment. We have continued to direct resources to these markets, which is
demonstrated in part by an increase in net sales to the filtration market from
$20.2 million in 1998 to $26.1 million in 1999. A weak aerospace industry,
however, resulted in lower sales in the composites market in 1999 ($41.4
million) compared to 1998 ($52.3 million).

                                      -13-
<PAGE>

      We purchase glass yarns, our principal raw material, primarily from two
suppliers. While glass yarns have been in short supply from time to time,
currently the supply is adequate. We generally have been able to pass through
price increases in raw materials to our customers.

      RESULTS OF OPERATIONS

      The following table summarizes our historical results of operations as a
percentage of net sales for the years ended December 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>

                                                                                      December 31,
                                                                      -------------------------------------
<S>                                                                         <C>         <C>           <C>
                                                                            1997        1998          1999
                                                                            ----        ----          ----
Net sales  ...........................................................     100.0%      100.0%        100.0%
Cost of goods sold....................................................      78.2        80.5          83.1
                                                                       ---------  ----------     ---------
      Gross profit....................................................      21.8        19.5          16.9
Selling, general and administrative expenses.........................        4.5         4.8           4.2
Restructuring charge................................................          --          --           0.4
                                                                     -----------  ----------    ----------
Operating income......................  ..............................      17.3        14.7          12.3
Other (income) expenses:
      Interest expense..............................................         1.1         2.2           8.9

      Other income, net.............................................         0.0         0.0         (0.8)
                                                                      ----------   ---------     ---------
            Income before taxes and extraordinary loss...............       16.2        12.5           4.2

Income tax expense..................................................         6.2         4.9           1.6
                                                                      ----------   ---------    ----------
            Income before extraordinary loss.........................       10.0         7.6           2.6
Extraordinary loss write-off of debt issuance costs, net of
  income taxes of $639..............................................         0.0         0.0           0.6
                                                                     -----------  ----------    ----------

            Net income..............................................      10.0%        7.6%          2.0%
                                                                     ===========  ==========    ==========
</TABLE>


FISCAL YEAR ENDED DECEMBER 31, 1999 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1998

      NET SALES. Net sales decreased $23.3 million, or 11.6% to $178.5 million
in 1999, from $201.8 million in 1998, primarily due to a decrease of $19.1
million or 45.5%, in the sales of heavyweight fabrics used in rigid printed
circuit boards.

      Sales of our products in the composites market decreased $10.9 million, or
20.9% from $52.3 million in 1998 to $41.4 million in 1999 due to a slow demand
for aerospace products.

      Sales of our filtration products increased by $5.9 million, or 29.2%, from
$20.2 million in 1998 to $26.1 million in 1999, due to incentive programs and
large replacement orders.

      GROSS PROFIT MARGINS. Gross profit margins decreased from 19.5% in 1998 to
16.9% in 1999 due primarily to lower volumes resulting in less absorption of
fixed costs as well as price pressures in the electronics segment.

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased to 4.2% of net sales in 1999 from 4.8% of net
sales in 1998. This was primarily due to significantly lower expenses for profit
sharing and executive bonuses to take into account the

                                      -14-
<PAGE>



current profitability of BGF as well as lower sales commissions to agents
because of lower export sales.

      RESTRUCTURING CHARGES. BGF incurred charges of $769,000 in 1999 due to a
restructuring plan announced on May 3, 1999 that resulted in the elimination of
67 jobs (20 salaried and 47 wage) across the company.

      OPERATING INCOME. As a result of the aforementioned factors, operating
income decreased to $22.0 million, or 12.3% of net sales in 1999 from $29.6
million, or 14.7% of net sales, in 1998.

      INTEREST EXPENSE. Interest expense increased $11.3 million to $15.8
million in 1999, from $4.5 million in 1998, due to the increase in debt, which
was incurred on September 30, 1998, in order to loan our parent company, Glass
Holdings, funds to enable AGY Holdings, a wholly owned subsidiary of Glass
Holdings, to purchase a 51% ownership interest in Advanced Glassfiber Yarns.

      INCOME TAX EXPENSE. The effective tax rate in 1999 and 1998 of 37.9% and
39.1% respectively was higher than the federal statutory rate of 35.0% primarily
due to state income tax.

      NET INCOME. As a result of the aforementioned factors, and the write-off
of debt issuance costs of $1.0 million after tax associated with the repayment
of outstanding indebtedness in connection with the issuance of senior
subordinated notes, net income decreased $11.6 million to $3.7 million in 1999,
from $15.3 million in 1998.

FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
1997

      NET SALES. Net sales decreased by $16.1 million, or 7.4% to $201.8 million
in 1998 from $217.9 million in 1997, due primarily to a decrease of $23.8
million, or 36.2%, in sales of heavyweight fabrics used in rigid printed circuit
boards.

      Sales of our products in the composites market increased $6.6 million, or
14.4%, from $45.7 million in 1997 to $52.3 million in 1998 due to strong
purchases of carbon, aramid and glass fabrics by the aerospace industry.

      Sales in the construction market increased $3.7 million, or 60.7%, from
$6.1 million in 1997 to $9.8 million in 1998 primarily due to strong export
sales. Sales in our other markets decreased $2.6 million due to decreased sales
in the filtration, commercial, and insulation markets, partially offset by
increases in sales of lightweight fabrics used in the electronics market.

      GROSS PROFIT MARGINS. Gross profit margins decreased from 21.8% in 1997 to
19.5% in 1998 due primarily to lower capacity utilization and price pressures in
heavyweight fabrics used in rigid printed circuit boards.

                                      -15-
<PAGE>

      SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses remained relatively constant at 4.8% and 4.5% of net
sales for the years ended 1998 and 1997, respectively.

      OPERATING INCOME. As a result of the aforementioned factors, operating
income decreased $8.1 million to $29.6 million, or 14.7% of net sales in 1998
from $37.7 million or 17.3% of net sales in 1997.

      INTEREST EXPENSE. Interest expense increased $2.1 million to $4.5 million
in 1998 from $2.4 million in 1997. This increase was primarily due to the
increase in our debt, which was incurred on September 30, 1998, in order to loan
our parent company, Glass Holdings, funds to enable AGY Holdings, a wholly owned
subsidiary of Glass Holdings, to purchase a 51% ownership interest in Advanced
Glassfiber Yarns.

      INCOME TAX EXPENSE. The effective tax rate in 1998 of 39.1% and in 1997 of
38.6% was higher than the federal statutory tax rate of 35.0% primarily due to
state income taxes.

      NET INCOME. As a result of the aforementioned factors, net income
decreased $6.4 million to $15.3 million in 1998 from $21.7 million in 1997.

LIQUIDITY AND CAPITAL RESOURCES

      Historically, our primary sources of liquidity have been cash flow from
operations and borrowings under our credit facilities. Our future need for
liquidity will arise primarily from interest payable on our 10 1/4% 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. We have no mandatory payments of principal on our
notes scheduled prior to their maturity.


      NET CASH PROVIDED BY OPERATING ACTIVITIES. Net cash provided by operating
activities was $28.3 million for 1999 and was primarily the result of net income
of $3.7 million, adjusted for non-cash charges/(credits) to net income for
depreciation of $8.0 million, amortization of $1.2 million, deferred income
taxes of $(6.5) million, and a decrease in inventory of $6.9 million and an
increase in accounts payable and accrued expenses of $11.3 million. Net cash
provided by operating activities was $29.5 million in 1998. Our net operating
cash was primarily a result of net income of $15.3 million, depreciation of $7.2
million and decreases in accounts receivable of $11.9 million. Net cash provided
by operating activities was $19.9 million for the year ended December 31, 1997
and was primarily the result of net income of $21.7 million and depreciation of
$6.6 million, offset by increases in working capital.

      NET CASH USED IN INVESTING ACTIVITIES. Net cash used in investing
activities was $6.5 million for 1999 and was the result of purchases of
property, plant and equipment. Net cash used in investing activities was $11.3
million in 1998, and was primarily the result of purchases of property, plant
and equipment. Net cash used in investing activities was $7.3 million for the
year ended December 31, 1997, and was the result of purchases of property, plant
and equipment.

                                      -16-
<PAGE>

       NET CASH USED IN FINANCING ACTIVITIES. Net cash used in financing
activities was $21.8 million for 1999 and was primarily the result of payments
on the senior subordinated debt of $65.0 million, net payments on the revolving
credit facility of $26.0 million, and payments on the term loan of $25.8 million
offset by the proceeds from the notes of $98.0 million. Net cash used in
financing activities was $18.2 million in 1998, resulting primarily from a loan
to our parent, Glass Holdings, of $136.8 million, payments on long-term debt and
other debt of $37.0 million and $4.6 million of debt issuance costs offset by
borrowings under our senior credit facility and senior subordinated credit
facility of $163.0 million. Net cash used in financing activities was $12.8
million for the year ended December 31, 1997, and was primarily a result of net
payments on debt of $11.3 million, as well as a distribution to Glass Holdings
of $4.9 million. This was offset by an increase in the book overdraft of $3.5
million.

      INDEBTEDNESS AND OTHER MATTERS. At December 31, 1999, we had outstanding
$132.4 million of long-term debt, consisting of $34.2 million under the Senior
Credit Facility and $98.2 of Senior Subordinated Notes (net of discount of $1.8
million). We do not believe that our current exposure to changes in interest
rates under the senior credit facility will have a material adverse effect on
our business, financial condition or results of operations. We have entered into
interest rate swap agreements to hedge our exposure to changes in interest rates
under the senior credit facility term loan such that our exposure under the term
loan will not have a material adverse effect on our business, financial
condition or results of operations.

     On January 21, 1999, BGF issued $100.0 million of 10 1/4% Senior
Subordinated Notes ($98 million net of discount) due 2009. The net proceeds to
BGF from the sales of the old notes were approximately $94.9 million, after
deducting the initial purchaser's discount and expenses. BGF used the net
proceeds from the offering to repay all $65.0 million of indebtedness under the
senior subordinated credit facility and $29.9 million of indebtedness under the
revolver under our senior credit facility, which was incurred on September 30,
1998 to fund the purchase by AGY Holdings of a 51% interest in Advanced Glass
Fibers. Upon the repayment of the $65.0 million of indebtedness under the senior
subordinated credit facility, the facility was terminated. On July 23, 1999, we
exchanged the old notes for substantially identical new notes that have been
registered under the Securities Act.

     On September 30, 1998, we entered into a credit agreement with various
lenders and First Union National Bank, as Agent, pursuant to which these lenders
provided us with our senior secured credit facility in an aggregate amount of up
to $125.0 million. This senior credit facility consisted of:

  o  a five-year revolving credit facility in an aggregate principal amount of
     up to $75.0 million; and

  o  a six-year amortizing term loan in an aggregate principal amount of $50.0
     million.


                                      -17-
<PAGE>


 The revolver includes:

o    a swingline loan facility with a $5.0 million sublimit; and

o    a letter of credit facility with a $20.0 million sublimit.

     On December 16, 1999, we amended the Senior Credit Facility as follows:

o    we changed the level of two of the four financial covenants (leverage ratio
     and interest coverage ratio) to allow for more flexibility through the year
     2000

o    we reduced the revolver commitment by $15.0 million to $60.0 million

o    we prepaid $10.0 million on the term loan effective December 31, 1999

     The swingline loan facility and the letter of credit facility remain
unchanged. We paid a fee to the senior lenders equal to 1/8% of the reduced
commitments.

     The term loan is payable in fifteen consecutive fiscal quarterly
installments commencing on March 31, 2001 and ending on September 30, 2004.
Aggregate maturities are as follows:

<TABLE>
<CAPTION>


<S>                                                              <C>
------------------------------------------------------------ ---------------------------------------------------------
2000                                                         ---
------------------------------------------------------------ ---------------------------------------------------------
2001                                                         $3.6 million
------------------------------------------------------------ ---------------------------------------------------------
2002                                                         $6.1 million
------------------------------------------------------------ ---------------------------------------------------------
2003                                                         $7.8 million
------------------------------------------------------------ ---------------------------------------------------------
2004                                                         $6.7 million
------------------------------------------------------------ ---------------------------------------------------------
</TABLE>

     As of December 31, 1999, we had outstanding borrowings under the revolver
of $10.0 million ($50.0 million remained available for borrowings).

   Interest on the term loan under the senior credit facility and the exchange
notes was $14.6 million in 1999. Principal payments under the term loan for 1999
were $25.8 million.

     The credit agreement governing the senior credit facility includes four
financial covenants: minimum net worth, leverage ratio, fixed charges coverage
ratio and interest coverage ratio.

     We also entered into a senior subordinated credit facility on September 30,
1998 which provided for a loan in the aggregate principal amount of $65.0
million. The senior subordinated credit facility, which was drawn down in full
on December 31, 1998 in connection with the purchase by Glass Holdings, our
parent company, of a 51% interest in Advanced Glassfiber, was repaid with the
proceeds of the offering of the old notes and then terminated.

   On September 30, 1998, AGY Holdings purchased a 51% ownership interest in
Advanced Glassfiber for aggregate consideration of approximately $338.9 million,
including post-closing


                                      -18-
<PAGE>

adjustments. In connection with the acquisition, we loaned Glass Holdings
approximately $138.6 million to provide Glass Holdings a portion of the capital
necessary to fund the acquisition. We raised the proceeds for this loan by
borrowing:

  o  $88.4 million under the senior credit facility; and

  o  $65.0 million under the senior subordinated credit facility.

     Our loan to Glass Holdings is evidenced in part by promissory notes that
bear interest at our "cost of funds rate" for the calendar year immediately
preceding the date on which any interest is due. With respect to any period of
determination, the "cost of funds rate" means a rate per annum equal to the
blended interest rate, as reasonably calculated by us, applicable to our
borrowings during that period, related to indebtedness we incurred to fund the
loan to Glass Holdings. Accrued interest is due and payable on the first
business day of February of each year commencing on February 1, 1999 and on any
date on which any principal is due. The promissory notes are payable on October
31, 2008 or on a later date as we and Glass Holdings may agree to. Payments made
pursuant to the promissory notes are expected to be offset by other of our cash
distributions to Glass Holdings, if any, and therefore, the promissory notes
should not be considered a source of liquidity. Further, we have no commitment
or plans to make dividends or other distributions in 2000 and the senior credit
facility restricts our ability to pay dividends and other distributions. See
"Certain Relationships and Related Transactions."

   In connection with AGY Holdings' purchase of a 51% ownership interest in
Advanced Glassfiber, Advanced Glassfiber stepped up the basis of AGY Holdings'
share of Advanced Glassfiber's assets, including goodwill. Depreciation and
amortization of the stepped-up basis will allow the consolidated U.S. tax group
of Porcher Industries (which includes BGF, hereinafter the "Porcher U.S. Tax
Group") to significantly reduce its tax liability, and as a result, the Porcher
U.S. Tax Group has agreed to defer the receipt of annual distributions which AGY
Holdings would otherwise be required to make in order to fund the Porcher U.S.
Tax Group's tax liability, to the extent that the taxes relate to income earned
by AGY Holdings. The deductions for amortization of goodwill may be challenged
by the Internal Revenue Service. If the amortization deductions are disallowed,
AGY Holdings will be required to distribute all accumulated annual deferred
distributions to the extent that both before and after the distribution there is
not a default under its senior credit facility or its senior subordinated notes.
Moreover, all deferred distributions would cease, and AGY Holdings would have to
pay in full all future distributions for taxes to the Porcher U.S. Tax Group.
Based on the purchase price paid by AGY Holdings for its purchase of a 51%
ownership interest in Advanced Glassfiber, and a 15 year amortization period,
the maximum annual deferred distribution will be $6.8 million. The actual
amounts of deferred distributions may be less if the Porcher U.S. Tax Group's
share of taxes due with respect to income earned by BGF is less than $6.8
million.

     We believe that Advanced Glassfiber will have sufficient funds available
under its senior credit facility and available cash to fund any potential tax
liability resulting from the disallowance of the amortization deductions.
However, since we are a member of the same consolidated group as AGY Holdings
for U.S. federal income tax purposes, we may be liable for any unpaid amounts in
the event Advanced Glassfiber has insufficient funds to make




                                      -19-
<PAGE>

distributions to AGY Holdings to pay its tax liability in full or if all
accumulated annual deferred distributions are less than the tax liability. Based
on our current level of operations, we believe that cash flow from operations
and borrowings under our senior credit facility will be adequate to fund any tax
liability imposed upon us as a result of the IRS disallowing the amortization
deductions. However, we cannot assure you that we will generate sufficient cash
from operations or that our future borrowings will be available under the senior
credit facility to pay any tax liability resulting from the disallowance of the
amortization deductions.


      CAPITAL EXPENDITURES. We have historically financed our capital
expenditures through cash flow from operations and borrowings under our credit
facilities. Capital expenditures were $11.3 million , and $6.5 million for the
years ended December 31, 1998 and 1999 respectively. The principal capital
expenditures during these periods included:

       (1)  a total of $3.7 million and $0 million in 1998 and 1999,
            respectively, for the construction of the yarns manufacturing
            facility at the lightweight fabrics facility;

       (2)  $1.8 million and $1.9 million in 1998 and 1999, respectively, of a
            $4.0 million new non-woven line for insulation applications;

       (3)  $1.4 million and $1.1 million in 1998 and 1999, respectively, for
            the beginning of the second phase of our lightweight fabrics
            facility in South Hill, Virginia; and

       (4)  a total of $0.5 in 1999 for new looms for the Altavista, Virginia
            facility and $0.3 million in 1999 for an automated grading system
            for the South Hill, Virginia facility.


      We are anticipating total capital expenditures in 2000 to be approximately
$11 million. Should business conditions not allow for this, we would spend a
lesser amount.

      Our ability to make scheduled payments of principal of, or to pay the
interest or liquidated damages, if any, on, 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.

                                      -20-
<PAGE>

      IMPACT OF INFLATION.

      We generally attempt to pass cost increases on to our customers. Costs are
affected by, among other things, inflation, and we may experience the effects of
inflation in future periods. We believe, however, that inflation has not had a
material impact on us during the past three years.

      IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

      On June 8, 1999, the Financial Accounting Standards Board issued SFAS No.
137, "Deferral of the Effective Date of SFAS 133," which changes the effective
date of SFAS 133 to all fiscal quarters of all fiscal years beginning after June
15, 2000. SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" requires entities to recognize all derivative instruments 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. We anticipate that, due to our
limited use of derivative instruments, the adoption of SFAS No. 133 will not
have significant effect on our financial condition or results of operations.

      SEASONALITY

      Our business is not materially subject to seasonality.

      YEAR 2000

         Many computer programs use only two digits to identify a year in a date
field within the program (e.g., "98" or "02") often meaning that the program
could fail to distinguish dates in the "2000s" from dates in the "1900s." If not
corrected, computer applications making calculations and comparisons in
different centuries could have caused inaccurate results, or failed by or at the
Year 2000.

         RISKS PRESENTED. These Year 2000 issues were of particular importance
to us. We recognized that many of the systems and equipment we use to conduct
and manage our business were at risk for Year 2000 compliance. If these risks
were not assessed and remediated, our ability to continue normal business
operations could have been substantially impaired, including our ability to
manufacture our products. We also recognized that Year 2000 related issues could
adversely affect the operations and financial performance of our material
suppliers and customers. Any of these issues, if not addressed properly, could
have had a material adverse effect on our business, financial condition and
results of operations.

         BUSINESS SYSTEMS. We operate two mission-critical business systems to
run our business. We purchased the primary of these two systems in 1990,
modified the system to conform it to our business needs and then installed it in
stages between 1990 and 1993. This system is necessary for us to successfully
process orders, manufacture products, ship products, bill customers and collect
data for both internal and external reporting requirements. Our other
mission-critical business system is a financial package which we purchased and
installed in

                                      -21-
<PAGE>


January 1999. This system is used for general accounting purposes. We have
developed an interface between these two systems, so that relevant data can be
transported from one to the other. Our business systems also include other
third-party software that has been installed on approximately 250 personal
computers located throughout our various facilities. Our employees using such
software have also at times modified various modules of such software to improve
business functions. We do not consider these modified applications as
mission-critical, however.

         EMBEDDED TECHNOLOGY. We employ a large amount of manufacturing
equipment, as well as systems which operate business functions such as e-mail,
telephones and security. As mentioned above, we also utilize approximately 250
personal computers in our business. Many of such systems, pieces of equipment
and computer hardware contain embedded technology that were susceptible to Year
2000 issues.

         OUR YEAR 2000 EFFORTS. Since 1997, we have been working to achieve Year
2000 readiness. Our Year 2000 efforts have been focused on mission-critical
issues and are directed by our Information Systems Department, with frequent
interaction with our senior management. The Information Systems Department has
been responsible for:

         (1)  identifying systems and applications that may be affected by Year
              2000 issues;

         (2)  evaluating and/or developing alternatives for affected systems,
              including modifying, replacing or discontinuing the systems; and

         (3)  converting, testing and implementing affected systems to ensure
              that the systems and their applications were made Year 2000
              compliant.

         We refer to these phases as (1) The Identification Phase; (2) The
Evaluation Phase; and (3) The Conversion, Testing and Implementation Phase.

         Our Information Systems Department has also been responsible for
evaluating the Year 2000 readiness of our primary vendors and customers and for
developing contingency plans in the event we or our primary vendors or customers
were not Year 2000 ready on a timely basis.

         SPECIFICS OF PHASES.

                   o  Business Systems.

                  IDENTIFICATION PHASE. With regard to our business systems, in
         1997, we purchased specialty software to run against the "library" of
         approximately 1,200 programs that make up our business systems. This
         specialized software is designed to identify programs that contain
         fields that could be date-oriented and thus susceptible to Year 2000
         issues. Approximately 50% of our 1,200 programs were identified as
         containing date-oriented fields. We completed this work in March 1998.

                                      -22-
<PAGE>

                  EVALUATION PHASE. The Evaluation Phase then consisted of our
         individually reviewing the date fields of each of the identified
         programs to determine whether that program would need to be modified,
         replaced or discontinued. We prioritized our review of the programs by
         difficulty level, reviewing the more complex of the programs first. As
         a result of these evaluations, we determined that we would need to
         address approximately 80-90% of the programs identified as containing
         date fields. Our scheduled work in this phase was complete as of June
         1998. However, we were later informed by the manufacturer of our
         financial package that two of the databases in this package would need
         to be upgraded due to Year 2000 issues. The necessary upgrades to these
         databases were completed as of the end of October 1999.

                  CONVERSION, IMPLEMENTATION AND TESTING PHASE. We completed the
         remediations necessary to programs relating to our PC-based software in
         March 1999 and the remediations necessary to our other business
         systems, other than our financial package, in April 1999. We completed
         the necessary upgrades to two of the databases in our financial package
         by the end of October 1999. As we modified programs, we put them back
         into operation and tested them. Based on our evaluation efforts, we
         were not required to replace or discontinue any of our business
         systems.

                  o EMBEDDED TECHNOLOGY.

                  IDENTIFICATION PHASE. Beginning in early 1998, we developed a
         list of specific manufacturing equipment and computer hardware that
         might contain technology susceptible to Year 2000 issues. We developed
         this list through communications among our various plant managers,
         machinery operators, MIS personnel and other of our personnel, as well
         as discussions with the various manufacturers of our equipment and
         hardware. After the list was compiled, we created an internal database
         outlining the specifics on the equipment and hardware and assigned
         responsibility for evaluating and performing the necessary remedial
         efforts for each one. This phase was completed in November 1998.

                  EVALUATION PHASE. We consistently updated our database of
         equipment and hardware as our Evaluation Phase progressed. We evaluated
         all of the items identified as potentially having Year 2000 related
         issues. Typically, our evaluation involved seeking representatives from
         the manufacturer that their equipment or hardware is Year 2000
         compliant and/or manually running Year 2000 regression tests ourselves
         against the equipment/hardware. We completed this phase in April 1999.

                  CONVERSION, TESTING AND IMPLEMENTATION PHASE. As a result of
         our evaluation efforts, we determined that the computers/equipment used
         to monitor some of our looms at one of our manufacturing facilities
         would need to be upgraded. The manufacturer of this hardware completed
         this upgrade in November 1999. Other than this loom monitoring system,
         we replaced the telephony system for our corporate offices in April
         1999. We did not identify any other necessary material modifications or
         replacements pertaining to embedded technology. Otherwise, we have made
         some immaterial modifications to equipment and purchased some hardware
         to upgrade some of our older

                                      -23-
<PAGE>


         PCs because of Year 2000 issues. As each of these projects were
         completed, we put the specific equipment back into operation and ran
         tests for Year 2000 compliance.

                  STATE OF READINESS. The following table shows our progress as
         of March 1, 2000 through each phase of our Year 2000 efforts for our
         business systems and PC-based software, as well as for embedded
         technology:
<TABLE>
<CAPTION>


                                    BUSINESS SYSTEMS                       EMBEDDED TECHNOLOGY
                          --------------------------------------  ---------------------------------------
                                                   ACTUAL                                  ACTUAL
           PHASE               % COMPLETE      COMPLETION DATE        % COMPLETE       COMPLETION DATE
           -----               ----------      ---------------        ----------       ---------------
<S>                               <C>             <C>                    <C>             <C>
Identification................    100%            3/31/1998              100%            11/30/1998
Evaluation...................     100%            6/30/1998              100%             4/30/1999
Conversion, Testing and
   Implementation...........      100%           10/31/1999              100%            11/15/1999

</TABLE>


         THIRD PARTIES. Aside from the manufacturers of the personal computers
and manufacturing equipment we use to run our business, the third parties which
we rely on most heavily are our suppliers of raw materials, energy and services,
as well as our customers. We purchase our resources from several vendors and
sell our products to a number of customers for a wide variety of applications.
However, if a significant number of these vendors or customers were to have
failed to be Year 2000 ready, it could have prevented or substantially impaired
our ability to transact business with them as usual. We would have needed to
find alternative supplies of these resources or customers for our products. If
we could not find or were delayed in finding, alternatives, it could have had a
material adverse effect on our business, results of operations and financial
condition.

         In addition to our suppliers of equipment, which we discussed above, we
also identified our key vendors of raw materials, energy and services. We
contacted each of these suppliers regarding their plans for dealing with Year
2000 issues and received responses from approximately 95% of them. Also,
beginning in the first quarter of 1999, we began to survey our major customers
as to their preparations for the Year 2000 and any anticipated changes in their
purchases from us related to this issue. Of the responses we received, we did
not identify any material issues regarding the Year 2000 readiness of our major
vendors and customers.

         COSTS. We used mainly internal resources to address our Year 2000
issues. We estimate that we used the equivalent of 2 full time members of our
Information Systems Department to implement our Year 2000 efforts. Also, in
October 1998, we retained a programmer on a temporary basis to assist us on Year
2000 modifications. We retained this programmer through mid-April 1999. Costs
associated with our Year 2000 efforts were expensed as incurred through our
normal budget with no additional funding allocated to the Information Systems
Department. Our total overall costs related to our Year 2000 efforts were
approximately $400,000.

         WORST CASE SCENARIO AND CONTINGENCY PLANS. If our systems and
equipment, or our material vendors and customers, had not been Year 2000 ready
on a timely basis, it could have had a material adverse effect on our business,
financial condition and results of operations.


                                      -24-
<PAGE>


Excluding the potential impact of the Year 2000 issues of material third
parties, which we are unable to control, a reasonable worst case scenario for
our company would have been if our identification and evaluation efforts had not
adequately detected material Year 2000 issues and a material number of our
mission-critical systems and equipment were rendered inoperable.

         In order to be ready for such a scenario, we developed a contingency
plan. Our contingency plan consists of manual work-arounds in the event of
business system failures with respect to our core business functions needed to
take orders, manufacture our products, ship to and bill our customers. We
ensured that our staff was up-to-date on these manual procedures that already
back-up our systems, some of which have previously been ISO certified. We will
continue to keep this plan in place.

         As of the date of this Report, we have not experienced any material
Year 2000 issues with respect to our business systems or embedded technology or
our third party relationships. We were not required to implement any of our
contingency plans in connection with the date rollover to the Year 2000 or as of
the date of this Report.

         The disclosures contained herein concerning Year 2000 are designated as
"Year 2000 Readiness Disclosures" and are made pursuant to the Year 2000
Information and Readiness Disclosure Act. Compliance with the Act, however, does
not preclude any claims that may arise under the federal securities laws.


                                      -25-
<PAGE>


      ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Our senior credit facility is subject to market risks, including interest
rate risk. Our financial instruments are not currently subject to foreign
currency risk or commodity price risk. We have no financial instruments held for
trading or speculative purposes.

      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.

      We entered into an interest rate swap agreement to manage our exposure to
interest rate changes under the senior credit facility. The swap involves the
exchange of fixed and variable interest rate payments based on a contractual
principal amount and time period. Payments or receipts on the agreement are
recorded as adjustments to interest expense. At December 31, 1999, we had an
interest rate swap agreement effective through September 30, 2004 on a
notional amount of $24.2 million. Under this agreement, we have secured a fixed
LIBOR rate of interest of 5.04% on the notional amount which 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 $24.2 million of variable
rate debt 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
December 31, 1999, we would have received approximately $1.3 million to
terminate the agreement. A 1% decrease in LIBOR would decrease the amount
received by approximately $0.03 million. The fair value is based on dealer
quotes, considering current interest rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and financial statement schedule in Part IV, Item 14(a)
1 and 2 of this Report are incorporated by reference into this Item 8.

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

      None


                                      -26-
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS OF BGF

      The names, ages and positions of the Directors and Executive Officers and
other senior managers of BGF as of March 13, 2000 are set forth below. Each of
the directors of BGF is also a director of Glass Holdings. All Directors are
elected annually and hold office until their successors are elected and
qualified or until their earlier removal or resignation.
<TABLE>
<CAPTION>

<S>                                      <C>               <C>
Name                                     Age              Positions with BGF
----                                     ---              ------------------
Robert T. Porcher                        71               Chairman of the Board, Chief Executive Officer
                                                          and Director
Philippe Porcher                         45               Vice Chairman
Graham A. Pope                           66               Director
Richard L. Cromer                        56               President
Philippe R. Dorier                       43               Senior Vice President, Chief Financial Officer,
                                                          Secretary and Treasurer
James R. Henderson                       62               Executive Vice President Sales and Merchandising
Gerald F. Mitchell                       52               Vice President Manufacturing
Robert A. Frank                          57               Vice President Operations
Charles H. Alligood                      60               Vice President Quality Assurance and Industrial
                                                          Engineering
Lee-Pei H. Chou, PhD                     51               Vice President Research and Development
Edward P. Cardille                       60               Vice President Information Systems
Thomas E. Mann, Jr.                      46               Vice President Human Resources

</TABLE>

      Robert T. Porcher has been our Chairman of the Board and Chief Executive
Officer and one of our directors since 1988. Mr. Porcher has maintained various
positions with Porcher Industries, including Chairman of the Board of Directors
and Chief Executive Officer of Porcher Industries, since 1952. Since December 9,
1998, Mr. Porcher has served as Chairman of the Supervisory Board of Porcher
Industries. Mr. Porcher beneficially owns a controlling interest in Porcher
Industries, which owns 100% of the outstanding capital stock of our parent,
Glass Holdings. See Item 12. Security Ownership of Certain Beneficial Owners and
Management.

      Philippe Porcher has been our Vice Chairman since April 1998. He has also
served as Vice President of Porcher Industries since March 1993. Before becoming
Vice President of Porcher Industries, Mr. Philippe Porcher served as Director of
Porcher Industries' industrial division. Mr. Philippe Porcher is the son of
Robert Porcher, who is our Chairman of the Board and Chief Executive Officer and
one of our directors. Since December 9, 1998, Mr. Philippe Porcher has served as
President of the Executive Board of Porcher Industries.

                                      -27-
<PAGE>

      Graham A. Pope has been one of our directors since 1989. From 1989 until
1998, Mr. Pope served as our President and Chief Operating Officer. From 1959 to
1988, Mr. Pope served in various positions with Burlington, including Division
Manufacturing Manager of Burlington's Glass Division. Since December 9, 1998,
Mr. Pope has served as a member of the Supervisory Board of Porcher Industries.

      Richard L. Cromer was named President of BGF in April 1998. Prior to
joining BGF, Mr. Cromer was employed by Owens Corning for 31 years in various
capacities, including Director of Operations Strategy from 1997 to 1998, General
Manager-Textiles from 1994 to 1997 and Director of Operations Support from 1989
to 1994. Since December 9, 1998, Mr. Cromer has served as a member of the
Executive Board of Porcher Industries.

      Philippe R. Dorier has been our Senior Vice President, Chief Financial
Officer, Secretary and Treasurer since 1993. From 1988 to 1993, he served as our
Vice President International Audit. From 1984 until 1988, Mr. Dorier served as
the Vice President of Finance of Babolat VS, S.A., and from 1980 until 1983, as
the Administration and Finance Manager of Syva-Biomerieux S.A. Since December 9,
1998, Mr. Dorier has served as a member of the Executive Board of Porcher
Industries.

      James R. Henderson has been Executive Vice President Sales and
Merchandising since joining BGF in 1989. Prior to joining BGF, Mr. Henderson was
employed for 31 years with United Merchants and Manufacturers, Inc., a company
engaged in the textile business. Mr. Henderson served as the Senior Vice
President of United Merchants and Manufacturers, President of their Uniglass
Division, and as Chairman of the Board of United's Marglass subsidiary in
England.

      Gerald F. Mitchell has been our Vice President Manufacturing since 1991.
From 1970 until 1991, Mr. Mitchell was employed with Burlington in various
capacities, including Plant Manager of Burlington's Knit Division from 1989 to
1991 and Vice President, Manufacturing of Burlington's Lees Carpet Division from
1986 to 1989.

      Robert A. Frank has been our Vice President Operations since 1988. From
1967 until 1988, Mr. Frank held various planning and marketing positions with
Burlington, including Market Manager of Burlington's Electronics Applications,
Operations Manager of Burlington's Glass Division and Vice President of
Operations.

      Charles H. Alligood has been our Vice President Quality Assurance and
Industrial Engineering since 1993. From 1988 to 1993, he served as our Corporate
Manager of Industrial Engineering. From 1964 until 1988, Mr. Alligood served in
various positions including Division Industrial Engineer for Burlington's Glass
Fabrics from 1983 until 1988 and division cost reduction coordinator for
Burlington's Industrial Division from 1981 to 1983.

      Lee-Pei H. Chou, Ph.D. has been our Vice President Research and
Development since 1997. From 1986 until 1996, Dr. Chou served as the Research
and Development Director/Manager of Elk Corporation. From 1984 until 1986, Dr.
Chou served as the Research and Development Leader of Tremco, Inc. a subsidiary
of BF Goodrich Co. From 1979 until 1984, Dr. Chou served


                                      -28-
<PAGE>

as the Research and Development Project Leader of Ferro Corporation and from
1976 until 1979, Dr. Chou was a Senior Research Chemist within the Coatings &
Resins Division of PPG Industries, Inc.

      Edward P. Cardille has been our Vice President Information Systems since
1997. From 1991 until 1997, Mr. Cardille served as our Director of Information
Systems. From 1968 until 1991, Mr. Cardille served in various positions with
Burlington, including as Manager of Systems and Programming for Burlington's
Carpet Division from 1983 until 1991.

      Thomas E. Mann, Jr. was named Vice President Human Resources of BGF in
December 1998. Since 1997, he had served as our Director of Human Resources.
From 1993 until 1997, Mr. Mann served as our Corporate Planning Manager, and
from 1988 until 1993, as a Plant Personnel Manager of BGF.

ITEM 11. EXECUTIVE COMPENSATION

      The following table shows, for the fiscal year ended December 31, 1999,
the compensation paid to or earned by our Chief Executive Officer and our four
other most highly compensated executive officers who were serving at the end of
1999.

<TABLE>
<CAPTION>
                                                                                        Other
        Name and Principal Position                Salary (1)        Bonus           Compensation
        ---------------------------                ----------        -----           ------------
<S>                                                      <C>           <C>                <C>
Robert T. Porcher
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER AND DIRECTOR
         1999:.......................               $120,000(2)     $120,000(4)            $52,070(5)
         1998:.......................               $120,000(2)     $200,000(4)            $49,505(5)
Philippe Porcher
VICE CHAIRMAN
         1999:.......................               $120,000(2)      $72,000(4)
         1998:.......................               $120,000(2)     $120,000(4)
Richard L. Cromer
PRESIDENT
         1999:.......................               $209,697        $100,000                $8,622(6)
         1998:.......................               $155,331(3)     $110,500                $6,607(6)
Philippe R. Dorier
SENIOR VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, SECRETARY AND TREASURER
         1999:.......................               $156,000(4)      $72,750(4)            $13,216(7)
         1998:.......................               $141,828(4)      $90,000(4)            $15,096(7)
James R. Henderson
EXECUTIVE VICE PRESIDENT SALES AND
MERCHANDISING
         1999:.......................               $153,288         $72,756               $12,413(8)
         1998:.......................               $146,058        $120,000               $13,280(8)
</TABLE>

(1)  Includes the following amounts deferred at the election of the following
     executive officers pursuant to BGF's 401(k) plan in 1999 and 1998,
     respectively: Mr. Dorier--$9,983 and $7,738; and Mr. Henderson--$10,000 and
     $10,000.

                                      -29-
<PAGE>

(2)  Represents a "management fee" paid by BGF Services, Inc., an affiliate of
     BGF, to Messrs. Robert and Philippe Porcher and reimbursed by BGF to cover
     services provided by Messrs. Robert and Philippe Porcher to BGF. See
     "Certain Relationships and Related Party Transactions".

(3)  Based on an annualized gross salary of $207,108. Mr. Cromer has served as
     President of BGF since April 1, 1998.

(4)  Paid for by BGF Services and reimbursed by BGF to BGF Services in the form
     of "management fees" to cover services rendered to BGF. See "Certain
     Relationships and Related Party Transactions."

(5)  Includes $3,640 for club membership fees; $1,447 for maintenance of
     automobile; $25,840 depreciation associated with cost of residence; and
     $21,143 associated with maintenance of residence in 1999. Includes $3,086
     for club membership fees; $932 for maintenance of automobile; $25,824
     depreciation associated with cost of residence; and $19,963 associated with
     maintenance of residence in 1998.

(6)  Represents $8,622 and $6,607 in 1999 and 1998, respectively, of personal
     use of company car.

(7)  Represents gross annual profit sharing distributions of $6,382 and $8,262
     in 1999 and 1998, respectively, and $6,834 and $6,834 in 1999 and 1998,
     respectively, of personal use of a company car.

(8)  Represents gross annual profit sharing distributions of $6,572 and $8,470
     in 1999 and 1998, respectively, and $5,841 and $4,810 in 1999 and 1998,
     respectively, for personal use of a company car.

      RETIREMENT PLANS

      RETIREMENT SYSTEM. The Retirement System of BGF Industries, Inc. covers
substantially all employees of BGF after they have completed one year of
service. Employees with five or more years of service are entitled to benefits
beginning at normal retirement age. This plan also provides reduced benefits to
participants electing to retire early, beginning at age 55. Participants are
required to contribute three percent of covered compensation per year and
interest is credited on employee contributions. In general, the normal
retirement benefit is payable as an annuity. Participants may also elect a
lump-sum distribution of their accrued benefit.

      Normal retirement benefits are determined by reference to an employee's
"accumulated contributions." Accumulated contributions are the sum of all
required employee contributions plus interest credited on the contributions,
compounded annually at the rate of 120% of the federal mid-term rate in effect
under section 1274 of the Internal Revenue Code for the first month of the plan
year. In general, the annual normal retirement benefit is equal to 50% of the


                                      -30-
<PAGE>


accumulated employee contributions, plus 3/4% of employee plan compensation up
to $6,600 for plan year 1989.

      The estimated annual benefits payable upon retirement at normal retirement
age for the executive officers listed in the "Executive Compensation" table
above is as follows: Mr. Cromer--$22,369; Mr. Dorier-- $59,804; Mr.
Henderson--$23,842. These calculations are based on 1999 compensation, assume
benefits are payable as a straight-life annuity, and assume that each individual
will work until age 65. Mr. Robert Porcher and Mr. Philippe Porcher do not
participate in the Retirement System.

      401(K) PLAN. The Employees' Profit Sharing and Tax Savings Plan of BGF
Industries, Inc. covers most employees of BGF, after they have completed one
year of service. Employees may defer up to 15% of their plan compensation each
year, subject to Internal Revenue Code limitations. We may, in our discretion,
match employees' elective deferrals up to a specified limitation each year and
may make a discretionary employer contribution. All contributions are 100%
vested and nonforfeitable at all times. Benefits are payable after separation
from service in a lump sum in cash.

      COMPENSATION OF DIRECTORS

      Our directors did not receive separate compensation for their services as
directors in 1999.

      COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      Mr. Robert Porcher, who serves as both an executive officer and as a
member of the board of directors of BGF, serves as the Chairman of the
Supervisory Board of Porcher Industries, which is the equivalent of a board of
directors. Mr. Robert Porcher also serves as an executive officer of Glass
Holdings, AGY Holdings, Belmont of America, BGF Services, Inc., BGF Overseas,
Inc., Advanced Glassfiber Yarns, LLC and AGY Capital Corp., all of which are
affiliates of BGF. He is a member of the board of directors for Glass Holdings,
AGY Holdings, BGF Services, BGF Overseas, Advanced Glassfiber Yarns and AGY
Capital Corp. Messrs. Cromer and Dorier also serve as members of the Executive
Board of Porcher Industries, whose members are equivalent to executive officers.
Mr. Dorier also serves as an executive officer of Glass Holdings, AGY Holdings,
Belmont of America, BGF Services, BGF Overseas and as a director of Glass
Holdings, AGY Holdings and BGF Services. Mr. Philippe Porcher serves as Chairman
of the Executive Board of Porcher Industries. He also serves as an executive
officer of Belmont of America and as a director of Belmont of America, Advanced
Glassfiber Yarns and AGY Capital Corp. These positions effectively create
interlocks between BGF and Glass Holdings, AGY Holdings, Belmont of America, BGF
Services, BGF Overseas, Advanced Glassfiber Yarns and AGY Capital Corp. See also
"Certain Relationships and Related Party Transactions."

      DEFERRED COMPENSATION AGREEMENTS

      We have entered into Deferred Compensation Agreements with Messrs. Pope,
Cromer and Henderson and we are the guarantor of Mr. Dorier's Deferred
Compensation Agreement with


                                      -31-
<PAGE>


BGF Services. The agreements provide for both pre-retirement survivor benefits,
as well as post-retirement benefits to the executive. The agreements also
contain a non-competition provision. Generally, under each of the agreements, if
the executive dies before the age of 65, his beneficiary or, if none, his estate
will receive monthly payments for a 10-year period of an amount equal to 50% of
the greater of:

      (A)   the executive's monthly base salary in effect on the January 1 prior
            to his death; or

      (B)   the executive's average monthly base salary on January 1 of the five
            years prior to his death.

      This amount is decreased progressively if the executive dies after the age
of 60 but before 65. The agreements also provide for post-retirement benefits in
the form of:

      (1)  monthly payments over 10 years, the sum of which is equal to the
           "applicable percentage" multiplied by the greater of (a) the
           executive's annual base salary on January 1 immediately preceding or
           concurrent with his retirement or (b) the average of the executive's
           annual base salary on January 1 of the five years prior to his
           retirement; and

      (2)  a payment on death equal to three-quarters of his annual base salary
           on the January 1 immediately preceding or concurrent with his
           retirement. The "applicable percentage" for Mr. Pope is two and one
           quarter. The "applicable percentage" for Mr. Cromer, Mr. Dorier and
           Mr. Henderson is one and one-half. Mr. Pope's agreement has been
           amended to pay his death benefit over the 10-year period mentioned in
           (1) above. If the executive dies prior to receiving all of the
           monthly payments, the payments are made to his designated beneficiary
           or, if none, his estate. Reduced benefits are paid if the executive
           retires prior to age 65.

      In 1998, we entered into an agreement with Mr. Pope with regard to his
executive life insurance policies, which obligates us on or before February 2001
to either:

(1)   at the event of his death the benefits will be paid to his estate or
      beneficiaries or,

(2)   transfer ownership of the life insurance to Mr. Pope. The cash surrender
      value of these policies was $138,537 at December 31, 1999.

                                      -32-
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows information regarding

      (1)   those person(s) known by management of BGF to own beneficially more
            than 5% of BGF's outstanding common stock, $1.00 par value,

      (2)   the directors of BGF,

      (3)   the executive officers of BGF named in the "Executive Compensation"
            table in this prospectus, and

      (4)   all of the directors and executive officers of BGF as a group.

      This information is provided as of March 13, 2000. An asterisk in the
percent of class column indicates beneficial ownership of less than 1% of the
outstanding common stock.

      As noted in the table, Porcher Industries indirectly owns 100% of the
outstanding common stock of BGF. The address of Porcher Industries is Porcher
Industries S.A., Badinieres, 38300 Bourgoin-Jallieu, France.

      As reflected in the graphic below the table, Mr. Robert Porcher may be
deemed to beneficially own 56.05% of the outstanding capital stock of Porcher
Industries, and thus Glass Holdings and BGF, through (1) his 7.22% direct
ownership interest in Porcher Industries and (2) his ownership interest in
Societe Civile des Terres Froides. Mr. Robert Porcher's address is c/o Porcher
Industries S.A., Badinieres, 38300 Bourgoin-Jallieu, France.

      Mr. Robert Porcher's 56.05% interest includes a 0.7% interest of his son,
Philippe Porcher, an executive officer of BGF, in Societe Civile des Terres
Froides. Mr. Robert Porcher controls the voting and investment of these shares.
The asterisk aside the name of Philippe Porcher represents this interest.

      Finally, as indicated in the table below, other than Messrs. Robert
Porcher and Philippe Porcher, no other director or executive officer of BGF
directly or indirectly owns any of BGF's outstanding common stock.
<TABLE>
<CAPTION>

                 Name of Beneficial Owner                                        Percent of Class
                 ------------------------                                        ----------------
<S>                                                                                     <C>
Porcher Industries..........................................................            100.00%
Robert T. Porcher...........................................................             56.05%
Philippe Porcher............................................................                  *
Richard L. Cromer...........................................................                 --
Philippe R. Dorier..........................................................                 --
James R. Henderson..........................................................                 --
All directors and executive officers as a group (6 persons).................             56.05%
</TABLE>

                                      -33-
<PAGE>

      The following graphic further illustrates the information described above:
[Flow chart appears here with four tiers.

      TOP TIER CONTAINS BOXES WITH THE NAMES OF THE FOLLOWING FOUR INDIVIDUALS:
PHILIPPE PORCHER (SON OF ROBERT PORCHER); ROBERT PORCHER; CLAIRE PORCHER (WIFE
OF ROBERT PORCHER); AND FRANCOISE GIRAUD-PORCHER (DAUGHTER OF ROBERT PORCHER).
FROM EACH OF THESE BOXES ARE LINES WHICH NOTE A PERCENTAGE INTEREST OF 0.7%,
49.3%, 49.3% AND 0.7%, RESPECTIVELY, WHICH LINES THEN MERGE VERTICALLY TO MEET
THE BOX ON THE SECOND TIER, WHICH CONTAINS THE NAME "SOCIETE CIVILE DES TERRES
FROIDES (NON- COMMERCIAL HOLDING ENTITY)." THERE IS AN ASTERISK ON THIS NAME AND
AT THE BOTTOM OF THE CHART THE ASTERISK IS REFERENCED TO NOTE THAT "MR. ROBERT
PORCHER EFFECTIVELY CONTROLS THE VOTING AND INVESTMENT POWER OF THIS ENTITY."
FROM THIS SECOND TIER BOX THERE IS A LINE WITH THE PERCENTAGE INTEREST 69.6%
NOTED NEXT TO IT, LEADING TO ONE (AND THE LEFT-MOST) OF ELEVEN BOXES ON THE
THIRD TIER, CONTAINING THE NAME "SOCIETE SAUMUROISE DE PARTICIPATIONS S.A." THE
REMAINING TEN BOXES TO THE RIGHT OF THIS BOX, IN ORDER FROM LEFT TO RIGHT,
CONTAIN THE NAMES OF THE FOLLOWING ENTITIES: LETRA S.A.; GROUPE BANEXI; ROBERT
PORCHER; SOCIETE CIVIL DES TERRES FROIDES; CREDIT LYONNAIS; GROUPE SIPAREX; CITA
S.A.; NATEXIS S.A.; OTHER FRENCH NATIONALS; AND ESTATE OF GILBERT PORCHER (THERE
IS AN ADDITIONAL LINE RUNNING HORIZONTALLY FROM RIGHT TO LEFT BETWEEN LETRA S.A.
TO SOCIETE SAUMUROISE DE PARTICIPATIONS S.A. NOTING THAT LETRA OWNS 30.4% OF
SAUMUROISE). BELOW THESE ELEVEN BOXES ARE VERTICAL LINES WITH THE FOLLOWING
PERCENTAGE INTERESTS, RESPECTIVELY: 66.91%; 10.62%; 8.01%; 7.22%; 2.26%; 2.05%;
1.89%; .57%; .40%; .06%; AND .01%. THESE ELEVEN LINES FROM THE THIRD TIER JOIN
TOGETHER TO THE BOX ON THE NEXT TIER CONTAINING THE NAME "PORCHER INDUSTRIES
S.A." FROM THIS BOX IS A LINE TO THE NEXT TIER CONTAINING ONE BOX FOR GLASS
HOLDINGS, WITH A NOTATION OF 100% BESIDE THE LINE BETWEEN THESE BOXES. EXTENDING
DOWN FROM THE BOX FOR GLASS HOLDINGS IS A LINE WITH A 100% NOTATION, LEADING TO
THE BOX FOR BGF INDUSTRIES, INC., ON THE FINAL TIER OF THE CHART.]

* Mr. Robert Porcher effectively controls the voting and investment power of
this entity.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      We are wholly owned by Porcher Industries through its U.S. holding
company, Glass Holdings. We have on-going financial, managerial and commercial
agreements and arrangements with Porcher Industries, Glass Holdings and other
wholly-owned subsidiaries of Glass Holdings, as well as other affiliates of
Porcher Industries. Mr. Robert Porcher, our Chairman of the Board and Chief
Executive Officer, beneficially owns a controlling interest in Porcher
Industries. See "Security Ownership of Certain Beneficial Owners and
Management."

      We pay management fees to BGF Services, Inc., a wholly owned subsidiary of
Glass Holdings, that cover the periodic management services of Robert Porcher
and his son Philippe Porcher, the Vice President of Porcher Industries, and the
full time services of Philippe Dorier, our Chief Financial Officer. We also
reimburse BGF Services for the costs associated with automobiles provided to
Messrs. Robert Porcher and Dorier and maintenance and upkeep of Robert Porcher's
Greensboro, North Carolina residence, which is owned by BGF Services and has a
net book value of $1.0 million. In connection with these arrangements, we
incurred expenses of $585,000 in 1999. BGF Services does not derive a profit
from this arrangement and

                                      -34-
<PAGE>


therefore these terms cannot be considered comparable to those that would be
provided to third parties.

      Porcher Industries and its French parent company provide general
management and strategic planning advice to us in exchange for management fees
that reimburse these companies for a portion of the compensation of Robert
Porcher, Philippe Porcher and other employees who allocate their time among us
and other Porcher Industries affiliates. We incurred expenses of $393,000 in
connection with this arrangement in 1999. The amounts billed are based on the
estimated value of services provided and are comparable to that which would be
given to third parties. However, we believe that Porcher Industries and its
parent would not provide these services to a third party.

      We provided management, accounting and administrative services to Belmont,
a wholly owned subsidiary of Glass Holdings that produced non-woven glass
products for reinforcement applications in exchange for fees that reimbursed us
for our costs associated with these services. In 1998, we subleased
approximately 12,800 square feet of our Cheraw, South Carolina facility to
Belmont for its production facilities and leased to Belmont 11 employees that
worked at the facility. During 1999, due to adverse business conditions, we shut
down the operations of Belmont of America. The closing was made at no cost to
BGF as one of our affiliated companies in France assumed related expenses.

        BGF billed Belmont an aggregate of $351,000 in fees, leased employee
payments, rent and its proportionate share of utilities costs at the Cheraw
plant in 1999. We believe that the sublease to Belmont is on no more favorable
terms than would be given to third parties. The leased employees are provided at
cost and are thus leased on terms more favorable than what would be given to a
third party. Belmont completed its shutdown of manufacturing operations in April
1999 and is currently in the process of winding down its financial operations.
During 1999 BGF purchased, at net book value, $465,000 of equipment from
Belmont. BGF and Glass Holdings were also guarantors of a $5.0 million
industrial revenue bond originally issued by Belmont in June 1997. As of
December 31, 1999, the bond was paid off by Belmont.

      We provide on-going senior management, technological support and
administrative assistance to Shanghai-Porcher, a joint venture company between
Glass Holdings, which owns 85% of the company and China Worldbest Development
Co., LTD, that produces glass fiber fabrics for the electronics markets in Asia.
Porcher Industries and Shanghai-Porcher have entered into a ten year Technology
Know-How Agreement, dated February 7, 1996, under which Porcher Industries is
entitled to receive royalty payments of up to 3% of net sales revenue in years
in which Shanghai-Porcher achieves a pre-tax profit. Under the agreement,
Shanghai-Porcher is required to reimburse Porcher Industries for all travel,
lodging and other reasonable expenses of Porcher Industries personnel that
conduct on-site training visits. We anticipate that Porcher Industries will
assign its rights and obligations under the Technology Know-How Agreement to us.
From time to time, we have acted as Shanghai-Porcher's billing agent at no cost
to Shanghai-Porcher. BGF billed Shanghai-Porcher a total of $2,000 in 1999. We
are reimbursed only for expenses in this arrangement. These terms are comparable
to that which would be provided to a third party.

                                      -35-
<PAGE>

      We purchase carbon fibers and finished products from Porcher Industries.
We purchased $7.1 million in 1999 for these products. We sell finished goods and
occasionally unfinished goods directly to Porcher. In 1999, we billed Porcher
Industries $1.0 million for these goods. Porcher Industries billed us for
commissions for sales of its products in Asia, Europe, and Australia of $98,000
in 1999. We believe that prices and commissions paid or received by us for these
transactions are comparable to those paid to third parties.

      We collect and deposit customer payments on behalf of two wholly owned
subsidiaries of Porcher Industries in exchange for fees equal to 2% of amounts
collected. We billed $24,000 in fees for these services incurred in 1999. We
believe that these fees are comparable to those that would be paid to third
parties.

      On April 14, 1998, we loaned $365,258 to Richard L. Cromer, our President,
for the purchase of a residence in Greensboro, North Carolina. The loan bears no
interest and is payable upon the sale of Mr. Cromer's residence in Toledo, Ohio
and thus is on terms more favorable than we would provide to third parties.

      A director of BGF performs certain consulting services for BGF regarding
Shanghai Porcher. We paid the director $15,000 in consulting fees in 1999.

      On September 30, 1998, AGY Holdings purchased its 51% ownership interest
in Advanced Glassfiber for aggregate consideration of approximately $338.9
million, including post-closing adjustments. We loaned Glass Holdings
approximately $138.6 million to provide it with a portion of the capital
necessary to fund the acquisition. Additionally, BGF had a non-interest bearing
payable to Glass Holdings from prior years of $1.8 million resulting in a net
loan amount to Glass Holdings of $136.8 million. Our loan to Glass Holdings is
evidenced in part by promissory notes. We believe that these transactions were
on terms no more favorable than if Glass Holdings had borrowed the funds
directly from a third party.

      Currently, Advanced Glassfiber leases approximately 27,200 square feet of
segregated space at our South Hill, Virginia lightweight fiber fabric facility
for the purpose of manufacturing glass yarns for exclusive supply to us under a
supply contract, extendible at the option of Advanced Glassfiber, that expires
on December 31, 2008. We also provide Advanced Glassfiber with leased employees
and administrative and technical support services. We billed Advanced Glassfiber
approximately $1.5 million pursuant to this agreement in 1999. We also purchased
approximately $34.7 million of raw materials from Advanced Glassfiber in the
twelve months ended December 31, 1999. We believe that each of these
arrangements are on terms no more favorable than those that would be provided to
third parties.


                                      -36-
<PAGE>



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1        FINANCIAL STATEMENTS

         The following financial statements of BGF Industries, Inc.,
         incorporated by reference into Item 8, are attached hereto beginning on
         page F-1:

                  Report of Independent Accountants

                  Consolidated Balance Sheets at December 31, 1998 and 1999

                  Consolidated Statements of Operations for the years ended
                  December 31, 1997, 1998 and 1999

                  Consolidated Statements of Cash Flows for the years ended
                  December 31, 1997, 1998 and 1999

                  Consolidated Statements of Stockholder's Equity (Deficit) for
                  the years ended December 31, 1997, 1998 and 1999

                  Notes to Consolidated Financial Statements

          2.      Financial Statement Schedules

         The following, incorporated by reference into Item 8, are attached
         hereto beginning on page S-1:

                  Report of Independent Accountant

                  Valuation and Qualifying Accounts

         3.       Exhibits

                  Unless indicated below, the exhibits are incorporated herein
         from BGF's Registration Statement on Form S-4 (File No. 333-72321)
         filed with the Securities and Exchange Commission. Copies of such
         exhibits will be furnished to any requesting stockholder of BGF upon
         request to Secretary, BFG Industries, Inc., 3802 Robert Porcher Way,
         Greensboro, North Carolina 27410.


                                      -37-
<PAGE>


                 EXHIBIT NO.                  DESCRIPTION OF EXHIBIT
                 ------------                 -----------------------

                      3.1             Certificate of Incorporation of BGF
                                      Industries, Inc., as amended

                      3.2             Bylaws of BGF Industries, Inc., as amended

                      4.1             Indenture, dated as of January 21, 1999,
                                      among BGF Industries, Inc. and The Bank of
                                      New York, as trustee, relating to $100
                                      million principal amount of 10 1/4% Senior
                                      Subordinated Notes Due 2009

                      4.2             Form of 10 1/4% Series A and Series B
                                      Senior Subordinated Notes due 2009
                                      (included in Exhibit 4.1)

                      4.3             Registration Rights Agreement dated as of
                                      January 21, 1999, by and between BGF
                                      Industries, Inc. and the Initial Purchaser

                      10.1            Deferred Compensation Agreement, dated
                                      November 13, 1995, by and between BGF
                                      Industries, Inc. and Graham A. Pope(1)

                      10.2            Deferred Compensation Agreement, dated
                                      April 1, 1998, by and between BGF
                                      Industries, Inc. and Richard L. Cromer(1)

                      10.3            Deferred Compensation Agreement, dated
                                      April 16, 1990, by and between BGF,
                                      Industries, Inc. and James R. Henderson(1)

                      10.4            Deferred Compensation Agreement, dated
                                      January 28, 1993, by and between BGF
                                      Services, Inc. and Philippe Dorier(1)

                      10.5            Lease, dated March 20, 1996, between E.R.
                                      English, Sr., as lessor, and BGF
                                      Industries, Inc., as lessee

                      10.6            Purchase Order (Lease), dated November 26,
                                      1996, between K&C Brokerage, as lessor,
                                      and BGF Industries, Inc., as lessee

                      10.7            Lease, dated November 1, 1991, by and
                                      between H.V. Johns, Jr., as lessor, and
                                      BGF Industries, Inc. as lessee

                      10.8            Agreement between Contractor and Owner
                                      (Warehouse Lease), dated February 1, 1998,
                                      between Boyd Warehouse/Emmett Williams, as
                                      lessor, and BGF Industries, as lessee

                      10.9            Note Purchase Agreement dated January 15,
                                      1999 between BFG Industries, Inc., Inc.
                                      and the Initial Purchaser

                      10.10           Senior Credit Agreement dated September
                                      30, 1999 among BGF


                                      -38-
<PAGE>

                 EXHIBIT NO.                  DESCRIPTION OF EXHIBIT
                 ------------                 -----------------------
                                      Industries, Inc., as Borrower, its
                                      Domestic Subsidiaries from time to time
                                      party thereto, as Guarantors, the Lenders
                                      Parties thereto and First Union National
                                      Bank, as Agent

                      10.11           Senior Subordinated Credit Agreement dated
                                      as of September 30, 1998 among BGF
                                      Industries, Inc., as Borrower, certain
                                      subsidiaries from time to time party
                                      thereto, as Guarantors, and First Union
                                      Investors, Inc., as Agent

                      10.12           Promissory Note, dated September 30, 1998,
                                      from Glass Holdings Corp. to BGF
                                      Industries, Inc. for the original
                                      principal amount of $135,043,844.62

                      10.13           Promissory Note, dated December 23, 1998,
                                      from Glass Holdings Corp. to BGF
                                      Industries, Inc. for the original
                                      principal amount of $2,681,000

                      10.14+          Second Amendment to Credit Agreement,
                                      dated December 16, 1999, by and among BGF
                                      Industries, Inc. (the "Borrower"), certain
                                      Domestic Subsidiaries of the Borrower
                                      party thereto (collectively the
                                      "Guarantors"), several banks and other
                                      financial institutions party thereto (the
                                      "Lenders") and First Union National Bank
                                      (the "Agent")

                      10.15++         Syndication Amendment and Assignment,
                                      dated November 30, 1998, by and among BGF
                                      Industries, Inc. (the "Borrower"), certain
                                      Domestic Subsidiaries of the Borrower
                                      party thereto (collectively the
                                      "Guarantors"), the Existing Lender (as
                                      defined therein), the New Lenders (as
                                      defined therein), and First Union National
                                      Bank (the "Agent")

                      10.16*          Lease agreement, dated December 1, 1999,
                                      by and between Lawson Family LLC and BGF
                                      Industries, Inc.

                      12*             Statement of Computation of Ratios

                      21*             Subsidiaries of BGF

                      24*             Powers of Attorney (included on signature
                                      page)

                      27*             Financial Data Schedule

                      99.1*           Reconciliation of net income to EBITDA


                                      -39-
<PAGE>

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

+               Exhibit is incorporated by reference herein to Exhibit 99.1 to
                the Company's Form 8-K, dated March 8, 2000.
++              Exhibit is incorporated by reference herein to Exhibit 99.2 to
                the Company's Form 8-K, dated March 8, 2000.
*               Filed herewith.

(1)             Management contract or compensatory plan or arrangement required
                to be filed as an exhibit to this Form 10-K pursuant to Item
                14(c) of this report.

(B)             REPORTS ON FORM 8-K

                The Registrant did not file any Reports on Form 8-K during the
                quarter ended December 31, 1999.



                                      -40-
<PAGE>


                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>


                                                                                                           PAGE
                                                                                                           ----
BGF INDUSTRIES, INC.
<S>                                                                                                         <C>

     Report of Independent Accountants..................................................................    F-2

     Consolidated Balance Sheets at December 31, 1998 and 1999..........................................    F-3

     Consolidated Statements of Operations for the years ended December 31, 1997, 1998 and 1999.........    F-4

     Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1998 and 1999.........    F-5

     Consolidated Statements of Stockholder's Equity (Deficit) for the years ended December 31, 1997,
     1998 and 1999......................................................................................    F-6

     Notes to Consolidated Financial Statements.........................................................    F-7
</TABLE>


                                      F-1
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS OF BGF INDUSTRIES, INC.:

     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, cash flows and changes in
stockholder's equity (deficit) present fairly, in all material respects, the
financial position of BGF Industries, Inc. and its subsidiaries at December 31,
1998 and 1999, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. 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 of these statements in accordance with
auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

                                                  /s/ PricewaterhouseCoopers LLP


PricewaterhouseCoopers LLP
Greensboro, North Carolina
February 25, 2000


                                      F-2
<PAGE>



                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1999
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
<S>                                                                               <C>           <C>


                                                                              DECEMBER 31,   DECEMBER 31,
                                                                                   1998         1999
                                                                               -----------   -----------
                                   ASSETS
Current assets:
     Cash and cash equivalents............................................         $   18       $   17
     Trade accounts receivable, less allowance for returns and doubtful
        accounts of $696 and $769 respectively............................         20,808       20,366
     Inventories..........................................................         42,532       35,597
     Other current assets.................................................          5,260       10,671
                                                                                 --------     --------
          Total current assets............................................         68,618       66,651
                                                                                 --------     --------
Property, plant and equipment:
     Land.................................................................          2,960        3,129
     Buildings............................................................         34,865       36,055
     Machinery and equipment..............................................         90,798       95,432
                                                                                 --------     --------
                                                                                  128,623      134,616
     Less accumulated depreciation........................................         70,520       78,050
                                                                                 --------     --------
          Net property, plant and equipment...............................         58,103       56,566
                                                                                 --------     --------
Other noncurrent assets, net..............................................         10,045       10,837
                                                                                 --------     --------
          Total assets....................................................       $136,766     $134,054
                                                                                 ========     ========

                    LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
     Book overdraft.......................................................         $  657      $ 1,264
     Accounts payable.....................................................          6,794        6,670
     Accrued liabilities..................................................          6,743       18,208
     Current portion of long-term debt....................................          1,000            -
                                                                                 --------     --------
          Total current liabilities.......................................         15,194       26,142
                                                                                 --------     --------

Long-term debt, net of discount of $0 and $1,817, respectively............        150,000      132,383
Deferred income taxes.....................................................          8,354        8,407
Postretirement benefit obligation.........................................          1,394        1,559
                                                                                 --------     --------
          Total liabilities...............................................        174,942      168,491
                                                                                 --------     --------
Commitments and contingencies (Note 11)

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....................................................         63,614       67,353
     Loan to parent.......................................................       (136,790)    (136,790)
                                                                                 --------     --------
          Total stockholder's equity (deficit)............................        (38,176)     (34,437)
                                                                                 --------     --------
          Total liabilities and stockholder's equity (deficit)............       $136,766     $134,054
                                                                                 ========     ========
</TABLE>

               The accompanying notes are an integral part of the consolidated
financial statements.


                                      F-3
<PAGE>


                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                             DECEMBER 31,     DECEMBER 31,      DECEMBER 31,
                                                1997              1998              1999
                                          ----------------   ---------------    ------------
<S>                                            <C>              <C>               <C>
 Net sales.............................        $217,889         $201,754          $178,539
 Cost of goods sold....................         170,486          162,478           148,349
                                               --------         --------          --------
      Gross profit.....................          47,403           39,276            30,190
 Selling, general and administrative
    expenses...........................           9,739            9,700             7,410
 Restructuring charge                                --               --               769
                                               --------         --------          --------
      Operating income.................          37,664           29,576            22,011
                                               --------         --------          --------
 Other (income) expenses:
      Interest expense.................           2,355            4,517            15,817
      Other income.....................            (315)            (170)           (1,485)
      Other expenses...................             242               58                --
                                               --------         --------          --------
                                                  2,282            4,405            14,332
                                               --------         --------          --------
      Income before taxes and
         extraordinary loss............          35,382           25,171             7,679
 Income tax expense....................          13,652            9,854             2,911
                                               --------         --------          --------
      Income before extraordinary
         loss..........................          21,730           15,317             4,768
 Extraordinary loss on write-off of
    debt issuance costs, net of income
    taxes of $639......................              --               --             1,029
                                               --------         --------          --------
      Net income.......................        $ 21,730         $ 15,317           $ 3,739
                                               ========         ========          ========

</TABLE>


               The accompanying notes are an integral part of the consolidated
financial statements.



                                      F-4
<PAGE>
                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED DECEMBER 1997, 1998 AND 1999
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                       DECEMBER 31,  DECEMBER 31,  DECEMBER 31,
                                                                          1997          1998          1999
                                                                      ------------   -----------  ------------
<S>                                                                      <C>          <C>          <C>
Cash flows from operating activities:
  Net income .........................................................   $  21,730    $  15,317    $   3,739
  Adjustment to reconcile net income to net cash provided by operating
   activities:
    Depreciation .....................................................       6,565        7,218        8,026
    Amortization .....................................................         242          370        1,241
    Amortization of discount on notes ................................        --           --            183
    Extraordinary loss ...............................................        --           --          1,668
    Restructuring charge .............................................        --           --            217
    Loss on disposal of equipment ....................................           4           23           10
    Deferred income taxes ............................................       1,371        1,027       (6,476)
    Postretirement benefit obligation ................................          98          126          165
  Change in operating assets and liabilities:
    Trade accounts receivable ........................................      (6,819)      11,878          442
    Inventories ......................................................      (3,994)      (1,666)       6,935
    Other current assets .............................................        (762)      (1,330)       1,118
    Other noncurrent assets ..........................................        (521)         (72)         (99)
    Accounts payable .................................................       2,266       (1,967)        (151)
    Accrued liabilities ..............................................        (282)      (1,453)      11,248
                                                                         ---------    ---------    ---------
        Net cash provided by operating activities.....................      19,898       29,471       28,266
                                                                         ---------    ---------    ---------
Cash flows from investing activities:
    Purchases of property, plant and equipment .......................      (7,275)     (11,299)      (6,531)
    Proceeds from sale of equipment ..................................        --             16           59
                                                                         ---------    ---------    ---------
        Net cash used in investing activities.........................      (7,275)     (11,283)      (6,472)
                                                                         ---------    ---------    ---------
Cash flows from financing activities:
    Book overdraft ...................................................       3,468       (2,811)         607
    Principal payments of long-term debt .............................     (40,750)     (20,000)        --
    Proceeds from borrowing of long-term debt ........................      34,000       50,000       98,000
    Proceeds from borrowing of revolving credit ......................        --         48,000       27,000
    Payments on borrowing of revolving credit ........................        --        (12,000)     (53,000)
    Proceeds from senior subordinated debt ...........................        --         65,000         --
    Payments on borrowing of senior subordinated debt ................        --           --        (65,000)
    Payments on term loan ............................................        --           --        (25,800)
    Net repayments on working capital line of credit .................      (4,526)      (5,000)        --
    Debt issuance costs ..............................................         (38)      (4,598)      (3,602)
    Loan to parent ...................................................        --       (136,790)        --
    Distribution to parent ...........................................      (4,913)        --           --
                                                                         ---------    ---------    ---------
        Net cash used in financing activities ........................     (12,759)     (18,199)     (21,795)
                                                                         ---------    ---------    ---------

    Net decrease in cash and cash equivalents ........................        (136)         (11)          (1)
    Cash and cash equivalents at beginning of period .................         165           29           18
                                                                         ---------    ---------    ---------
    Cash and cash equivalent at end of period ........................   $      29    $      18    $      17
                                                                         =========    =========    =========
Supplemental disclosures of cash flow information:
    Cash paid during the year for interest ...........................   $   2,622    $   3,833    $  10,271
                                                                         =========    =========    =========
    Cash paid for income taxes .......................................   $  11,679    $  10,399    $     895
                                                                         =========    =========    =========
Supplemental disclosure of non-cash investing activities
    Property and equipment financed in accounts payable ..............   $     421    $     698    $     725
                                                                         =========    =========    =========
</TABLE>
         The accompanying notes are an integral part of the consolidated
                             financial statements.

                                      F-5
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

            CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1998 AND 1999
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                            TOTAL
                                                           COMMON     PAID-IN    RETAINED      LOAN TO   STOCKHOLDER'S
                                                           STOCK      CAPITAL    EARNINGS      PARENT       EQUITY
                                                         ---------   ---------   ---------    ---------    ---------
<S>                                                      <C>         <C>         <C>          <C>          <C>
Balance, December 31, 1996 ...........................   $       1   $  34,999   $  31,480    $    --      $  66,480
     Net income ......................................        --          --        21,730         --         21,730
     Distributions to parent .........................        --          --        (4,913)        --         (4,913)
                                                         ---------   ---------   ---------    ---------    ---------
Balance, December 31, 1997 ...........................           1      34,999      48,297         --         83,297
     Net income ......................................        --          --        15,317         --         15,317
     Loan to parent ..................................        --          --          --       (138,590)    (138,590)
     Non-interest bearing loan payable reclassified to
        offset loan to parent ........................        --          --          --          1,800        1,800
                                                         ---------   ---------   ---------    ---------    ---------
Balance, December 31, 1998 ...........................           1      34,999      63,614     (136,790)     (38,176)
     Net income ......................................        --          --         3,739         --          3,739
                                                         ---------   ---------   ---------    ---------    ---------
Balance, December 31, 1999 ...........................   $       1   $  34,999   $  67,353    $(136,790)   $ (34,437)
                                                         =========   =========   =========    =========    =========

</TABLE>

         The accompanying notes are an integral part of the consolidated
                             financial statements.


                                      F-6
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     GENERAL: BGF Industries, Inc. is a wholly owned subsidiary of Glass
Holdings Corp., which is a wholly owned subsidiary of Porcher Industries, S.A.
These consolidated financial statements include the accounts of BGF Industries,
Inc. and its wholly owned subsidiary, BGF Overseas, Inc. (collectively "BGF ").
All intercompany transactions and balances are eliminated in consolidation. BGF
manufactures high-quality glass, aramid and carbon fiber fabrics for use in a
variety of electronic, composite, insulation, construction, filtration, and
commercial applications. The principal market is the United States.

     CASH AND CASH EQUIVALENTS: For purposes of the statements of cash flows,
BGF considers cash on hand, cash deposited in financial institutions and money
market accounts with maturities of less than ninety days at date of purchase to
be cash equivalents. These are stated at cost which approximates market value.
The book overdrafts in bank accounts consist of outstanding checks which have
not been presented to a bank for payment.

     INVENTORIES: Inventories are stated at the lower of cost or market value.
Cost is determined using the first-in, first-out (FIFO) method.

     PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost and depreciated over the estimated useful lives of the related assets using
the straight-line method. Cost includes expenditures for major improvements and
replacements and the net amount of interest cost associated with significant
capital additions. Capitalized interest was $32, $127 and $46 in 1997, 1998 and
1999, respectively. Total interest incurred in 1997, 1998 and 1999 was $2,339,
$4,455 and $14,619, respectively.

     The estimated useful lives of the assets are as follows:

           Buildings............................................    15-40 years
           Machinery and equipment..............................     3-10 years

      The costs of renewals and betterments are capitalized, while repair and
maintenance which do not improve or extend useful lives, are charged against
income as incurred. At the time that property, plant and equipment is retired or
otherwise disposed of, the respective cost and accumulated depreciation are
removed from the accounts, and any gain or loss on disposition is recognized.

      In the event that facts and circumstances indicate that the cost of long
lived assets may not be recoverable, the estimated future undiscounted cash
flows is compared to the asset's carrying value and if less, an impairment loss
is recognized in an amount by which the carrying value exceeds its fair value.

      INCOME TAXES: Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases based on enacted tax laws and statutory rates. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period in which the legislation is enacted. A
valuation allowance against deferred tax assets is required if, based on the
weight of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.

      INTANGIBLE ASSETS: The excess of acquisition cost over assigned value of
net assets acquired is amortized over 40 years, using the straight-line method.
Debt issuance costs are amortized over the terms of the respective debt
agreements using the interest method. BGF assesses the recoverability of
long-lived assets, including goodwill, by determining whether the carrying value
of the asset balances over their remaining lives can be recovered through
undiscounted future operating cash flows.

                                      F-7
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

  1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED):

        LOAN TO PARENT: On September 30, 1998, AGY Holdings, an affiliate of
BGF, purchased a 51% ownership interest in Advanced Glassfiber Yarns LLC (AGY)
for aggregate consideration of $338.9 million, including post-closing
adjustments. In connection with the acquisition, BGF loaned Glass Holdings
approximately $138.6 million to provide Glass Holdings a portion of the capital
necessary to fund the acquisition. BGF raised the proceeds for this loan by
borrowing (1) $88.4 million under the senior credit facility, and (2) $65.0
million under the senior subordinated credit facility which was refinanced in
1999 with senior subordinated notes (Note 6). The loan from BGF to Glass
Holdings is evidenced in part by promissory notes that bear interest at the Cost
of Funds Rate for BGF for the calendar year immediately preceding the date on
which any interest is due. With respect to any period of determination, the Cost
of Funds Rate means a rate per annum equal to the blended interest rate, as
reasonably calculated by BGF, applicable to borrowings of BGF during such period
in respect of indebtedness incurred by BGF, to fund the loan to Glass Holdings.
Accrued interest is due and payable on the first business day of February of
each year commencing on February 1, 1999 and on any date on which any principal
is due. The promissory notes are payable on October 31, 2008 or such later date
as may be agreed to by BGF and Glass Holdings. At December 31, 1998 and 1999,
the loan to Glass Holdings of $136.8 million has been included as a contra
equity account in the financial statements. Accrued interest at December 31,
1998 and 1999 of approximately $3.2 million and $12.7 million, respectively, on
this loan has been fully reserved.

     REVENUE RECOGNITION: Revenue from product sales and the related cost of
goods sold are recognized at the time of shipment.

     FINANCIAL INSTRUMENTS: BGF selectively enters into interest rate protection
agreements to mitigate changes in interest rates on its variable rate
borrowings. None of these agreements are used for speculative or trading
purposes. The fair value of BGF's interest rate swap agreement is the estimated
amount BGF would have to pay or receive to terminate the swap agreement as of
the reporting date, taking into account current interest rates, and is disclosed
in Note 11. The interest rate swaps are accounted for as hedges on the basis
that such derivatives reduce the risk of changes in interest rates on BGF's
variable rate debt. The interest differentials from these swaps are recorded in
interest expense. Rates currently available to BGF for debt with similar terms
and remaining maturities are used to estimate fair value of existing debt.

     The carrying amounts of BGF's long-term debt approximates fair value.

     PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS: BGF has a contributory
defined benefit pension plan covering most employees. Pension expense for the
plan is determined using the projected unit credit method. BGF also provides
certain retirement health care benefits, the estimated cost for which is accrued
within the employees' active service lives. BGF's customary funding policy of
these plans is to contribute amounts permitted by the Internal Revenue Code and
in conformance with ERISA guidelines.

     RESEARCH AND DEVELOPMENT: BGF expenses research and development costs as
incurred. These costs were approximately $1,267, $1,376 and $1,425 for the years
ended December 31, 1997, 1998 and 1999, respectively.

     ADVERTISING AND PROMOTION: BGF expenses advertising and promotion costs as
incurred and these costs are included as selling, general and administrative
expenses. Such amounts were not material for 1997, 1998 and 1999.

     FOREIGN CURRENCY TRANSACTIONS: Gains (losses) resulting from foreign
currency transactions are included in other income or other expenses, and
amounted to $126, ($58) and $177 in 1997, 1998 and 1999, respectively.

                                      F-8
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED):

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

     RECLASSIFICATIONS: Certain amounts from the prior consolidated financial
statements have been reclassified to conform to the current presentation.

     RECENTLY ISSUED ACCOUNTING STANDARDS: On June 8, 1999, the Financial
Accounting Standards Board issued SFAS No. 137, "Deferral of the Effective Date
of FAS 133," which changes the effective date of SFAS 133 to all fiscal quarters
of all fiscal years beginning after June 15, 2000. SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities," requires entities to recognize
all derivative instruments 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. BGF
anticipates that, due to its limited use of derivative instruments, the adoption
of SFAS 133 will not have a significant effect on its financial condition or
results of operations.

2.   INVENTORIES:

     Inventories at December 31 consist of the following:

                                                          1998       1999
                                                         -------   -------
     Supplies .........................................  $ 1,571   $ 1,657
     Raw materials ....................................    4,283     3,325
     Stock-in-process .................................    8,029     6,120
     Finished goods ...................................   28,649    24,495
                                                         -------   -------
                                                         $42,532   $35,597
                                                         =======   =======

3.   OTHER CURRENT ASSETS:

     Other current assets at December 31 consist of the following:

                                                           1998       1999
                                                          -------   -------
     Deferred income taxes ............................   $ 2,664   $ 9,193
     Prepaid expenses and other .......................     2,596     1,478
                                                          -------   -------
                                                          $ 5,260   $10,671
                                                          =======   =======

                                      F-9
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

4.   OTHER NONCURRENT ASSETS:

     Other noncurrent assets at December 31 consist of the following:

<TABLE>
<CAPTION>
                                                                               1998        1999
                                                                             --------    --------
<S>                                                                          <C>         <C>
     Excess of acquisition cost over assigned value of net assets acquired   $  5,809    $  5,809
     Debt issuance costs .................................................      4,598       6,143
                                                                             --------    --------
                                                                               10,407      11,952
     Accumulated amortization ............................................       (696)     (1,546)
                                                                             --------    --------
                                                                                9,711      10,406
     Other ...............................................................        334         431
                                                                             --------    --------
                                                                             $ 10,045    $ 10,837
                                                                             ========    ========
</TABLE>

     Amortization of deferred financing charges of $48, $189 and $792 for the
years ended December 31, 1997, 1998 and 1999 respectively, have been included in
interest expense. In 1997 and 1998 BGF wrote off $1,090 and $38, respectively,
of fully amortized noncurrent assets. During January 1999, the Company wrote off
net debt issuance costs of $1,668 related to the termination of the senior
subordinated credit facility. These costs have been classified as an
extraordinary item in the accompanying financial statement. In December 1999,
BGF wrote off $268 of net debt issuance costs related to the revolving credit
facility due to an amendment dated December 16, 1999. These costs have been
classified as interest expense in the accompanying financial statements.
Accumulated amortization related to these costs was $119 (Note 6).


5.   ACCRUED LIABILITIES:

     Accrued liabilities at December 31 consist of the following:

<TABLE>
<CAPTION>

                                                                                   1998      1999
                                                                                  ------    -------
<S>                                                                                <C>      <C>
     Income taxes............................................................      $ 855    $ 8,154
     Payroll.................................................................        117        321
     Pension and 401(k)......................................................      4,439      2,980
     Interest................................................................        553      4,901
     Other...................................................................        779      1,852
                                                                                  ------    -------
                                                                                  $6,743    $18,208
                                                                                  ======    =======
</TABLE>

6.   DEBT:

     Debt at December 31 consists of the following:

<TABLE>
<CAPTION>

                                                                                  1998       1999
                                                                                --------   --------
<S>                                                                             <C>        <C>
     Senior Credit Facility
        Amortizing Term Loan................................................    $ 50,000   $ 24,200
        Revolving Credit Facility...........................................      36,000     10,000
     Senior Subordinated Credit Facility....................................      65,000       --
     Senior Subordinated Notes, net of unamortized discount of $1,817.......         --      98,183
                                                                                --------   --------

                                                                                 151,000    132,383
     Less current portion...................................................       1,000       --
                                                                                --------   --------
                                                                                $150,000   $132,383
                                                                                ========   ========
</TABLE>

                                      F-10
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

6.   DEBT--(CONTINUED):

     BGF entered into a senior credit facility dated as of September 30, 1998,
as amended on November 24, 1998 and December 16, 1999, with a syndicate of
lenders and First Union National Bank, as agent. The senior credit facility, as
amended, provides BGF with a total of up to $110.0 million of credit consisting
of (i) a five-year revolving credit facility for up to $60.0 million and (ii) a
six-year amortizing term loan in the amount of $50.0 million. The revolver
contains two sub facilities: a $5.0 million swingline facility for working
capital requirements and a $20.0 million letter of credit facility. At December
31, 1999 BGF had $50.0 million of available borrowings under the revolver. Under
the senior credit facility, BGF may be required to use the proceeds for the
following transactions to prepay in part, the term loan and the revolver if it:

         o sells assets in transactions outside the ordinary course of business;

         o issues debt or equity securities; or

         o receives insurance proceeds for casualty losses and does not repair
           or replace the damaged facilities.

     These prepayments would be applied first to the term loan, and upon payment
of the term loan, to permanently pay outstanding loans under the revolver.

     The senior credit facility is collateralized by a first priority lien on
substantially all of BGF's real and personal property. The lien also covers (1)
100% of the capital stock of each direct or indirect domestic subsidiary of BGF,
(2) 65% of the capital stock of each first tier foreign subsidiary of BGF and
(3) certain promissory notes issued by affiliates of BGF. The senior credit
facility is also collateralized by a non-recourse pledge by Glass Holdings, the
parent of BGF, of capital stock of certain affiliates of BGF.

     The annual interest rate applicable to the revolver and the term loan is a
fluctuating rate of interest measured, at BGF's option, by reference to either
(1) LIBOR or (2) the greater of the published prime rate of First Union National
Bank or the overnight federal funds rate plus 0.5%, plus, in either case, an
additional amount which fluctuates based upon BGF's leverage ratio. This
additional amount ranges from 2.00% to 2.75% for LIBOR based borrowings and
0.75% to 1.50% for borrowings with an interest rate based on either of the
alternative rates described in clause (2) in the prior sentence.

     The senior credit facility provides for an annual administrative fee to be
paid to the agent, an unused commitment fee payable to the lenders and certain
other fees payable in connection with letters of credit issued under the
revolver.

     The senior credit facility requires BGF to maintain a certain maximum
leverage ratio and minimum consolidated net worth, interest coverage and fixed
charge coverage ratios. The December 16, 1999 amendment to the credit agreement
changed the required leverage ratio and interest coverage ratio. As of December
31, 1999, BGF was in compliance with these amended covenants.

     On September 30, 1998, BGF also entered into a ten-year senior subordinated
credit agreement with First Union Investors, Inc. as agent. Subsequently, other
institutions became lenders under this senior subordinated credit facility. The
senior subordinated credit facility is an unsecured senior subordinated
obligation of BGF. Amounts outstanding under the senior subordinated credit
facility accrued interest at variable rates based on either LIBOR or a treasury
based rate.

                                      F-11
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

6.   DEBT--(CONTINUED):

     As of December 31, 1998, BGF had $65.0 million outstanding under the senior
subordinated credit facility. The senior subordinated credit facility was paid
in full on January 21, 1999. On January 21, 1999, BGF issued $100 million of
senior subordinated notes ($98 million net of discount) due 2009. Net proceeds
of approximately $95.3 million were used to repay outstanding indebtedness of
$65.0 million under the senior subordinated credit facility, interest of $0.5
million under the senior subordinated credit facility, and $29.8 million under
the revolver. The annual interest rate on the senior subordinated notes is
10 1/4% and is payable semiannually beginning in July 1999.

     On June 18, 1999 the Securities and Exchange Commission declared effective
the company's Regristration Statement on Form S-4 relating to its offering of
$100,000 of 10 1/4% series B senior subordinated notes due 2009. The notes
issued in the Offering were exchanged on July 23, 1999 for 10 1/4% senior
subordinated notes due 2009 that were privately issued January, 21, 1999.
Interest on the 10 1/4% series B senior subordinated notes is payable
semiannually beginning July 15, 1999.

     The aggregate maturities of long-term debt at December 31, 1999 are as
follows:

                              2000                                 $   --
                              2001                                    3,588
                              2002                                    6,071
                              2003                                   17,765
                              2004                                    6,776
                              Thereafter                            100,000


7.   INCOME TAXES:

     Income tax expense for the years ended December 31, 1997, 1998 and 1999
consists of the following:

<TABLE>
<CAPTION>
                                                                    1997
                                                   -----------------------------------
                                                   CURRENT         DEFERRED     TOTAL
                                                   --------        -------    --------
<S>                                                <C>             <C>        <C>
     Federal................................       $ 10,242        $ 1,340    $ 11,582
     State..................................          2,039             31       2,070
                                                   --------        -------    --------
                                                   $ 12,281        $ 1,371    $ 13,652
                                                   ========        =======    ========


                                                                    1998
                                                   -----------------------------------
                                                   CURRENT        DEFERRED      TOTAL
                                                   --------        -------    --------
     Federal................................        $ 7,649          $ 933     $ 8,582
     State..................................          1,178             94       1,272
                                                   --------        -------    --------
                                                    $ 8,827        $ 1,027     $ 9,854
                                                    =======        =======     =======


                                                                    1999
                                                   -----------------------------------
                                                   CURRENT        DEFERRED      TOTAL
                                                   --------        -------    --------
     Federal................................        $ 8,333       $(5,570)     $ 2,763
     State..................................          1,054          (906)         148
                                                   --------        -------    --------
                                                    $ 9,387       $(6,476)     $ 2,911
                                                    =======       ========     =======
</TABLE>

                                      F-12
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

7. INCOME TAXES--(CONTINUED):

     A reconciliation of the difference between the federal statutory rate and
the effective income tax rate as a percentage of income before taxes is as
follows:

                                                         1997     1998    1999
                                                         ----     ----    ----
     Federal statutory tax rate ....................     35.0%    35.0%   35.0%
     State income taxes, net of federal benefit ....      3.8      3.9     2.7%
     Other .........................................     (0.2)     0.2     0.2%
                                                         ----     ----    ----
                                                         38.6%    39.1%   37.9%
                                                         ====     ====    ====

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997, 1998 and 1999 are presented below:

<TABLE>
<CAPTION>
                                                         1997       1998      1999
                                                        -------    -------    -------
<S>                                                       <C>        <C>        <C>
     Deferred tax assets:
          Loan to parent ............................   $  --      $  --      $ 6,105
          Inventories ...............................     1,157      1,321      1,166
          Accrued liabilities .......................       530        550        935
          Reserves ..................................        96         96        221
          Other .....................................       349        537        766
                                                        -------    -------    -------
               Total gross deferred tax assets ......     2,132      2,504      9,193
                                                        -------    -------    -------
     Deferred tax liabilities:
          Accounts receivable .......................      --          (88)       (26)
          Depreciation ..............................    (5,960)    (6,956)    (7,066)
          Other .....................................      (835)    (1,150)    (1,315)
                                                        -------    -------    -------
               Total gross deferred tax liabilities .    (6,795)    (8,194)    (8,407)
                                                        -------    -------    -------
               Net deferred tax liability ...........   $(4,663)   $(5,690)   $   786
                                                        =======    =======    =======
</TABLE>

BGF is included in the consolidated federal tax return of Glass Holdings.
Pursuant to a tax sharing agreement, BGF is required to make tax sharing
payments to Glass Holdings with respect to BGF's pro rata share of consolidated
federal income tax liabilities which does not differ significantly from that
which would be determined on a stand alone basis.

8.   EMPLOYEE BENEFIT PLANS:

     DEFINED CONTRIBUTION PLAN: BGF has a 401(k) savings plan for all employees.
Company contributions, if any, are made at the discretion of BGF's Board of
Directors. BGF allows participants an election of receiving their profit
sharing, when applicable, in cash or as an employer contribution to the 401(k)
plan. Plan expense in 1997, 1998, and 1999 amounted to $2,364, $1,743, and $778,
respectively.

     DEFINED BENEFIT PENSION PLAN: BGF has a defined benefit pension plan
covering substantially all of its employees. Participating employees are
required to contribute to the pension plan. BGF contributions to the pension
plan for 1997, 1998 and 1999 amounted to $183, $123 and $0, respectively.

     A summary of the components of the defined benefit pension plans' net
periodic pension cost for the pension plan is as follows:

                                      F-13
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

8.   EMPLOYEE BENEFIT PLANS: --(CONTINUED):

<TABLE>
<CAPTION>

                                                        1997       1998        1999
                                                      -------     -------     -------
<S>                                                   <C>         <C>         <C>
     Service cost-benefits earned during the period   $   777     $   934     $   996
     Interest cost on projected benefit obligation        888       1,009       1,040
     Expected return on plan assets ...............      (988)     (1,191)     (1,214)
     Net amortization and deferral ................         7           7           7
                                                      -------     -------     -------
     Net periodic pension expense .................       684         759         829
     Settlement gain ..............................      --          --          (539)
                                                      -------     -------     -------
     Total pension expense ........................   $   684     $   759     $   290
                                                      =======     =======     =======
     Assumptions used:
     Weighted-average discount rates ..............      7.00%       6.75%       8.00%
     Rate of increase in compensation levels ......      5.00%       5.00%       4.00%
     Expected long-term rate of return on assets ..      8.00%       8.00%       8.00%
</TABLE>

     The change in projected benefit obligation, the change in fair value of
plan assets and the funded status of BGF's pension plan at December 31 is
summarized below:

                                                           1998        1999
                                                         --------    --------
Change in projected benefits obligations:
     Projected benefit obligation at beginning of year   $ 14,621    $ 16,739
     Service cost ....................................        934         996
     Interest cost ...................................      1,009       1,040
     Actuarial (gain)/loss ...........................        703      (3,495)
     Benefits paid ...................................     (1,454)         (2)
     Plan participants' contributions ................        926         805
     Settlement ......................................       --        (2,106)
                                                         --------    --------
     Projected benefit obligation at end of year .....   $ 16,739    $ 13,977
                                                         ========    ========

Change in fair value of plan assets:
     Fair value of plan assets at beginning of year ..   $ 14,763    $ 15,542
     Actual return on plan assets ....................      1,184       1,554
     Employer contributions ..........................        123           0
     Employee contributions ..........................        926         805
     Benefits paid ...................................     (1,454)         (2)
     Settlement ......................................       --        (2,327)
                                                         --------    --------
     Fair value of plan assets at end of year ........   $ 15,542    $ 15,572
                                                         ========    ========

Funded status ........................................   $ (1,197)   $  1,595
Unrecognized prior service cost ......................         61          54
Unrecognized gain ....................................       (164)     (3,239)
                                                         --------    --------
Net amount recognized in accrued liabilities .........   $ (1,300)   $ (1,590)
                                                         ========    ========

     During 1999, the Company recognized a settlement gain of $539 as a
reduction in pension expense in the accompanying financial statements. The
recognition of the gain results from a significant number of participants in the
current year accepting lump sum payments as settlement of their pension
benefits.

                                      F-14
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

8.   EMPLOYEE BENEFIT PLANS--(CONTINUED):

     POSTRETIREMENT BENEFITS: In addition to providing pension benefits, BGF
provides certain retirement health care benefits to eligible employees.
Employees become eligible for these benefits by attaining specified age and
service requirements.

     A summary of the components of the other postretirement benefit plan's net
periodic cost for the plan is as follows:

<TABLE>
<CAPTION>

                                                      1997      1998       1999
                                                      -----     -----     -------
<S>                                                   <C>       <C>       <C>
Other postretirement benefit plans:
     Service cost-benefits earned during the period   $  43     $  54     $    70
     Interest cost on projected benefit obligation       66        74          95
     Recognized net actuarial gain ................     (11)       (2)       --
                                                      -----     -----     -------
     Total postretirement benefit expenses ........   $  98     $ 126     $   165
                                                      =====     =====     =======

Assumptions used:
     Weighted-average discount rates ..............    7.00%     6.75%       8.00%
     Medical Trend Rate
        First year rate ...........................    5.50%     5.25%      10.00%
        Ultimate rate .............................    5.50%     5.25%       6.00%
        Select period .............................     N/A       N/A     4 years
</TABLE>

     The change in projected benefit obligation, the change in fair value of
plan assets and the funded status of BGF's postretirement benefit plan at
December 31 is summarized below:

                                                           1998       1999
                                                         -------    -------
Change in projected benefit obligations:
     Projected benefit obligation at beginning of year   $ 1,027    $ 1,458
     Service cost ....................................        54         70
     Interest cost ...................................        74         95
     Plan participant contributions ..................       144        114
     Actuarial loss ..................................       343         32
     Benefits paid ...................................      (184)      (157)
                                                         -------    -------
          Projected benefit obligation at end of year    $ 1,458    $ 1,612
                                                         =======    =======

Change in fair value of plan assets:
     Fair value of plan assets at beginning of year ..   $    --    $    --
     Actual return on plan assets ....................        --         --
     Employer contributions ..........................        40         43
     Employee contributions ..........................       144        114
     Benefits paid ...................................      (184)      (157)
                                                         -------    -------
     Fair value of plan assets at end of year ........   $    --    $    --
                                                         =======    =======

Funded status ........................................   $(1,458)   $(1,612)
     Unrecognized loss ...............................        64         53
                                                         -------    -------
     Net amounts recognized ..........................   $(1,394)   $(1,559)
                                                         =======    =======


                                      F-15
<PAGE>
                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

8.   EMPLOYEE BENEFIT PLANS--(CONTINUED):

     Assumed health care trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage point change in assumed
health care cost trend rates would have the following effects:

<TABLE>
<CAPTION>

                                                                    1998         1999
                                                                    -----         -----
<S>                                                                <C>           <C>
1% increase:
     Effect on total of service and interest cost components...      $ 19          $ 25
     Effect on postretirement benefit obligation...............     $ 127         $ 170

1% decrease:
     Effect on total of service and interest cost components...      $(19)        $(21)
     Effect on postretirement benefit obligation...........         $(110)       $(146)
</TABLE>


9.   CONCENTRATIONS:

     BGF's cash and cash equivalents are placed in major domestic and
international banks. Deposits in such banks may exceed federally insured limits.

     Substantially all of BGF's raw materials are purchased from two suppliers.
In the event suppliers are unable or unwilling to deliver glass, aramid or
carbon yarns, the business, financial condition and results of operations could
be materially adversely affected.

     Substantially all of BGF's trade accounts receivable are due from companies
in the electronics, composites, insulation, filtration, construction and
commercial industries. Management periodically performs credit evaluations of
its customers and generally does not require collateral. Credit losses have
historically been within management's expectations.


10.   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. 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.

                                         1997         1998         1999
                                       --------     --------     --------
     United States...........          $191,632     $183,080     $167,953
     Foreign.................            26,257       18,674       10,586
                                       --------     --------     --------
                                       $217,889     $201,754     $178,539
                                       ========     ========     ========

     The following table presents a summary of sales of significant customers as
a percentage of BGF's net sales:

                                         1997         1998         1999
                                       --------     --------     --------
     Customer A..............             12.1%          N/A          N/A
                                          =====        =====        =====
     Customer B..............             14.2%        11.2%        13.7%
                                          =====        =====        =====
     Customer C..............               N/A        10.5%        13.7%
                                          =====        =====        =====

                                      F-16
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)


11.   COMMITMENTS AND CONTINGENCIES:

     FINANCIAL INSTRUMENTS: During 1998 BGF entered into an interest rate swap
transaction which expires September 30, 2004, on an initial notional amount on
$50,000 in order to limit its exposure to interest rate fluctuations under the
term loan portion of the senior credit facility (Note 6). Under the swap
agreement, BGF has secured a fixed LIBOR rate of interest of 5.04% on the
notional amount which is correlated in a manner consistent with the amortization
of the term loan principal. During 1999 the company terminated portions of the
interest rate swap relating to early payment of $25,000 on the term loan. The
company recognized a gain of $890 related to the early payments which have been
included as other income in the accompanying financial statements. The amount of
the term loan covered by this swap was $50,000 and $24,200 as of December 31,
1998 and 1999, respectively. The fair value of the interest rate swap agreement
representing the estimated amount that BGF would receive to terminate the swap
agreement was $349 at December 31, 1998 and $1,309 at December 31, 1999;
however, BGF has no intention of terminating the swap agreement.

     LEASES: BGF leases facilities and equipment. Generally, these leases
contain renewal options under cancelable and noncancelable operating leases.
Rent expense amounted to $697, $879 and $662 for the years ended December 31,
1997, 1998 and 1999, respectively. Under the terms of noncancelable operating
leases, BGF is committed to the following future minimum lease payments at
December 31, 1999:

            FISCAL YEAR
            2000.............................................       $304
            2001.............................................        292
            2002.............................................         69
            2003.............................................         10
            2004.............................................          1

     GUARANTEES: In 1997, BGF cosigned a debt facility with Glass Holdings
guaranteeing the payment and performance of the obligations of Belmont of
America and Shanghai Porcher Industries Co., Ltd., affiliates of BGF. The
obligations guaranteed by BGF under the debt facility were a $30,000 five year
stand-by letter of credit of Shanghai Porcher, and a $5,000 tax-free variable
rate demand note for Belmont of America. On September 29, 1998, the guarantee
for Shanghai Porcher Industries Co., Ltd. was transferred to Porcher Industries.
On June 30, 1999, Belmont of America paid off the $5,000 tax-free variable rate
demand note, relieving BGF of its guarantee.

     LEGAL AND ENVIRONMENTAL MATTERS: 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 of operations.

                                      F-17
<PAGE>

                              BGF INDUSTRIES, INC.
               (A WHOLLY OWNED SUBSIDIARY OF GLASS HOLDINGS CORP.)

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
                             (DOLLARS IN THOUSANDS)

12.   RELATED PARTY TRANSACTIONS:

     Related party balances at December 31, 1997, 1998 and 1999 and transactions
for the years ended December 31, 1997, 1998 and 1999 were as follows:

<TABLE>
<CAPTION>

                                                                                     1997       1998      1999
                                                                                     -----     ------     -----
<S>                                                                                  <C>       <C>        <C>
Trade accounts receivable from Porcher.........................................      $  98     $  213     $  98
                                                                                     =====     ======     =====
Trade accounts receivable from other affiliated companies......................      $ --      $   --     $  94
                                                                                     =====      =====    =====
Receivable for reimbursable expenses from Porcher..............................      $  32     $   37    $  183
                                                                                     =====      =====    ======
Sales to Porcher...............................................................      $ 329     $1,672   $ 1,001
                                                                                     =====    =======   =======
Management fees to subsidiaries of Porcher.....................................      $ 202     $  312    $  350
                                                                                     =====     ======    ======
Management fees included in accounts payable...................................      $  56     $  158     $  78
                                                                                     =====     ======     =====
Management fees to Porcher.....................................................      $ 102     $   12     $  43
                                                                                     =====      =====     =====
Fees to a subsidiary of Glass Holdings.........................................     $1,000     $  950    $  585
                                                                                    ======     ======    ======
Fees to an affiliate included accounts payable.................................      $  13     $   --     $  21
                                                                                     =====      =====     =====
Due from affiliate in other current assets.....................................      $  44     $1,430    $  537
                                                                                     =====    =======    ======
Purchases from Porcher and affiliated companies................................     $8,081     $7,023   $ 7,123
                                                                                    ======    =======   =======
Affiliated purchases included in accounts payable..............................      $ 749     $1,097   $ 2,073
                                                                                     =====    =======   =======
Affiliated purchases included in inventory.....................................     $1,491    $12,044  $ 13,137
                                                                                    ======   ========  ========
Payable to Glass Holdings, for taxes included in accrued expenses..............     $2,337     $  855   $ 8,154
                                                                                    ======     ======   =======
Non-interest bearing loan payable to Glass Holdings............................     $1,800     $  --       $ --
                                                                                    ======      =====      ====
Loan receivable from Glass Holdings............................................       $ --   $136,790  $136,790
                                                                                      ====   ========  ========
Payable to Advanced Glassfiber Yarns LLC.......................................      $ --      $2,903   $ 2,211
                                                                                     =====    =======   =======
Receivable from Advanced Glassfiber Yarns LLC..................................      $ --      $  110    $  228
                                                                                     =====     ======    ======
Reimbursable expenses and lease income from Advanced Glassfiber Yarns
   LLC.........................................................................      $ --      $  796   $ 1,465
                                                                                     =====     ======   =======
Purchases from Advanced Glassfiber Yarns LLC...................................      $ --    $ 11,185  $ 34,727
                                                                                     =====   ========  ========
Management accounting and administrative fee income from a subsidiary
   of Glass Holdings...........................................................      $ 360     $  658      $351
                                                                                     =====     ======      ====
Management, technological support and administrative income from a joint
   venture of Glass Holdings...................................................      $ 349      $  52     $   2
                                                                                     =====      =====     =====
Dividends to Glass Holdings....................................................     $4,913      $ --      $ --
                                                                                    ======      =====     ====
Commissions to Porcher.........................................................      $ 380     $  363     $  98
                                                                                     =====     ======     =====
Service fees from subsidiary of Porcher........................................      $  23      $  43     $  24
                                                                                     =====      =====     =====
Purchase of assets from affiliate..............................................      $ --       $ --     $  465
                                                                                     =====      =====    ======
Consulting fees to a director of BGF...........................................      $ --       $ --      $  15
                                                                                     =====      =====     =====
</TABLE>

     In 1998, BGF loaned an officer $365. The loan bears no interest and is
payable upon the sale of the officer's former residence. The loan is still
outstanding at December 31, 1999.

13. RESTRUCTURING PLAN

     In April 1999 management approved a restructuring plan which resulted in
the reduction of BGF's workforce by 67 hourly and salary employees across the
company. Employees affected by the plan were notified in May of 1999 and have
all been terminated during 1999. As a result of the restructuring, BGF incurred
charges of $769, included as a component of operating income in the accompanying
financial statements. The charges incurred are costs for salaried employee
severence. As of December 31, 1999, $552 of the restructuring costs have been
paid with the remaining reserve of $217 for severance scheduled for payment
through January 2001. At December 31, 1999 the reserve is included in accrued
liabilities in the accompanying financial statements.

                                      F-18



<PAGE>



                        Report of Independent Accountants

         Our report on the financial statements of BGF Industries, Inc. is
included on page F-2 of this Form 10-K. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed under Item 14 of this Form 10-K.

         In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.



                                         /s/ PricewaterhouseCoopers LLP


Greensboro, North Carolina
February 25, 2000


                                      S-1
<PAGE>


                              BGF Industries, Inc.

                        Valuation and Qualifying Accounts

                                 (In thousands)
<TABLE>
<CAPTION>


----------------------------------- ---------------- -------------------------------- ------------ --------------
                                                                Column C
----------------------------------- ---------------- -------------------------------- ------------ --------------
             Column A                  Column B                 Additions              Column D      Column E
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
                                      Balances at      Charged to        Charged      Deductions    Balance at
                                     Beginning of      Costs and      (Credited) to                End of Period
                                        Period          Expenses     Other Accounts
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
<S>                                        <C>               <C>            <C>           <C>            <C>
Allowance for doubtful accounts,
returned goods and discounts
deducted from accounts receivable
in the balance sheets...........
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1999....               $696            $ 83            $  --          $(10)         $769
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1998....               $723             $--            $(23)          $ (4)         $696
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1997....             $1,071             $--           $(292)          $(56)         $723
----------------------------------- ---------------- --------------- ---------------- ------------ --------------

----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Allowance for obsolete inventory
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1999....             $1,138            $234           $ --            $--         $1,372
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1998....             $1,067             $71           $ --            $--         $1,138
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1997....              $ 805            $262           $ --            $--         $1,067
----------------------------------- ---------------- --------------- ---------------- ------------ --------------

Restructuring Reserve
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1999....             $ --            $769           $ --            $552         $217
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1998....             $ --            $ --           $ --            $--          $ --
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
Year ended December 31, 1997....             $ --            $ --           $ --            $--          $ --
----------------------------------- ---------------- --------------- ---------------- ------------ --------------
</TABLE>


                                      S-2
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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, on March 29, 2000.


                              BGF INDUSTRIES, INC.

                              By: ___/s/  Richard L. Cromer________
                                       Richard L. Cromer
                                           President


         KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of BGF Industries, Inc. hereby severally constitute Richard L. Cromer
and Philippe R. Dorier, and each of them singly, our true and lawful attorneys
with full power to them, and each of them singly, to sign for us and in our
names in the capacities indicated below, the Report filed herewith and any and
all amendments to said Report and generally to do all such things in our names
and in our capacities as officers and directors to enable BGF Industries, Inc.
to comply with the provisions of the Securities Exchange Act of 1934, and all
requirements of the Securities and Exchange Commission, hereby ratifying and
confirming our signature as they may be signed by our said attorneys, or any of
them, to said Report and any and all amendments thereto.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the Registrant
in the capacities indicated on March 29, 2000.

<TABLE>
<CAPTION>
<S>                                                              <C>


                         SIGNATURE                                           TITLE
                         ---------                                           -----
                    /s/ ROBERT PORCHER                       Chairman of the Board of Directors, Chief
                    ------------------                        Executive Officer and Director (Principal
                      Robert Porcher                          Executive Officer)

                    /s/ GRAHAM A. POPE                       Director
                    ------------------
                      Graham A. Pope

                   /s/ RICHARD L. CROMER                     President
                   ---------------------
                     Richard L. Cromer

                  /s/ PHILIPPE R. DORIER                     Chief Financial Officer (Principal Financial
                  ----------------------                       and Accounting Officer)
                    Philippe R. Dorier

</TABLE>



<PAGE>

                                  EXHIBIT INDEX

                  Unless indicated below, the exhibits are incorporated herein
                  from BGF's Registration Statement on Form S-4 (File No.
                  333-72321) filed with the Securities and Exchange Commission.
                  Copies of such exhibits will be furnished to any requesting
                  stockholder of BGF upon request to Secretary, BFG Industries,
                  Inc., 3802 Robert Porcher Way, Greensboro, North Carolina
                  27410.


                   EXHIBIT NO.        DESCRIPTION OF EXHIBIT
                   -----------        ----------------------
                      3.1             Certificate of Incorporation of BGF
                                      Industries, Inc., as amended

                      3.2             Bylaws of BGF Industries, Inc., as amended

                      4.1             Indenture, dated as of January 21, 1999,
                                      among BGF Industries, Inc. and The Bank of
                                      New York, as trustee, relating to $100
                                      million principal amount of 10 1/4% Senior
                                      Subordinated Notes Due 2009

                      4.2             Form of 10 1/4% Series A and Series B
                                      Senior Subordinated Notes due 2009
                                      (included in Exhibit 4.1)

                      4.3             Registration Rights Agreement dated as of
                                      January 21, 1999, by and between BGF
                                      Industries, Inc. and the Initial Purchaser

                      10.1            Deferred Compensation Agreement, dated
                                      November 13, 1995, by and between BGF
                                      Industries, Inc. and Graham A. Pope(1)

                      10.2            Deferred Compensation Agreement, dated
                                      April 1, 1998, by and between BGF
                                      Industries, Inc. and Richard L. Cromer(1)

                      10.3            Deferred Compensation Agreement, dated
                                      April 16, 1990, by and between BGF,
                                      Industries, Inc. and James R. Henderson(1)

                      10.4            Deferred Compensation Agreement, dated
                                      January 28, 1993, by and between BGF
                                      Services, Inc. and Philippe Dorier(1)

                      10.5            Lease, dated March 20, 1996, between E.R.
                                      English, Sr., as lessor, and BGF
                                      Industries, Inc., as lessee

                      10.6            Purchase Order (Lease), dated November 26,
                                      1996, between K&C Brokerage, as lessor,
                                      and BGF Industries, Inc., as lessee

                      10.7            Lease, dated November 1, 1991, by and
                                      between H.V. Johns, Jr., as lessor, and
                                      BGF Industries, Inc. as lessee


<PAGE>
                   EXHIBIT NO.        DESCRIPTION OF EXHIBIT
                   -----------        ----------------------

                      10.8            Agreement between Contractor and Owner
                                      (Warehouse Lease), dated February 1, 1998,
                                      between Boyd Warehouse/Emmett Williams, as
                                      lessor, and BGF Industries, as lessee

                      10.9            Note Purchase Agreement dated January 15,
                                      1999 between BFG Industries, Inc., Inc.
                                      and the Initial Purchaser

                      10.10           Senior Credit Agreement dated September
                                      30, 1999 among BGF Industries, Inc., as
                                      Borrower, its Domestic Subsidiaries from
                                      time to time party thereto, as Guarantors,
                                      the Lenders Parties thereto and First
                                      Union National Bank, as Agent

                      10.11           Senior Subordinated Credit Agreement dated
                                      as of September 30, 1998 among BGF
                                      Industries, Inc., as Borrower, certain
                                      subsidiaries from time to time party
                                      thereto, as Guarantors, and First Union
                                      Investors, Inc., as Agent

                      10.12           Promissory Note, dated September 30, 1998,
                                      from Glass Holdings Corp. to BGF
                                      Industries, Inc. for the original
                                      principal amount of $135,043,844.62

                      10.13           Promissory Note, dated December 23, 1998,
                                      from Glass Holdings Corp. to BGF
                                      Industries, Inc. for the original
                                      principal amount of $2,681,000

                      10.14+          Second Amendment to Credit Agreement,
                                      dated December 16, 1999, by and among BGF
                                      Industries, Inc. (the "Borrower"), certain
                                      Domestic Subsidiaries of the Borrower
                                      party thereto (collectively the
                                      "Guarantors"), several banks and other
                                      financial institutions party thereto (the
                                      "Lenders") and First Union National Bank
                                      (the "Agent")

                      10.15++         Syndication Amendment and Assignment,
                                      dated November 30, 1998, by and among BGF
                                      Industries, Inc. (the "Borrower"), certain
                                      Domestic Subsidiaries of the Borrower
                                      party thereto (collectively the
                                      "Guarantors"), the Existing Lender (as
                                      defined therein), the New Lenders (as
                                      defined therein), and First Union National
                                      Bank (the "Agent")

                      10.16*          Lease Agreement, dated December 1, 1999 by
                                      and between Lawson Family LLC and BGF
                                      Industries, Inc.

                      12*             Statement of Computation of Ratios

<PAGE>

                   EXHIBIT NO.        DESCRIPTION OF EXHIBIT
                   -----------        ----------------------

                      21*             Subsidiaries of BGF

                      24*             Powers of Attorney (included on signature
                                      page)

                      27*             Financial Data Schedule

                      99.1*           Reconciliation of net income to EBITDA


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

+               Exhibit is incorporated by reference herein to Exhibit 99.1 to
                the Company's Form 8-K, dated March 8, 2000.

++              Exhibit is incorporated by reference herein to Exhibit 99.2 to
                the Company's Form 8-K, dated March 8, 2000.
*               Filed herewith.

(1)             Management contract or compensatory plan or arrangement required
                to be filed as an exhibit to this Form 10-K pursuant to Item
                14(c) of this report.