UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-K

|ý                                                   | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    
|--------------------------------------------------- | --------------------------------------------------------
|SECURITIES EXCHANGE ACT OF 1934                    
|For the fiscal year ended December 31, 2004        
|or                                                 
|o                                                   | 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 33-81808

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BUILDING MATERIALS CORPORATION
OF AMERICA(Exact name of registrant as specified in its charter)

|Delaware(State or Other Jurisdiction
of Incorporation or Organization)   |  | 22-3276290(IRS Employer Identification No.)
|------------------------------------------------------------------------ |  | -------------------------------------------
|1361 Alps Road
Wayne, New Jersey(Address of Principal Executive Offices) |  | 07470(Zip Code)                            

Registrant's Telephone Number, Including Area Code: (973) 628-3000
Securities registered pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act: none
See table of additional registrants below

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 ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes o    No ý

As of March 30, 2005, 1,015,010 shares of Class A Common Stock, $.001 par value of Building Materials Corporation of America were outstanding. There
is no trading market for the common stock of Building Materials Corporation of America.

As
of March 30, 2005, each of the additional registrants had the number of shares outstanding which is shown on the table below. There is no trading market for the common stock of
the additional registrants. As of March 30, 2005, no shares of the registrant or the additional registrants were held by non-affiliates.



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ADDITIONAL REGISTRANTS

|Exact name of registrant
as specified in its charter |  | State or other
jurisdiction of
incorporation or
organization |  | No. of
Shares
outstanding |  | Registration No./
I.R.S. Employer
Identification
Number |  | Address, including zip code and
telephone number, including
area code, of registrant's
principal executive office
|---------------------------------------------------- |  | ------------------------------------------------------------ |  | ------------------------- |  | ------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------
|Building Materials Manufacturing Corporation         |  | Delaware                                                     |  | 10                        |  | 333-69749-01/
22-3626208                                |  | 1361 Alps Road
Wayne, New Jersey 07470
(973) 628-3000                                                            
|Building Materials
Investment Corporation            |  | Delaware                                                     |  | 10                        |  | 333-69749-02/
22-3626206                                |  | 300 Delaware Avenue
Wilmington, Delaware 19801
(302) 427-5960                                                    

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BUILDING MATERIALS CORPORATION OF AMERICA    Form 10-K  for the fiscal year ended December 31, 2004    Table of Contents

|PART I   |  |                                                                                                              |  |   
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | --
|Item 1.  |  | Business                                                                                                     |  | 1 
|Item 2.  |  | Properties                                                                                                   |  | 8 
|Item 3.  |  | Legal Proceedings                                                                                            |  | 9 
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                          |  | 13
|PART II  |  |                                                                                                              |  |   
|Item 5.  |  | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 14
|Item 6.  |  | Selected Financial Data                                                                                      |  | 14
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |  | 14
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  | 14
|Item 8.  |  | Financial Statements and Supplementary Data                                                                  |  | 14
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 14
|Item 9A. |  | Controls and Procedures                                                                                      |  | 14
|Item 9B. |  | Other Information                                                                                            |  | 14
|PART III |  |                                                                                                              |  |   
|Item 10. |  | Directors and Executive Officers of the Registrant                                                           |  | 15
|Item 11. |  | Executive Compensation                                                                                       |  | 17
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 20
|Item 13. |  | Certain Relationships and Related Transactions                                                               |  | 20
|Item 14. |  | Principal Accountant Fees and Services                                                                       |  | 22
|PART IV  |  |                                                                                                              |  |   
|Item 15. |  | Exhibits, Financial Statement Schedules                                                                      |  | 24

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PART I

The Business section and other parts of this annual report on Form 10-K contain both historical and forward-looking
statements that involve risks and uncertainties. Many of the forward-looking statements are located in "Management's Discussion and Analysis of Financial Condition and Results of Operations." These
forward-looking statements are only predictions and generally can be identified by words such as "anticipates," "expects," "believes," "intends," "plans," "predicts," "foresees" and other related
terms. Similarly, statements that describe our objectives, plans or goals are also forward-looking statements. Our operations are subject to certain risks and uncertainties that could cause actual
results to differ materially from those contemplated by the relevant forward-looking statement. Forward-looking statements are not guarantees of future performance and our actual results may differ
significantly from the results discussed in the forward-looking statements. The forward-looking statements included herein are made only as of the date of this annual report on
Form 10-K. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Item 1.Business.

General

Building Materials Corporation of America or BMCA is a leading national manufacturer and marketer of a broad line of asphalt and polymer based roofing products
and accessories for the residential and commercial roofing markets. We also manufacture specialty building products and accessories for the professional and do-it-yourself
remodeling and residential construction industries. We were incorporated under the laws of Delaware in 1994 and are a wholly-owned subsidiary of BMCA Holdings Corporation, which is a
wholly-owned subsidiary of G-I Holdings Inc. In 1994, we acquired the operating assets and certain liabilities of GAF Building Materials Corporation, whose name has changed
to G-I Holdings Inc. G-I Holdings Inc. is a wholly-owned subsidiary of G Holdings Inc. Samuel J. Heyman beneficially owns (as defined
in Rule 13d-3 of the Securities Exchange Act) approximately 99% of G Holdings Inc. We do business under the name "GAF Materials Corporation."
Unless otherwise indicated by the context, "we," "us," "our" and "BMCA" refer to Building Materials Corporation of America and its consolidated subsidiaries.

To
facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, our former indirect parent, merged into its direct subsidiary,
G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct
subsidiary, GAF Fiberglass Corporation. In that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation, formerly known as GAF
Fiberglass Corporation, merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc.
G-I Holdings Inc. is now our indirect parent and our direct parent is BMCA Holdings Corporation. We refer to G-I Holdings Inc. and any and
all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials
Corporation in this report as "G-I Holdings."

On
January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States
Bankruptcy Court for the District of New Jersey in Newark, New Jersey due to its asbestos-related bodily injury claims relating to the inhalation of asbestos fiber. We refer to these claims in this
report as "Asbestos Claims." G-I Holdings, the successor to GAF Corporation by merger, is a privately-held holding company and we are its only operating subsidiary. We
are not included in the bankruptcy filing.

Our
executive offices are located at 1361 Alps Road, Wayne, New Jersey 07470 and our telephone number is (973) 628-3000.

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Residential Roofing

We are a leading national manufacturer of a complete line of premium residential roofing products. Residential roofing product sales represented approximately
74%, 73% and 74% of our net sales in 2004, 2003 and 2002, respectively. Our principal residential roofing products consist of laminated and strip asphalt shingles. We have improved our sales mix of
residential roofing products in recent years by increasing our emphasis on laminated shingles and accessory products, which generally are sold at higher prices with more attractive profit margins than
our standard strip shingle products. We believe, based on unit sales, that we are the largest manufacturer of residential roofing shingles in the United States. Statements contained in this report as
to our competitive position are based on industry information which we believe is reliable.

Our
two principal lines of residential roofing shingles are the Timberline® series and the Sovereign® series. We also produce certain specialty shingles.

The Timberline® Series.

The Timberline® series offers a premium architectural laminated product line that adds dramatic shadow lines, while adding depth and dimension and
substantially improving the appearance of a roof. The series includes:



The Sovereign® Series.

The Sovereign® series includes:



Specialty Shingles.

Our specialty asphalt shingles include:



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Weather Stopper® Integrated Roofing System.In addition to shingles, we supply the major components
necessary to install a complete roofing system. Our Weather Stopper® Integrated Roofing System begins with Weather Watch® and Stormguard® waterproof
underlayments for eaves, valleys and flashings to protect against water seepage between the roof deck and the shingles caused by ice build-up and wind-driven rain. Our Weather
Stopper® Integrated Roofing System also includes Shingle-Mate® glass-reinforced or Leatherback® saturated felt underlayments,
Timbertex®, TimberCrest and Pacific Ridge Hip and Ridge shingles, which are significantly thicker and larger than standard hip and ridge shingles and provide
dramatic accents to the slopes and planes of a finished roof, and the Cobra® Ridge Vent series, which provides attic ventilation.

Commercial Roofing

We manufacture a full line of modified bitumen and asphalt built-up roofing products, thermoplastic polyolefin products, liquid applied membrane
systems and roofing accessories for use in the application of commercial roofing systems. Commercial roofing represented approximately 22%, 22% and 21% of our net sales in 2004, 2003 and 2002,
respectively. We also market, under the EverGuard® trademark, thermoplastic and elastomeric single-ply products. The EverGuard® products address the important and
growing single ply segment of the commercial roofing market. The elastomeric products target the price conscious property owners, while the thermoplastic products offer building owners the reliability
of heat-welded seams and ENERGY STAR® qualified systems. The EverGuard® brand also includes Freedom self-adhering single-ply
membranes, which feature faster installation without the need for hot asphalt, solvent-based adhesives, or torches.
We believe, based on unit sales, that we are the largest manufacturer of both asphalt built-up roofing products and modified bitumen products in the United States.

We
manufacture fiberglass-based felts under the Gafglas® and Brai® trademarks, which are made from asphalt impregnated glass fiber mat for use as a component in
asphalt built-up roofing systems. Most of our fiberglass based felts are assembled on the roof by applying successive layers of roofing with asphalt and topped, in some applications, with
gravel or mineral surfaced sheets. Thermal insulation may be applied beneath the membrane. We also manufacture base sheets, flashings and other roofing accessories for use in these systems; our
Topcoat® roofing system, a liquid-applied membrane system designed to protect and waterproof existing roofing systems; and roof maintenance products. In addition, we market insulation
products under the EnergyGuard brandname, which includes perlite and isocyanurate foam in addition to accessories, such as vent stacks, fasteners and cements and coatings. These products
allow us to provide customers with a complete roofing system and the ability to market and sell extended guarantees.

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We
sell modified bitumen products under the Ruberoid® and Brai® trademarks. Modified bitumen products are used primarily in re-roofing applications or
in combination with glass membranes in GAF CompositeRoof systems. These products consist of a roofing membrane utilizing polymer-modified asphalt, which strengthens and increases
flexibility and is reinforced with a polyester non-woven mat or a glass mat. Modified bitumen systems provide high strength characteristics, such as weatherability, water resistance and
labor cost savings due to ease of application.

Specialty Building Products and Accessories

We manufacture and market a variety of specialty building products and accessories for the professional and do-it-yourself remodeling and
residential construction industries. Specialty building products and accessories represented approximately 4%, 5% and 5% of our net sales in 2004, 2003 and 2002, respectively. These products primarily
consist of residential attic ventilation systems and metal and fiberglass air distribution products for the HVAC (heating, ventilating and air conditioning) industry.

Marketing and Sales

Our sales and marketing functions are designed to help customers grow their business and provide better service while offering property owners the best and safest
choice from our product offerings. We believe we have one of the industry's largest sales forces. We have a staff of technical professionals who work directly with architects, consultants, contractors
and building owners providing support to our sales force, distributors, lumberyards and retailers. We sell our roofing and specialty building products and accessories through our own sales force of
approximately 300 experienced, full-time employees and independent sales representatives located across the United States and Canada. A major portion of our roofing product sales are to
wholesale distributors and retailers, who resell our products to roofing contractors, builders and property owners. We believe that the wholesale distribution channel represents the principal
distribution channel for professionally installed asphalt roofing products. As a result, we believe that our nationwide coverage has contributed to certain of our roofing products being among the most
recognized and requested brands in the industry.

Our
certified contractor programs offer marketing and support services to a nationwide network of residential (Master Elite® and Authorized) and commercial
(Master, Master Select, Platinum and Authorized) installers, as well as residential homebuilders. We view these certified contractors and builders as an
effective extension of our sales force, which promotes our products and support services (including enhanced warranty protection) directly to property owners, construction specifiers and architects.

Significant Customers

We sell our products through multiple distribution channels with a strong presence in the wholesale, retail, manufactured housing and lumberyard distribution
channels. No single customer accounted for over 10% of our net sales in 2004, 2003 and 2002, except for The Home Depot, Inc. and American Builders & Contractors Supply Company,
Inc.

Raw Materials

The major raw materials required for the manufacture of our roofing products are asphalt, mineral stabilizer, glass fiber, glass fiber mat, polyester mat and
granules. Asphalt and mineral stabilizer are available from a large number of suppliers on substantially similar terms. We currently have contracts with several of these suppliers and others are
available as substitutes. In 2004, prices of most raw materials other than asphalt and other petroleum-based raw materials, and energy have been relatively

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stable,
rising moderately with general industrial prices, while the increase in the price of asphalt was driven mostly by continued high crude oil prices during 2004.

During
2004, the cost of asphalt continued to be high relative to historical levels. Due to the strength of our manufacturing operations which allows us to use many types of asphalt
together with our ability to secure alternative sources of supply, we do not anticipate that any future disruption in the supply of asphalt will have a material impact on future net sales, although no
assurances can be provided in that regard.

To
mitigate these and other petroleum-based cost increases, we announced and implemented multiple price increases during 2004. We will attempt to pass on future additional unexpected
cost increases from suppliers as needed; however, no assurances can be provided that these price increases will be accepted in the marketplace.

The
major raw materials required for the manufacture of our specialty building products and accessories are steel tubes, sheet metal products, aluminum, motors and cartons. These raw
materials are commodity-type products, the pricing for which is driven by supply and demand. Prices of other raw materials used in the manufacture of specialty building products and
accessories are more closely tied to movements in inflation rates. All of these raw materials are available from a large number of suppliers on substantially similar terms.

Five
of our roofing plants have easy access to deep water ports thereby permitting delivery of asphalt by ship, the most economical means of transport. Our Nashville, Tennessee plant
manufactures a significant portion of our glass fiber requirements for use in our Chester, South Carolina and Shafter, California plants, which manufacture glass fiber mat substrate.

During
2004, we purchased substantially all of our requirements for colored roofing granules and algae-resistant granules from an affiliate, International Specialty Products Inc.,
under a
long-term requirements contract, except for the requirements of certain of our roofing plants which are supplied by third parties. We refer to International Specialty Products Inc.
as "ISP."

Backlog

Our backlog is not significant and is not material to our overall operations.

Seasonal Variations and Working Capital

Sales of roofing and specialty building products and accessories in the northern regions of the United States generally decline during the winter months due to
adverse weather conditions. Generally, our inventory practice includes increasing inventory levels in the first and second quarters of each year in order to meet peak season demand in the months of
June through November.

Warranty Claims

We provide certain limited warranties covering most of our residential roofing products for periods generally ranging from 20 to 40 years, although certain
of our styles provide for a lifetime limited warranty. Although terms of warranties vary, we believe that our warranties generally are consistent with those offered by our competitors with the
exception of our unique "Golden Pledge" warranty. We also offer certain limited warranties of varying duration covering most of our commercial roofing products. Most of our specialty building products
and accessories provide limited warranties for periods generally ranging from 5 to 10 years, with lifetime limited warranties on certain products. We review the reserves established for
estimated probable future warranty claims at least on an annual basis.

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Competition

The roofing products industry is highly competitive and includes a number of national competitors. These competitors in the residential roofing and accessories
markets are Owens-Corning, Tamko,
Elkcorp and CertainTeed, and in the commercial roofing market are Johns Manville, Firestone and Carlisle. In addition, there are numerous regional competitors, principally in the commercial roofing
market.

Competition
is based largely upon products and service quality, distribution capability, price and credit terms. We believe that we are well-positioned in the marketplace as
a result of our broad product lines in both the residential and commercial markets, consistently high product quality, strong sales force and national distribution capabilities. As a result of the
growth in demand for premium laminated shingles, a number of roofing manufacturers, including our company, have increased their laminated shingle production capacity in recent years. In that regard,
on February 9, 2004, we announced plans to build a new high speed, state-of-the-art shingle manufacturing facility to support our continued premium laminated
shingle growth in the Northeast and Canadian markets. On May 7, 2004, we acquired certain assets of a manufacturing facility located in Quakertown, Pennsylvania from Atlas Roofing Corporation.
The Quakertown manufacturing facility provides us with immediate production capacity to keep pace with the growing demand for our products in the North American markets, plus the potential for
additional capacity expansion, as well as saturated felt products. With the acquisition of the Quakertown manufacturing facility, we decided not to construct the new shingle manufacturing facility in
the Northeast, as announced on February 9, 2004.

Our
specialty building products and accessories business is highly competitive with numerous competitors due to the breadth of the product lines we market. Major competitors include
Gibraltar, Southwark, Inc., Lomanco Inc., Standex and Hart & Cooley.

Research and Development

We primarily focus our research and development activities on the development of new products, process improvements and the testing of alternative raw materials
and supplies. Our research and development activities, dedicated to residential, commercial and fiberglass products, are located at technical centers in Wayne, New Jersey, Chester, South Carolina and
Walpole, Massachusetts. Our research and development expenditures were approximately $9.3, $7.6 and $6.6 million in 2004, 2003 and 2002, respectively.

Intellectual Property

We hold a number of patents, trademarks and licenses obtained over a number of years and expiring at various times consistent with our business needs. Generally,
we seek statutory protection for strategic or financially important intellectual property, including patents, trademarks and licenses developed in connection with our businesses. Certain intellectual
property, where appropriate, is protected by contracts, licenses, confidentiality or other similar agreements.

We
own numerous United States and foreign patents (and their respective counterparts), the more important of which cover those technologies and inventions embodied in current products,
or which are used in the manufacture of those products. While we believe our patent portfolio is important to our business operations and in the aggregate constitutes a valuable asset, no single
patent, or group of patents, is critical to the success of our businesses. We also, from time to time, grant licenses under our patents and technology and receive licenses under the patents and
technology of others.

In
addition, we own numerous registered trademarks in the United States and in many foreign countries that apply to our product offerings and businesses. Most works of authorship, such
as computer programs, catalogs, product brochures and sales literature, carry appropriate notices

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indicating
our claim to copyright protection under United States law and where appropriate, international treaties. See Item 3, "Legal ProceedingsOther Litigation."

Environmental Compliance

Since 1970, federal, state and local authorities have adopted and amended a wide variety of federal, state and local environmental laws and regulations relating
to environmental matters. The environmental laws and regulations deal with air and water emissions or discharges into the environment, as well as the generation, storage, treatment, transportation and
disposal of solid and hazardous waste, and the remediation of any releases of hazardous substances and materials to the environment. These laws and regulations affect us because of the nature of our
operations and that of our predecessor and certain of the substances that are, or have been used, produced or discharged at our or its plants or at other locations. We made capital expenditures of
approximately $2.5, $1.9 and $0.7 million in 2004, 2003 and 2002, respectively, relating to environmental compliance. These expenditures are included in additions to property, plant and
equipment.

We
believe that our manufacturing facilities comply in all material respects with applicable environmental laws and regulations, and, while we cannot predict whether more burdensome
requirements will be adopted by governmental authorities in the future, nor can we predict with certainty future capital expenditures or operating costs for environmental compliance, we do not believe
they will have a material effect on our business, liquidity, results of operations, cash flows, financial position or competitive position.

See
Item 3, "Legal ProceedingsEnvironmental Litigation."

Employees

At December 31, 2004, we employed approximately 3,700 people worldwide, approximately 1,200 of which were subject to fourteen union contracts. The
contracts are effective for four to five year periods. During 2004, two labor contracts expired and were renegotiated. In addition, two other union contracts expired during the first quarter of 2005
and were also renegotiated. We believe that our relations with our employees and their unions are satisfactory.

Other Information

Any materials that we have filed with the Securities and Exchange Commission may be read and copied by the public at the SEC's Public Reference Room located at
450 Fifth Street, N.W., Washington, DC 20549 or by telephoning the SEC at 1-800-SEC-0330. These reports are also available electronically on the SEC's EDGAR website
at www.sec.gov. Alternatively, if you wish to receive a paper copy of our reports or any of the exhibits filed with or furnished to the SEC, they may be obtained by writing to: the Corporate
Secretary, Building Materials Corporation of America, 1361 Alps Road, Wayne, New Jersey 07470.

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Item 2.Properties.

Our corporate headquarters and principal research and development laboratories are located at a 100-acre campus-like
office and research park owned by a subsidiary of ISP, at 1361 Alps Road, Wayne, New Jersey 07470. We occupy our headquarters pursuant to our management agreement with ISP. See Item 13,
"Certain Relationships and Related TransactionsManagement Agreement."

We own or lease the principal real properties described below. Unless otherwise indicated, the properties are owned in fee. In addition to the principal
facilities listed below, we maintain sales offices and warehouses, substantially all of which are in leased premises under relatively short-term leases.

Location

FacilityAlabamaMobile

Plant, Warehouse*CaliforniaFontana

Plant, Regional Sales OfficeHollister

Plant, Plant*Shafter

PlantStockton

Plant, Plant, Warehouses*FloridaTampa

Plant, Regional Sales OfficeGeorgiaAtlanta

Sales Office*Savannah

PlantIndianaMount Vernon

Plant, PlantMichigan City

PlantIllinoisRomeoville

Regional Sales Office*MarylandBaltimore

Plant, WarehouseMassachusettsMillis

Plant, Warehouse*Walpole

Plant*, Research Center*MinnesotaMinneapolis

Plant, WarehouseMississippiPurvis

Plant*New JerseyNorth Branch

Plant, Warehouses*North Brunswick

Regional Sales Office*, Warehouse*Swedesboro

Regional Sales Office*Wayne

Headquarters*, Corporate Administrative Offices*, Research Center*North CarolinaBurgaw

PlantGoldsboro

Plant, Warehouse*OhioWadsworth

Plant*PennsylvaniaErie

Plant, Warehouse*Quakertown

PlantWind Gap

PlantSouth CarolinaChester

Plant, Research CenterTennesseeNashville

Plant, Quality Control Center*TexasAddison

Regional Sales Office*Dallas

Plant, Warehouses*Port Arthur

Customer Service Center


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In addition to the foregoing list, we have two manufacturing facilities in Port Arthur, Texas and Albuquerque, New Mexico that are currently
closed. We believe that our plants and facilities, which are of varying ages and are of different construction types, have been satisfactorily maintained, are in good condition, are suitable for their
respective operations and generally provide sufficient capacity to meet production requirements. Due to the seasonality of our business, our production facilities generally run at full capacity during
the months necessary to meet our peak seasonal operating demands. Each plant has adequate transportation facilities for both raw materials and finished products. In 2004, we made capital expenditures
and an acquisition of a manufacturing facility of approximately $67.0 million relating to property, plant and equipment.

Item 3.Legal Proceedings.

Asbestos Bodily Injury Claims.In connection with our formation, we contractually assumed and agreed to pay the first
$204.4 million of liabilities for asbestos-related bodily injury claims relating to the inhalation of asbestos fiber ("Asbestos Claims") of our parent, G-I Holdings. As of
March 30, 1997, we paid all of our assumed asbestos-related liabilities. In January 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the
U.S. Bankruptcy Code due to Asbestos Claims. Most asbestos claims do not specify the amount of damages sought. This Chapter 11 proceeding remains pending.

Claimants
in the G-I Holdings' bankruptcy, including judgment creditors, might seek to satisfy their claims by asking the bankruptcy court to require the sale of
G-I Holdings' assets, including its holdings of BMCA Holdings Corporation's common stock and its indirect holdings of our common stock. Such action could result in a change of control of
our company. In addition, those creditors may seek to file Asbestos Claims against our company (with approximately 1,900 Asbestos Claims having been filed against us as of December 31, 2004).
We believe that we will not sustain any liability in connection with these or any other asbestos-related claims. On February 2, 2001, the United States Bankruptcy Court for the District of New
Jersey issued a temporary restraining order enjoining any existing or future claimant from bringing or prosecuting an Asbestos Claim against us. By oral opinion on June 22, 2001, and written
order entered February 22, 2002, the court converted the temporary restraints into a preliminary injunction prohibiting the bringing or prosecution of any such Asbestos Claim against us. On
February 7, 2001, G-I Holdings filed an action in the United States Bankruptcy Court for the District of New Jersey seeking a declaratory judgment that BMCA has no successor
liability for Asbestos Claims against G-I Holdings and that it is not the alter ego of G-I Holdings (the "BMCA Action"). On May 13, 2003, the United States District
Court for the District of New Jersey overseeing the G-I Holdings' Bankruptcy Court withdrew the reference of the BMCA Action from the Bankruptcy Court, and this matter will be heard by the
District Court directly. The BMCA Action is in a pretrial discovery stage and no trial date has been set by the court. As a result, it is not possible to predict the outcome of this litigation,
although we believe our claims are meritorious. While we cannot predict whether any additional Asbestos Claims will be asserted against us or our assets, or the outcome of any litigation relating to
those claims, we believe that we have meritorious defenses to any claim that we have asbestos-related liability, although there can be no assurances in this regard.

Actions Relating to G-I Holdings' Bankruptcy.On or about February 8, 2001, the creditors' committee
established in G-I Holdings' bankruptcy case filed a complaint in the United States Bankruptcy Court, District of New Jersey against G-I Holdings and us. The complaint requests
substantive consolidation of us with G-I Holdings or an order directing G-I Holdings to cause us to file for bankruptcy protection. We and G-I Holdings intend to
vigorously defend the lawsuit. The plaintiffs also filed for interim relief absent the granting of their requested relief described above. On March 21, 2001, the bankruptcy court denied
plaintiffs' application for interim relief. In November 2002, the creditors' committee, joined in by the legal representative of future demand holders, filed a motion for appointment of a
trustee in the G-I Holdings' bankruptcy. In December 2002, the bankruptcy court

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denied
the motion. The creditors' committee appealed the ruling to the United States District Court, which denied the appeal on June 27, 2003. The creditors' committee appealed the denial to
the Third Circuit Court of Appeals, which denied the appeal on September 24, 2004. The creditors' committee filed a petition with the Third Circuit Court of Appeals for a rehearing of its
denial of the creditors' committee's appeal, which was denied by the Court on October 26, 2004.

On
February 27, 2004, the creditors' committee, joined in by the legal representative, filed a motion to modify the preliminary injunction and to seek authority by the bankruptcy
court to avoid, on various grounds, certain liens granted in connection with the financing obtained by us in December, 2000. G-I Holdings and we have opposed the motion and a hearing on
the motion was held by the bankruptcy court on March 29, 2004. By opinion dated June 8, 2004, the court granted the motion in
part and denied it in part. On July 7, 2004, the creditors' committee filed a claim challenging, as a fraudulent conveyance, the transactions entered into in connection with our formation in
1994, in which G-I Holdings caused to be transferred to our company all of its roofing business and assets and in which we assumed certain liabilities relating to those assets, including a
specified amount of asbestos liabilities (the "1994 transaction"). In addition on July 7, 2004, the creditors' committee filed a claim against holders of BMCA's bank and bond debt outstanding
in 2000, seeking to avoid the liens granted to them, based on the committee's theory that the 1994 transaction was a fraudulent conveyance. On August 3, 2004, the creditors' committee filed an
amended complaint adding the names of additional alleged bondholders. On July 20, 2004, the creditors' committee appealed the court's decision, issued on June 8, 2004, seeking the
authority to file a lawsuit against the banks and bondholders discussed above, challenging the liens granted to them in 2000 as a fraudulent conveyance and are appealing, among other things,
certain adverse rulings relating to statute of limitation issues. This appeal remains pending before the District Court.

On
August 3, 2004, the creditors' committee filed a motion with the bankruptcy court seeking to impose certain conditions on the redemption of our $100 million
85/8% Senior Notes due 2006 (the "2006 Notes"), or in the alternative, temporarily enjoin us from satisfying such redemption. On August 5, 2004, the bankruptcy court, having
previously ruled on June 8, 2004, that the redemption could proceed without restriction, refused to impose any conditions on the redemption or to enjoin, on a preliminary basis, us from
repaying the 2006 Notes pursuant to a July 26, 2004 call notice, or from purchasing any of our senior notes on the open market. The committee subsequently withdrew its motion as being moot, and
the redemption of the 2006 Notes concluded on August 26, 2004.

We
believe that the claims of the creditors' committee are without merit. However, if we are not successful defending against one or more of these claims, we may be forced to file for
bankruptcy protection and/or contribute all or a substantial portion of our assets to satisfy the claims of G-I Holdings' creditors. Either of these events, or the substantive
consolidation of G-I Holdings and us, would weaken our operations and cause us to divert a material amount of our cash flow to satisfy the asbestos claims of G-I Holdings, and
may render us unable to pay interest or principal on our credit obligations.

Asbestos-in-Building Claims.G-I Holdings has also been named as a
co-defendant in asbestos-in-buildings cases for economic and property damage or other injuries based upon an alleged present or future need to remove asbestos
containing materials from public and private buildings. We refer to the asbestos-in-building claims as the "Building Claims." Most Building Claims do not seek to recover an
amount of specific damages. Since these actions were first initiated approximately 20 years ago, G-I Holdings has not only successfully disposed of approximately 145 of these cases,
but is a co-defendant in only three remaining lawsuits, one of which has been dormant. These actions have been stayed as to G-I Holdings pursuant to the G-I
Holdings' bankruptcy case. No new Building Claims were filed in 2004. We have not assumed any liabilities with respect to Building Claims, and believe we will not sustain any liability in connection
with such claims.

10

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Insurance Matters.In October 1983, G-I Holdings filed a lawsuit in Los Angeles, California Superior Court
against its past insurance carriers to obtain a judicial determination that those carriers were obligated to defend and indemnify it for Building Claims. G-I Holdings is seeking
declaratory relief as well as compensatory damages. This action is presently in the pre-trial pleading stage. The parties have agreed to hold this action in abeyance pending developments
in the Building Claims. Because this litigation is in early stages and evidence and interpretations of important legal questions are presently unavailable, it is not possible to predict the future of
this litigation.

In
all the Building Claims, which are presently stayed as to G-I Holdings as a result of the G-I Holdings' bankruptcy filing, G-I Holdings' defense
costs have been paid by one of its primary carriers. While G-I Holdings expects that this primary carrier will continue to be obligated to defend and indemnify G-I Holdings,
this primary carrier has reserved its rights to later refuse to defend and indemnify G-I Holdings and to seek reimbursement for some or all of the fees paid to defend and resolve the
Building Claims.

Environmental Litigation

We, together with other companies, are a party to a variety of proceedings and lawsuits involving environmental matters under the Comprehensive Environmental
Response Compensation and Liability Act, and similar state laws, in which recovery is sought for the cost of cleanup of contaminated sites or remedial obligations are imposed, a number of which are in
the early stages or have been dormant for protracted periods. We refer to these proceedings and lawsuits below as "Environmental Claims." Most of the Environmental Claims do not seek to recover an
amount of specific damages.

In
connection with our formation, we contractually assumed all environmental liabilities of G-I Holdings relating to existing plant sites and our business as then conducted.
The estimates referred to below reflect those environmental liabilities assumed by us and our other environmental liabilities. The environmental liabilities of G-I Holdings we did not
assume relate primarily to closed manufacturing facilities. G-I Holdings estimates that, as of December 31, 2004, its liability in respect of the environmental liabilities of
G-I Holdings not assumed by us was approximately $9.8 million, not accounting for any possible reduction of liability as a result of the G-I Holdings' bankruptcy, before
insurance recoveries reflected on its balance sheet of $10.0 million. We estimate our liability as of December 31, 2004, in respect of assumed and other environmental liabilities is
$1.4 million, and expect insurance recoveries, as discussed below, of $1.3 million. Insurance recoveries reflected on these balance sheets relate to both past expenses and estimated
future liabilities. We refer to these recoveries below as "estimated recoveries."

At
most sites, we anticipate that liability will be apportioned among the companies found to be responsible for the presence of hazardous substances at the site. Although it is difficult
to predict the ultimate resolution of these claims, based on our evaluation of the financial responsibility of the parties involved and their insurers, relevant legal issues and cost sharing
arrangements now in place, we estimate that our liability in respect of all Environmental Claims, including certain environmental compliance expenses, will be as discussed above. While we cannot
predict whether adverse decisions or events can occur in the future, in the opinion of management, the resolution of such matters should not be material to our business, liquidity, results of
operations, cash flows or financial position. However, adverse decisions or events, particularly as to increases in remedial costs, discovery of new contamination, assertion of natural resource
damages, and the liability and the financial responsibility of our insurers and of the other parties involved at each site and their insurers, could cause us to increase our estimate of our liability
in respect of those matters. It is not currently possible to estimate the amount or range of any additional liability. For information relating to other environmental compliance expenses, see
Item 1, "BusinessEnvironmental Compliance."

11

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After
considering the relevant legal issues and other pertinent factors, we believe that it is probable we will receive the estimated recoveries and the legal expenses incurred by
G-I Holdings on our behalf. We also believe that we are entitled to the estimated recoveries, although our insurers have not affirmed a legal obligation under the policies to provide
indemnity for those claims.

In
June 1997, G-I Holdings commenced litigation on behalf of itself and its predecessors, successors, subsidiaries and related corporate entities in the Superior Court
of New Jersey, Somerset County, seeking amounts substantially in excess of the estimated recoveries. This action was removed to the United States Bankruptcy Court for the District of New Jersey in
February 2001, in conjunction with the G-I Holdings' bankruptcy case. In November 2002, the parties agreed to have the action remanded to the Superior Court of New Jersey,
Somerset County where it is pending. While we believe that our claims are meritorious, there can be no assurance that we will prevail in our efforts to obtain amounts equal to, or in excess of, the
estimated recoveries.

We
believe that we will not sustain any liability for environmental liabilities of G-I Holdings other than those that we have contractually assumed or that relate to the
operations of our business. While we cannot predict whether any claims for non-assumed environmental liabilities will be asserted against us or our assets, or the outcome of any litigation
relative to those claims, we believe that we have meritorious defenses to those claims.

Other Litigation

On or about April 29, 1996, an action was commenced in the Circuit Court of Mobile County, Alabama against G-I Holdings on behalf of a
purported nationwide class of purchasers of, or current owners of, buildings with certain asphalt shingles manufactured by G-I Holdings and affiliated entities. The action alleged, among
other things, that those shingles were defective and sought unspecified damages on behalf of the purported class. On September 25, 1998, we agreed to settle this litigation on a national,
class-wide basis for asphalt shingles manufactured between January 1, 1973 and December 31, 1997. Following a fairness hearing, the court granted final approval of the
class-wide settlement in April 1999. Under the terms of the settlement, we will provide property owners whose shingles were manufactured during this period and which suffer certain
damages during the term of their original warranty period, and who file a qualifying claim, with an opportunity to receive certain limited benefits beyond those already provided in their
existing warranty.

In
October 1998, G-I Holdings brought suit in the Superior Court of New JerseyMiddlesex County, on our behalf, against certain of its insurers for
recovery of the defense costs in connection with the Mobile County, Alabama class action and a declaration that the insurers are obligated to provide indemnification for all damages paid pursuant to
the settlement of this class action and for other damages. This action is pending.

On
or about February 17, 2004, litigation was commenced against us in the United States District Court for the Eastern District of Pennsylvania by CertainTeed Corporation alleging
patent infringement in connection with certain of our products representing less than 5% of our net sales. No specific amount of damages have been sought in this litigation. We intend to defend
ourselves vigorously in this matter, have denied CertainTeed's claims and have filed counterclaims against CertainTeed for patent infringement, violations of the antitrust laws and for trade libel.
Although this matter is in its preliminary stages and there can be no assurances made, we believe that CertainTeed's claims are without merit and will not have a material adverse effect on us. In
addition, although our counterclaims against CertainTeed are in their preliminary stages, we believe our counterclaims are meritorious.

*    *    *

The
cases described above under "Legal ProceedingsAsbestos-in-Building Claims," "Environmental Litigation" and "Other Litigation" generally do not
seek only specific amounts of

12

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damages,
but rather seek all damages from whatever claims are asserted. We believe that the ultimate disposition of the cases, however, will not, individually or in the aggregate, have a material
adverse effect on the Company's liquidity, financial position or results of operations.

Tax Claim Against G-I Holdings

On September 15, 1997, G-I Holdings received a notice from the Internal Revenue Service or the IRS, of a deficiency in the amount of
$84.4 million (after taking into account the use of net operating losses and foreign tax credits otherwise available for use in later years) in connection with the formation in 1990 of
Rhône-Poulenc Surfactants and Specialties, L.P. or the surfactants partnership, a partnership in which G-I Holdings held an interest. G-I Holdings has advised us
that it believes that it will prevail in this tax matter arising out of the surfactants partnership, although there can be no assurance in this regard. We believe that the ultimate disposition of this
matter will not have a material adverse effect on our business, financial position or results of operations. On September 21, 2001, the IRS filed a proof of claim with respect to such
deficiency against G-I Holdings in the G-I Holdings' bankruptcy. If such proof of claim is sustained, we and/or certain of our subsidiaries together with G-I
Holdings and several current and former subsidiaries of G-I Holdings would be severally liable for a portion of those taxes and interest. G-I Holdings has filed an objection to
the proof of claim. If the IRS were to prevail for the years in which we and/or certain of our subsidiaries were part of the G-I Holdings Group, we would be severally liable for
approximately $40.0 million in taxes plus interest, although this calculation is subject to uncertainty depending upon various factors including G-I Holdings' ability to satisfy its
tax liabilities and the application of tax credits and deductions.

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

Not applicable.

13

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PART II

Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

All
of our outstanding shares of Class A common stock are owned by BMCA Holdings Corporation or BHC. Accordingly, there is no public trading market for our common stock.

In
2003, we did not declare or pay dividends to our parent corporation. In 2004, we declared and paid cash dividends of $15.0 million in the aggregate, to our parent corporation.
See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 13 to our consolidated financial statements included in this annual report on
Form 10-K for information regarding restrictions on the payment of dividends set forth on pages F-2 to F-20 and pages F-44
to F-48, respectively. Any decision to pay dividends, and the timing and amount thereof, is dependent upon, among other things, our results of operations, financial condition, cash
requirements, prospects and other factors deemed relevant by our Board of Directors.

Item 6.Selected Financial Data.

See page F-21.

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

See page F-2.

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

See "Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Financial
ConditionMarket-Sensitive Instruments and Risk Management" on page F-20.

Item 8.Financial Statements and Supplementary Data.

See Index on page F-1 and Financial Statements and Supplementary Data on pages F-23 to F-68.

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

Not applicable.

Item 9A.Controls and Procedures.

Disclosure Controls and Procedures:Our management, with the participation of the Chief Executive Officer and Chief Financial
Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer
have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely
basis, information required to be disclosed by us in the reports filed, furnished or submitted under the Exchange Act.

Internal Control Over Financial Reporting:There were no significant changes in our internal control over financial reporting
identified in management's evaluation during the fourth quarter of fiscal year 2004 that have materially affected or are reasonably likely to materially affect our internal control over financial
reporting.

Item 9B.Other Information.

None.

14

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PART III

Item 10.Directors and Executive Officers of the Registrant.

Executive Officers of the Registrant

The following are the name, age and respective positions of our directors and executive officers.

|Name                |  | Age |  | Position                                                                                   
|------------------- |  | --- |  | -------------------------------------------------------------------------------------------
|William W. Collins  |  | 54  |  | Chief Executive Officer, President and Director                                            
|Robert B. Tafaro    |  | 54  |  | Executive Vice PresidentRoofing and Director                                              
|John F. Rebele      |  | 50  |  | Senior Vice President, Chief Financial Officer and Director                                
|David A. Harrison   |  | 48  |  | Senior Vice PresidentMarketing, Contractor Services and Corporate Development and Director
|Kenneth E. Walton   |  | 48  |  | Senior Vice PresidentOperations and Director                                              
|Richard A. Weinberg |  | 45  |  | Executive Vice President, General Counsel and Secretary                                    
|Susan B. Yoss       |  | 46  |  | Senior Vice President                                                                      

Set
forth below is a description of the backgrounds, including business experience over the past five years, for each of our directors and executive officers. There are no family
relationships that exist between any of our directors or executive officers. Under our bylaws, our officers are elected by the Board of Directors and hold office until their respective successors are
duly elected and qualified. As used in this section, "ISP" refers to International Specialty Products Inc.

William W. CollinsMr. Collins has been President and Chief Executive Officer of BMCA and some of our subsidiaries
since September 2000 and a director of these companies for more than five years. He was President and Chief Operating Officer of the same companies from February 2000 to
September 2000 and was Executive Vice President and Chief Operating Officer of these companies from July 1999 to February 2000. For more than five years, Mr. Collins also
has been a director of G-I Holdings, a corporation that filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2001, due to its
Asbestos Claims.

Robert B. TafaroMr. Tafaro has been a director of BMCA and some of our subsidiaries since September 2000 and
Executive Vice President, Roofing of BMCA and some of our subsidiaries since February 2005. He was previously Senior Vice President and General ManagerRoofing Systems Sales of BMCA
and some of our subsidiaries from October 2003 to February 2005. He was Senior Vice President and General ManagerResidential Systems of BMCA and some of our subsidiaries
from July 2000 to October 2003. He was Vice PresidentMarketing and Sales, Commercial Roofing Products of us and some of our subsidiaries from November 1997 to
July 2000.

John F. RebeleMr. Rebele has been a director of BMCA since January 2001 and of BMCA's subsidiaries since
March 2001. He also has been Senior Vice President and Chief Financial Officer of BMCA and some of our subsidiaries since December 2001 and was Vice President and Chief Financial Officer
of the same companies from January 2001 to December 2001. He was Vice PresidentFinance of BMCA and some of our subsidiaries from March 1998 to January 2001.

David A. HarrisonMr. Harrison has been a director of BMCA and some of our subsidiaries since September 2000. He
also has been Senior Vice PresidentMarketing, Contractor Services and Corporate Development of BMCA and some of our subsidiaries since July 2000. He has also served as President of
GAF Materials Corporation (Canada) since July 2000. Mr. Harrison was Vice President-Corporate Marketing and Development of BMCA and some of our subsidiaries from November 1999 to
July 2000.

15

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Kenneth E. WaltonMr. Walton has been a director of BMCA and some of our subsidiaries since September 2000. He
also has been Senior Vice PresidentOperations of BMCA and some of our subsidiaries since July 2000. He was Vice PresidentResidential Operations of BMCA from
March 1999 to July 2000.

Richard A. WeinbergMr. Weinberg has been Executive Vice President, General Counsel and Secretary of BMCA and our
subsidiaries for more than five years. Since September 2000, he has been Chief Executive Officer, President, General Counsel and Secretary of G-I Holdings,
a corporation that filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2001, due to its Asbestos Claims, and previously served as Executive
Vice President, General Counsel and Secretary of G-I Holdings and its subsidiaries from May 1998 to September 2000. Mr. Weinberg has served as a director of
G-I Holdings for more than five years. He also has been Executive Vice President, General Counsel and Secretary of ISP and its subsidiaries for more than five years and a director
of ISP since December 2003.

Susan B. YossMs. Yoss has been Senior Vice President of BMCA and its subsidiaries since August 2001 and was
Senior Vice President and Treasurer of the same companies from July 1999 to August 2001. For more than five years, she also has been Senior Vice President, Chief Financial Officer and
Treasurer of G-I Holdings, a corporation that filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2001, due to its Asbestos
Claims. Ms. Yoss has served as Executive Vice President-Finance and Treasurer of ISP and some of its subsidiaries since September 2000 and was previously Senior Vice President and
Treasurer of ISP from July 1999 to September 2000.

Audit Committee Financial Expert

We are not issuers of securities as that term is defined in the Securities Exchange Act of 1934 and do not have any securities listed on a national exchange or
association. Based on the foregoing, our Board of Directors does not, nor is it required to have an audit committee and therefore is not required to determine anyone to be an audit committee financial
expert. Our Board of Directors performs customary audit committee functions for us.

Code of Ethics

All of our employees, including our principal executive officer, principal financial officer, principal accounting officer and the persons performing similar
functions, are required to abide by our code of ethics and business conduct policies to ensure that our business is conducted in a consistently legal and ethical manner. We intend to disclose any
changes in or waivers from our code of ethics by filing a current report on Form 8-K with the Securities and Exchange Commission. We will provide to any person, without charge, upon
request, a copy of our code of ethics by writing to: the Corporate Secretary, Building Materials Corporation of America, 1361 Alps Road, Wayne, New Jersey 07470.

16

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Item 11.Executive Compensation.

Summary Compensation Table

The following table sets forth the cash and non-cash compensation for each of the last three fiscal years awarded to or earned by our Chief Executive
Officer and the four other most highly compensated executive officers as of December 31, 2004. The salaries and other compensation of Mr. Weinberg and Ms. Yoss for services
provided by them to our company are paid by ISP in accordance with a management agreement between ISP and our company. See Note (7) to the table below and "Certain Relationships and Related
Transactions."

Annual Compensation(7)Name and Principal Position

Year

Salary

Bonus(1)

Other Annual
Compensation

All Other
CompensationWilliam W. Collins

2004

$
417,687

$
775,000

$


$
19,683
(2)Chief Executive Officer

2003


407,500


775,000





21,562
(2)and President

2002


355,417


650,000





21,562
(2)Robert B. Tafaro

2004

$
324,450

$
400,000

$


$
19,683
(3)Executive Vice President,

2003


288,083


300,000
(3)




21,562
(3)Roofing

2002


264,556


200,000





21,461
(3)John F. Rebele

2004

$
272,950

$
300,000

$


$
18,179
(4)Senior Vice President

2003


236,917


245,000
(4)




18,917
(4)and Chief Financial Officer

2002


216,250


200,307
(4)




18,537
(4)David A. Harrison

2004

$
268,331

$
215,000
(5)
$


$
18,179
(5)Senior Vice President

2003


258,010


155,000





19,260
(5)Marketing, Contractor Services and Corporate Development

2002


247,372


149,734





19,192
(5)Kenneth E. Walton

2004

$
230,308

$
175,000

$


$
17,885
(6)Senior Vice President

2003


221,450


150,000
(6)




18,667
(6)Operations

2002


208,762


156,902
(6)




18,391
(6)


---

17

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Long-Term Incentive Plan

The following table sets forth information on awards granted to the executive officers named in the Summary Compensation Table above during 2004 under our 2001
Long-Term Incentive Plan.

2001 Long-Term Incentive PlanAwards in 2004

Estimated Future Payouts Under
Non-Stock Price-Based PlansNumber of
Shares, Units
or Other
Rights(1)

Performance or
Other Period
Until Maturation
or Payout(1)Name

Date
of
GrantThreshold($)(2)

Target($)(3)

Maximum($)(3)William W. Collins

1/04

2,000



300.00



Robert B. Tafaro

1/04

1,700



300.00



John F. Rebele

1/04

1,300



300.00



David A. Harrison

1/04

1,100



300.00



Kenneth E. Walton

1/04

1,100



300.00






---

18

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Employment Security Agreements

In June 2001, we entered into employment security agreements with certain of our executive officers and key personnel, including Messrs. Collins,
Tafaro, Rebele, Harrison and Walton, in an effort to retain these individuals as well as provide security to us and the executives and to provide for continuity of management in the event of a change
in control. The agreements have no expiration date, are supported by irrevocable letters of credit and provide for a single-sum payment consisting of two to three times salary and bonus
and related benefits if employment is terminated or a change in employment responsibilities occurs within a thirty-six month period following the change in control event, as defined. At
December 31, 2004, the aggregate value of the security agreements related to the above named individuals was $6.7 million, which excludes the cost of medical benefits under the 2001
Long-Term Incentive Plan.

A
change in control, as defined in the agreements, would occur when (1) the Heyman Group (as described below) ceases to be the beneficial owner, directly or indirectly, of a
majority voting power of the voting stock of BMCA, (2) the transfer or sale of a substantial portion of the property of BMCA in any transaction or series of transactions to any entity or
entities other than an entity of which the Heyman Group owns at least 80% of such entity's capital stock or beneficial interest or (3) any person or entity, other than the Heyman Group,
assumes, without the consent of the Heyman Group, management responsibilities for the affairs of G-I Holdings or any subsidiary thereof. The filing of the Chapter 11 case by
G-I Holdings did not constitute a change in control but a change in control could occur in the future depending on the outcome of the bankruptcy proceeding.

Under
the agreements, the "Heyman Group" means (1) Samuel J. Heyman, his heirs, administrators, executors and entities of which a majority of the voting stock is owned by Samuel
J.

19

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Heyman,
his heirs, administrators or executors and (2) any entity controlled, directly or indirectly, by Samuel J. Heyman or his heirs, administrators or executors. Also for purposes of this
section, "beneficial ownership" shall be determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

Compensation of Directors

Our directors do not receive any additional compensation for their services as directors.

Compensation Committee Interlocks and Insider Participations

We do not have a separate compensation committee. Compensation policies are established by our board of directors, each member of which is also one of our
executive officers. See Item 13, "Certain Relationships and Related Transactions."

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



Not Applicable.



As of March 30, 2005, 100% of our outstanding shares of Class A common stock were owned of record by BMCA Holdings Corporation.

The
following table sets forth information with respect to the ownership of our common stock, as of March 30, 2005, by each other person known to us to own beneficially more than
5% of the common stock outstanding on that date and by all of our directors and executive officers as a group.

|Title of Class       |  | Name and Address of Beneficial Owner(1)                                      |  | Amount and
Nature of
Beneficial
Ownership |     | Percent
of Class |   | Total
Voting
Power |  
|-------------------- |  | ---------------------------------------------------------------------------- |  | ----------------------------------------- | --- | ---------------- | - | ------------------ | -
|Class A Common Stock |  | Samuel J. Heyman
All directors and executive officers
as a group (7 persons) |  | 1,015,010
                               | (2) | 100.0
          | % | 100.0
            | %

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Item 13.Certain Relationships and Related Transactions.

Management Agreement

Pursuant to a management agreement, a subsidiary of ISP (of which Samuel J. Heyman beneficially owns, as defined in Rule 13d-3 of the Exchange
Act, approximately 100%), provides some general management, administrative, legal and facilities services to us, including the use of our headquarters in Wayne, New Jersey. We were charged
approximately $5.6, $6.2 and $6.1 million in 2004, 2003 and 2002, respectively, for these services under the management agreement, inclusive of the

20

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services
provided to G-I Holdings. These charges consist of management fees and other reimbursable expenses attributable to us, or incurred by ISP for our benefit. They are based on
an estimate of the costs ISP incurs to provide those services. The amount payable to ISP for management fees as of December 31, 2004 and 2003 was $0.4 and $0.4 million, respectively. The
management agreement also provides that we are responsible for providing management services to G-I Holdings and some of its subsidiaries and that G-I Holdings pay to us
a management fee for these services. The aggregate amount paid by G-I Holdings to us for services rendered under the management agreement in 2004, 2003 and 2002 was approximately
$0.8 million, respectively. We also allocate a portion of the management fees payable by us under the management agreement to separate lease payments for the use of our headquarters. Some of
our executive officers receive their compensation from ISP. ISP is indirectly reimbursed for this compensation through payment of the management fee and other reimbursable expenses payable under the
management agreement.

Due
to the unique nature of the services provided under the management agreements, comparisons with third party arrangements are difficult. However, we believe that the terms of the
management agreement taken as a whole are no less favorable to us than could be obtained from an unaffiliated third party.

Certain Purchases

We purchase substantially all of our colored roofing granules and algae-resistant granules requirements under a long-term requirements contract from
ISP, except for the requirements of certain of our roofing plants that are supplied by third parties. We believe our long-term supply requirements contract with ISP, taken as a whole, is
no less favorable to us than could be obtained from an unaffiliated third party. In 2004, 2003 and 2002, we purchased in the aggregate approximately $98.2, $77.7 and $73.2 million of mineral
products from ISP, respectively.

Tax Sharing Agreement

We entered into a tax sharing agreement (the "Tax Sharing Agreement") dated January 31, 1994 and later amended on March 19, 2001, with
G-I Holdings, with respect to the payment of federal income taxes and related matters. During the term of the Tax Sharing Agreement, which is effective for the period during which we or
any of our domestic subsidiaries is included in a consolidated federal income tax return for the G-I Holdings' consolidated tax group, we are obligated to pay
G-I Holdings an amount equal to those federal income taxes we would have incurred if we, on behalf of ourselves and our domestic subsidiaries, filed our own federal income tax
return. Unused tax attributes will carry forward for use in reducing amounts payable by us to G-I Holdings in future years, but cannot be carried back. If we ever were to leave the
G-I Holdings' consolidated tax group, we would be required to pay to G-I Holdings the value of any tax attributes to which we would succeed under the consolidated
return regulations to the extent the tax attributes reduced the amounts otherwise payable by us under the Tax Sharing Agreement. Under limited circumstances, the provisions of the Tax Sharing
Agreement could result in us having a greater liability under the agreement than we would have had if we and our domestic subsidiaries had filed our own separate federal income tax return. Under the
Tax Sharing Agreement, we and each of our domestic subsidiaries are responsible for any taxes that would be payable by reason of any adjustment to the tax returns of G-I Holdings or
its subsidiaries for years prior to the adoption of the Tax Sharing Agreement that relate to our business or assets or the business or assets of any of our domestic subsidiaries. Although, as a member
of the G-I Holdings' consolidated tax group, we are severally liable for certain federal income tax liabilities of the G-I Holdings' consolidated tax group,
including tax liabilities not related to our business, we should not have any liability other than liabilities arising from our operations and the operations of our domestic subsidiaries and tax
liabilities for tax years pre-dating the Tax Sharing Agreement that relate to our business or assets and the business or assets of any of our domestic subsidiaries. The Tax Sharing

21

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Agreement
provides for analogous principles to be applied to any consolidated, combined or unitary state or local income taxes. Under the Tax Sharing Agreement, G-I Holdings makes all
decisions with respect to all matters relating to taxes of the G-I Holdings' consolidated tax group. The provisions of the Tax Sharing Agreement take into account both the federal
income taxes we would have incurred if we filed our own separate federal income tax return and the fact that we are a member of the G-I Holdings' consolidated tax group for federal
income tax purposes.

Intercompany Borrowings

We make loans to, and borrow from, our parent corporations from time to time at rates ranging from 4.0% to 6.3% in 2004. During 2001 and on July 1, 2003
and December 29, 2003, we loaned BMCA Holdings Corporation $2.5, $37.8 and $15.0 million, respectively, and on July 9, 2003 and December 29, 2003,
BMCA Holdings Corporation loaned us $37.8 and $15.0 million, respectively. As of
December 31, 2004 and 2003, BMCA Holdings Corporation owed us $55.7 and $55.6 million, including interest of $0.4 and $0.3 million, respectively, and we owed
BMCA Holdings Corporation $52.8 and $52.8 million, respectively. Interest income on our loans to BMCA Holdings Corporation amounted to $2.9, $1.0 and $0.1 million in 2004,
2003 and 2002, respectively. Interest expense on our loans from BMCA Holdings Corporation amounted to $2.8 and $0.9 million in 2004 and 2003, respectively. Loans payable to/receivable
from our parent corporation are due on demand and provide each party with the right of offset of its related obligation to the other party and are subject to limitations as outlined in our
$350.0 million Senior Secured Revolving Credit Facility, which we refer to as the Senior Secured Revolving Credit Facility, and our 73/4% Senior Notes due 2005, the 8% Senior
Notes due 2007, the 8% Senior Notes due 2008 and the 73/4% Senior Notes due 2014, which we refer to collectively as the Senior Notes. Under the terms of our Senior Secured Revolving
Credit Facility and the indentures governing the Senior Notes at December 31, 2004, we could repay demand loans to our parent corporation amounting to $52.8 million, subject to certain
conditions. We also make non-interest bearing advances to affiliates, of which no balance was outstanding at December 31, 2004. In addition, no loans were owed by us to other
affiliates. See Note 17 to our consolidated financial statements included in this annual report on Form 10-K.

Item 14.Principal Accountant Fees and Services.

The following table presents fees for professional services rendered by our independent registered public accounting firm, KPMG LLP, for the fiscal years ended
December 31, 2004 and 2003.

Audit and Non-Audit Fees

2004

2003Audit Fees(1)

$
377,500

$
199,500Audit-Related Fees(2)


9,240


9,240Tax Fees(3)


25,000


20,000All Other Fees(4)





3,500Total

$
411,740

$
232,240


---

22

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Policy on Pre-Approval of Audit and Non-Audit Services Performed by the Independent Auditors

Our Board of Directors approves, prior to the engagement, consistent with the Sarbanes-Oxley Act of 2002 and the requirements of the Securities and Exchange
Commission, any audit, audit-related and permitted non-audit services reasonably likely to be required by us from KPMG LLP during the coming fiscal year. The Board may delegate the
approval of unanticipated (but otherwise permitted) non-audit services during the coming fiscal year to our principal financial or accounting officer as required.

23

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PART IV

Item 15.Exhibits, Financial Statement Schedules.

The following documents are filed as part of this report:



24

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EXHIBIT INDEX

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | Reorganization Agreement, dated as of December 31, 1998, by and among BMCA, Building Materials Manufacturing Corporation and Building Materials Investment Corporation (incorporated by reference to Exhibit 2.1 to
BMCA's Registration Statement on Form S-4 (Registration No. 333-69749) (the "2008 Notes S-4")).                                                                                                                                                               
|3.1            |  | Amended and Restated Certificate of Incorporation of BMCA (incorporated by reference to Exhibit 3.1 to BMCA's Form 10-K for the fiscal year ended December 31, 1999).                                                                                                                                                                                                                                                                                                             
|3.2            |  | By-laws of BMCA (incorporated by reference to Exhibit 3.2 to BMCA's Registration Statement on Form S-4 (Registration No. 33-81808)) (the "Deferred Coupon Note Registration Statement").                                                                                                                                                                                                                                                                                          
|3.3            |  | Certificate of Incorporation of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.3 to BMCA's Form 10-K for the fiscal year ended December 31, 1998 (the "1998 10-K")).                                                                                                                                                                                                                                                                        
|3.4            |  | By-laws of Building Materials Manufacturing Corporation (incorporated by reference to Exhibit 3.4 to the 1998 10-K).                                                                                                                                                                                                                                                                                                                                                              
|3.5            |  | Certificate of Incorporation of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.5 to the 1998 10-K).                                                                                                                                                                                                                                                                                                                                            
|3.6            |  | By-laws of Building Materials Investment Corporation (incorporated by reference to Exhibit 3.6 to the 1998 10-K).                                                                                                                                                                                                                                                                                                                                                                 
|4.1            |  | Indenture, dated as of October 20, 1997, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-41531)).                                                                                                                                                                                                                                                                  
|4.2            |  | First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of October 20, 1997 among BMCA, as issuer, Building Materials Manufacturing Corporation, as co-obligor, and Building Materials Investment Corporation, as guarantor,
and The Bank of New York, as trustee (incorporated by reference to Exhibit 10.8 to the 2008 Notes S-4).                                                                                                                     
|4.3            |  | Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of October 20, 1997 among BMCA and Building Materials Manufacturing Corporation, as issuers, Building Materials Investment Corporation, as guarantor, the Additional
Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.7 to BMCA's Form 10-K for the fiscal year ended December 31, 2000 (the "2000 10-K")).
|4.4            |  | Indenture, dated as of July 17, 1998, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to BMCA's Registration Statement on Form S-4 (Registration No. 333-60633)).                                                                                                                                                                                                                                                                     
|4.5            |  | First Supplemental Indenture, dated as of January 1, 1999, to Indenture dated as of July 17, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of
New York, as trustee (incorporated by reference to Exhibit 10.9 to the 2008 Notes S-4).                                                                                                                                       
|4.6            |  | Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of July 17, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the
Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.9 to the 2000 10-K).                                                           
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

25

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|4.7  |  | Indenture, dated as of December 3, 1998, between BMCA and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to the 2008 Notes S-4).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.8  |  | First Supplemental Indenture dated as of January 1, 1999 to Indenture dated as of December 3, 1998 among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as guarantors, and The Bank of
New York, as trustee (incorporated by reference to Exhibit 4.4 to the 2008 Notes S-4).                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.9  |  | Second Supplemental Indenture, dated as of December 4, 2000, to Indenture dated as of December 3, 1998, among BMCA, as issuer, Building Materials Manufacturing Corporation and Building Materials Investment Corporation, as original guarantors, the
Additional Guarantors signatory thereto, as additional guarantors, and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.12 to the 2000 10-K).                                                                                                                                                                                                                                                                                                                                 
|4.10 |  | Indenture, dated as of July 26, 2004, among BMCA, as issuer, BMCA Insulation Products Inc., BMCA Quakertown Inc., Building Materials Investment Corporation, Building Materials Manufacturing Corporation, Ductwork Manufacturing Corporation, GAF
Leatherback Corp., GAF Materials Corporation (Canada), GAF Premium Products Inc., GAF Real Properties, Inc., GAFTECH Corporation, LL Building Products Inc., Pequannock Valley Claim Service Company, Inc., South Ponca Realty Corp. and Wind Gap Real
Property Acquisition Corp., as guarantors, and Wilmington Trust Company as trustee (incorporated by reference to Exhibit 4.10 to BMCA's Registration Statement on Form S-4 (Registration No. 333-119608) (the "July 2004 Registration
Statement")).
|10.1 |  | Amended and Restated Management Agreement, dated as of January 1, 1999, among GAF, G-I Holdings Inc., G Industries Corp., Merick Inc., GAF Fiberglass Corporation, ISP, GAF Building Materials Corporation, GAF Broadcasting Company, Inc., BMCA
and ISP Opco Holdings Inc. (incorporated by reference to Exhibit 10.1 to the 1998 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.2 |  | Amendment No. 1 to the Management Agreement, dated as of January 1, 2000 (incorporated by reference to Exhibit 10.2 to International Specialty Products Inc. annual report on Form 10-K for the fiscal year ended December 31, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.3 |  | Amendment No. 2 to the Management Agreement, dated as of January 1, 2001 (incorporated by reference to Exhibit 10.3 to International Specialty Products Inc. annual report on Form 10-K for the fiscal year ended December 31, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.4 |  | Amendment No. 3 to the Amended and Restated Management Agreement, dated as of June 27, 2001, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials
Corporation of America and ISP Management Company, Inc., as assignee of ISP Chemco Inc. (incorporated by reference to Exhibit 10.7 to the ISP Chemco Inc. Registration Statement on Form S-4 (Registration No. 333-70144)).                                                                                                                                                                                                                                                                            
|10.5 |  | Amendment No. 4 to the Amended and Restated Management Agreement, dated as of January 1, 2002, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials
Corporation of America and ISP Management Company, Inc. (incorporated by reference to Exhibit 10.5 to BMCA's Form 10-K for the fiscal year ended December 31, 2001
(the "2001 10-K")).                                                                                                                                                                                                                                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

26

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|10.6  |  | Amendment No. 5 to the Amended and Restated Management Agreement, dated as of January 1, 2003, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., ISP Investco LLC, GAF Broadcasting Company, Inc., Building Materials
Corporation of America and ISP Management Company, Inc. (incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended March 30, 2003).                                                                                                                                                                                          
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7  |  | Amendment No. 6 to the Amended and Restated Management Agreement, dated as of January 1, 2004, by and among G-I Holdings Inc., Merick Inc., International Specialty Products Inc., International Specialty Holdings Inc., ISP Synthetic Elastomers LP, ISP
Investco LLC, GAF Broadcasting Company, Inc., BMCA and ISP Management Company, Inc. as assignee of ISP Chemco, Inc. (incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended April 4, 2004).                                                                                                                            
|10.8  |  | BMCA 2001 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.8 to the 2000 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.9  |  | Tax Sharing Agreement, dated as of January 31, 1994, among GAF, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.6 to the Deferred Coupon Note Registration Statement).                                                                                                                                                                                                                                                                                                                                                                                                                              
|10.10 |  | Amendment to Tax Sharing Agreement, dated as of March 19, 2001, between G-I Holdings and BMCA (incorporated by reference to Exhibit 10.10 to the 2000 10-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.11 |  | Reorganization Agreement, dated as of January 31, 1994, among GAF Building Materials Corporation, G-I Holdings Inc. and BMCA (incorporated by reference to Exhibit 10.9 to the Deferred Coupon Note Registration Statement).                                                                                                                                                                                                                                                                                                                                                                                            
|10.12 |  | Credit Agreement, dated as of July 9, 2003, by and among BMCA, the Initial Lenders, Initial Issuing Bank and Swing Line Bank (as defined therein), Citicorp USA, Inc., as collateral monitoring agent and administrative agent, Citigroup Global Markets
Inc., as lead arranger and book manager, Deutsche Bank Securities Inc., as syndication agent and The CIT Group/Business Credit, Inc., Congress Financial Corporation and JP Morgan Chase Bank as co-documentation agents (the "Credit Agreement")
(incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended June 29, 2003).
|10.13 |  | First Amendment, dated as of May 7, 2004, to the Credit Agreement dated as of July 9, 2003, among BMCA, the banks, financial institutions and other institutional lenders party thereto and Citicorp USA, Inc., as administrative agent for the Lenders
(incorporated by reference to Exhibit 10.1 to BMCA's Form 10-Q for the quarterly period ended July 4, 2004).                                                                                                                                                                                                                                                    
|10.14 |  | Second Amendment, dated as of July 12, 2004, to the Credit Agreement dated as of July 9, 2003, among BMCA, the Grantors party thereto, the banks, financial institutions and other institutional lenders party thereto and Citicorp USA, Inc., as
administrative agent for the Lenders (incorporated by reference to Exhibit 10.14 to the July 2004 Registration Statement).                                                                                                                                                                                                                                            
|10.15 |  | Third Amendment, dated as of July 19, 2004, to the Credit Agreement dated as of July 9, 2003, among BMCA, the Grantors party thereto, the banks, financial institutions and other institutional lenders party thereto and Citicorp USA, Inc., as
administrative agent for the Lenders (incorporated by reference to Exhibit 10.15 to the July 2004 Registration Statement).                                                                                                                                                                                                                                             
|10.16 |  | Fourth Amendment, dated as of November 9, 2004, among BMCA, the Grantors party thereto, the banks, financial institutions and other institutional lenders party thereto and Citicorp USA, Inc., as administrative agent for the Lenders (incorporated by
reference to Exhibit 10.16 to the July 2004 Registration Statement).                                                                                                                                                                                                                                                                                           
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

27

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|10.17 |  | Employment Security Agreement between BMCA and William W. Collins, effective May 2001 (incorporated by reference to Exhibit 10.22 to the 2001 10-K).                                                                                                                                                                                                                               
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.18 |  | Employment Security Agreement between BMCA and David A. Harrison, effective June 2001(incorporated by reference to Exhibit 10.23 to the 2001 10-K).                                                                                                                                                                                                                                
|10.19 |  | Employment Security Agreement between BMCA and Robert B. Tafaro, effective June 2001 (incorporated by reference to Exhibit 10.24 to the 2001 10-K).                                                                                                                                                                                                                                
|10.20 |  | Employment Security Agreement between BMCA and Kenneth E. Walton, effective June 2001 (incorporated by reference to Exhibit 10.25 to the 2001 10-K).                                                                                                                                                                                                                               
|10.21 |  | Employment Security Agreement between BMCA and John F. Rebele, effective June 2001 (incorporated by reference to Exhibit 10.26 to the 2001 10-K).                                                                                                                                                                                                                                  
|10.22 |  | Amended and Restated Collateral Agent Agreement, dated as of July 9, 2003, among BMCA, the Subsidiary Parties thereto, Citicorp USA, Inc., as administrative agent, Citibank, N.A., as collateral agent, and each Senior Note Trustee (as defined therein)
(the "Collateral Agent Agreement") (incorporated by reference to Exhibit 10.22 to the July 2004 Registration Statement).
|10.23 |  | First Amendment to the Collateral Agent Agreement, dated as of July 12, 2004, among BMCA, the Subsidiary Parties thereto, Citicorp USA, Inc., as administrative agent, Citibank, N.A., as collateral agent, and each Senior Note Trustee (as defined
therein) (incorporated by reference to Exhibit 10.23 to the July 2004 Registration Statement).                                
|10.24 |  | Amended and Restated Security Agreement, dated as of July 9, 2003, among BMCA, the Grantors thereto and Citibank, N.A., as collateral agent (the "Security Agreement") (incorporated by reference to Exhibit 10.24 to the July 2004 Registration
Statement).                                                                                                                       
|10.25 |  | First Amendment to the Security Agreement, dated as of August 22, 2003, among BMCA, the Grantors thereto and Citibank, N.A., as collateral agent (incorporated by reference to Exhibit 10.25 to the July 2004 Registration Statement).                                                                                                                                             
|10.26 |  | Second Amendment to the Security Agreement, dated as of May 7, 2004, among BMCA, the Grantors thereto and Citibank, N.A., as collateral agent (incorporated by reference to Exhibit 10.26 to the July 2004 Registration Statement).                                                                                                                                                
|10.27 |  | Third Amendment to the Security Agreement, dated as of July 12, 2004, among BMCA, the Grantors thereto and Citibank, N.A., as collateral agent (incorporated by reference to Exhibit 10.27 to the July 2004 Registration Statement).                                                                                                                                               
|*21   |  | Subsidiaries of BMCA.                                                                                                                                                                                                                                                                                                                                                              
|*23.1 |  | Consent of Independent Registered Public Accounting Firm (KPMG LLP)                                                                                                                                                                                                                                                                                                                
|*31.1 |  | Rule 13a-14(a)/Rule 15d-14(a) Certification of the Chief Executive Officer.                                                                                                                                                                                                                                                                                                        
|*31.2 |  | Rule 13a-14(a)/Rule 15d-14(a) Certification of the Chief Financial Officer.                                                                                                                                                                                                                                                                                                        
|*32.1 |  | Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer.                                                                                                                                                                                                                                                                                             

---

28

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

|                     |  | BUILDING MATERIALS CORPORATION OF AMERICA
BUILDING MATERIALS MANUFACTURING CORPORATION
|-------------------- |  | --------------------------------------------------------------------------------------
|Date: March 30, 2005 |  | By:                                                                                   

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 30, 2005 by the following persons on behalf of each registrant and
in the capacities indicated.

|Signature                               |  | Title                                                                                    
|--------------------------------------- |  | -----------------------------------------------------------------------------------------
|                                        |  |                                                                                          
|/s/WILLIAM W. COLLINSWilliam W. Collins |  | Chief Executive Officer, President and Director (Principal Executive Officer)            
|/s/JOHN F. REBELEJohn F. Rebele         |  | Senior Vice President, Chief Financial Officer and Director (Principal Financial Officer)
|/s/DAVID A. HARRISONDavid A. Harrison   |  | Director                                                                                 
|/s/ROBERT B. TAFARORobert B. Tafaro     |  | Director                                                                                 
|/s/KENNETH E. WALTONKenneth E. Walton   |  | Director                                                                                 
|/s/JAMES T. ESPOSITOJames T. Esposito   |  | Vice President and Controller (Principal Accounting Officer)                             

29

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant listed below has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

|                     |  | BUILDING MATERIALS INVESTMENT CORPORATION
|-------------------- |  | -----------------------------------------
|Date: March 30, 2005 |  | By:                                      

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 30, 2005 by the following persons on behalf of each registrant and
in the capacities indicated.

|Signature                               |  | Title                                                                                                   
|--------------------------------------- |  | --------------------------------------------------------------------------------------------------------
|                                        |  |                                                                                                         
|/s/WILLIAM W. COLLINSWilliam W. Collins |  | Chief Executive Officer, President and Director (Principal Executive Officer)                           
|/s/BARRY A. CROZIERBarry A. Crozier     |  | Director                                                                                                
|/s/JOHN F. REBELEJohn F. Rebele         |  | Senior Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer)

30

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BUILDING MATERIALS CORPORATION OF AMERICA

FORM 10-K

INDEX TO MANAGEMENT'S DISCUSSION AND ANALYSIS, CONSOLIDATED  FINANCIAL STATEMENTS AND SCHEDULES

PageManagement's Discussion and Analysis of Financial Condition and Results of Operations

F-2Selected Financial Data

F-21Report of Independent Registered Public Accounting Firm

F-22Consolidated Statements of Income for the three years ended December 31, 2004

F-23Consolidated Balance Sheets as of December 31, 2004 and 2003

F-24Consolidated Statements of Cash Flows for the three years ended December 31, 2004

F-25Consolidated Statements of Stockholders' Equity (Deficit) for the three years ended December 31, 2004

F-27Notes to Consolidated Financial Statements

F-28Supplementary Data (Unaudited):
Quarterly Financial Data (Unaudited)

F-68SCHEDULESConsolidated Financial Statement Schedule:
Schedule IIValuation and Qualifying Accounts

S-1


F-1

---



BUILDING MATERIALS CORPORATION OF AMERICA

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Overview

Building Materials Corporation of America or BMCA, a subsidiary of BMCA Holdings Corporation, was formed in January 1994 to acquire the operating
assets and certain liabilities of GAF Building Materials Corporation, whose name was changed to G-I Holdings Inc., our indirect parent.
G-I Holdings Inc. is a wholly-owned subsidiary of G Holdings Inc. See Note 1 to our Consolidated Financial Statements. Unless otherwise indicated by the
context, "we," "us" and "our" refer to Building Materials Corporation of America and its consolidated subsidiaries.

To
facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, the former indirect parent of BMCA, merged into its direct subsidiary,
G-I Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct
subsidiary, GAF Fiberglass Corporation. In that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation (formerly known as GAF
Fiberglass Corporation) merged into its direct subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc.
G-I Holdings Inc. is now an indirect parent of BMCA and BMCA's direct parent is BMCA Holdings Corporation. References herein to "G-I Holdings" mean
G-I Holdings Inc. and any and all of its predecessor corporations, including GAF Corporation, G-I Holdings Inc., G Industries Corp.,
GAF Fiberglass Corporation and GAF Building Materials Corporation.

We
are a leading national manufacturer and marketer of a broad line of asphalt and polymer based roofing products and accessories for the residential and commercial markets. We also
manufacture specialty building products and accessories for the professional and do-it-yourself remodeling and residential construction industries. We have twenty-seven
strategically located manufacturing facilities across the United States. Our manufacturing facilities include: seventeen asphalt roofing manufacturing facilities, two roofing accessory plants, one
thermoplastic polyolefin plant, one glass fiber manufacturing plant, two glass mat manufacturing plants,
one fiber-cement shingle and siding plant, one liquid roofing membrane and adhesive plant and two attic ventilation and air distribution product plants.

Our
products are marketed in three groups: residential roofing, commercial roofing and specialty building products and accessories.



We are a leading national manufacturer of a complete line of residential roofing products. Our principal lines of residential roofing shingles are the
Timberline® series, the Sovereign® series, as well as certain other specialty shingles. In recent years, we have improved our sales mix of residential roofing products by
increasing our emphasis on laminated shingles and accessory products (the Timberline® series and specialty shingles), which are generally sold at higher prices and more attractive profit
margins than our standard strip shingle products. We believe, based on unit sales, that we are the largest manufacturer of residential roofing shingles in the United States.



We manufacture a full line of modified bitumen and asphalt built-up roofing products, thermoplastic polyolefin products, liquid applied membrane
systems and roofing accessories for use in the application of commercial roofing systems. We also market thermoplastic and elastomeric single-ply

F-2

---



products,
which address the important and growing single-ply segment of the commercial roofing market. We believe, based on unit sales, that we are the largest manufacturer of both asphalt
built-up roofing products and modified bitumen products in the United States.

We
sell modified bitumen products under the Ruberoid® and Brai® trademarks. Modified bitumen products are used primarily in re-roofing applications or
in combination with glass membranes in GAF CompositeRoof systems. Modified
bitumen systems provide high strength characteristics, such as weatherability, water resistance and labor cost savings due to ease of application.

Over
the past five years, over 80% of industry sales of both residential and commercial roofing products were for re-roofing, as opposed to new construction. As a result, we
believe our exposure and the roofing industry's exposure to cyclical downturns in the new construction market are substantially lower than for other building material manufacturers. We expect that
demand for residential re-roofing will continue to increase as the existing housing stock ages and as homeowners upgrade from standard strip roofing shingles to premium laminated shingles
for enhanced aesthetics and durability. We also expect commerical roofing demand to rise as construction of new commerical facilities increases and existing buildings age.

Our
business relies on the availability of reasonably priced raw materials and energy for the production of our products. Shortages of and price increases of these products, specifically
asphalt, which is correlated to increases in the price of oil, have occurred in the past and may occur in the future. To mitigate the effect of the petroleum-based and other cost increases, we will
attempt to pass on future unexpected cost increases from our suppliers as needed, although no assurances can be provided that these price increases will be accepted in the marketplace.

Our
net sales for 2004 were $1,773.4 million, an increase of 10.3% from net sales of $1,607.8 million in 2003. Our operating income increased by 14.5% in 2004 to
$156.3 million from $136.5 million in 2003. (See discussion on operating results below.)

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles requires our management to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, we evaluate
our estimates, including but not limited to those related to customer incentives, doubtful accounts, inventory valuation, product warranty claims, environmental liabilities, the carrying value of
goodwill, the carrying value of long-lived tangible and intangible assets, pensions and other postemployment benefits and contingent liabilities. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities. Actual results may differ from these estimates under different assumptions or conditions. In the opinion of our management, the consolidated financial statements herein contain all
adjustments necessary to present fairly our financial position and our results of operations and cash flows for the periods presented. We do not anticipate any changes in management estimates that
would have a material impact on our operations, liquidity or capital resources, subject to the matters discussed in Note 18 to Consolidated Financial Statements. We believe the following
critical accounting policies are the most important to the portrayal of our financial condition and results of operations and require our management's more significant judgments and estimates in the
preparation of our consolidated financial statements.

F-3

---





Revenue is recognized at the time products are shipped to the customer. Products are generally shipped Freight on Board, or FOB shipping point. Title and risk of
loss passes to the customer at the time of shipment.



We maintain allowances for customer incentives and volume rebates resulting from promotional programs to certain of our customers. The customer incentives and
volume rebates are recorded as a reduction in gross sales and reserves are recorded based on customers' purchase levels of specific products and the promotional programs related to these products.
Management evaluates customer performance against these incentives and volume rebate programs from time to time. If adjustments to
our estimates are required, additional allowances or reductions to the customer incentive reserves would be recorded.



We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Management continuously
assesses the financial condition of our customers and the markets in which these customers participate and adjusts credit limits or the allowance for doubtful accounts based on this periodic review,
which includes a detailed analysis of financial statements and performance against key financial performance metrics and historical financial information. If the financial condition of our customers
were to deteriorate, resulting in their inability to make payments, our ability to collect on accounts could be negatively impacted, in which case additional allowances may be required.



Inventories are valued at the lower of cost or market. The LIFO (last-in, first-out) method is utilized to determine cost for
asphalt-based products used to produce our products. All other inventories are valued on the FIFO (first-in, first-out) method. We reserve our inventories for estimated
obsolescence or unmarketable inventories equal to the difference between the cost of inventories and their estimated market value based upon assumptions related to future demand and market conditions.
If actual market conditions differ than those projected by management, additional inventory adjustments may be required.



We follow the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" or SFAS No. 144. SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of. For purposes of recognizing and measuring impairment of long-lived assets, we evaluate assets of our associated facilities because this is
the lowest level of independent cash flows ascertainable to evaluate impairment. We review long-lived assets to be held and used for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. For long-lived assets to be held and used, an impairment exists when the carrying amount of the asset exceeds the
estimated undiscounted cash flows. Any resulting impairment is measured

F-4

---



based
on the fair value of the related asset. Fair value is determined based on future projected demand and estimated discounted cash flows. See Note 7 to Consolidated Financial Statements.



In accordance with the provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" or SFAS No. 142,
effective January 1, 2002, goodwill is no longer amortized over its estimated useful life. However, goodwill is subject to at least an annual assessment for impairment and more frequently if
circumstances indicate a possible impairment. This assessment could result in a material future impairment charge.

We
evaluated the recoverability of goodwill for our roofing products and specialty building products and accessories reporting units. Our methodology included evaluations using estimated
future discounted cash flows, multiples of net sales and multiples of earnings before interest, taxes, depreciation and the amortization of other assets, or EBITDA. Our analysis was completed for each
of the reporting units to which the goodwill relates. If the estimated range of fair values from the methodologies employed are less than the carrying amount of the related reporting unit, impairment
losses for goodwill are charged to results of operations. In determining the estimated future discounted cash flows, we considered projected future levels of income, future business trends and market
and economic conditions. Our analysis related to multiples of net sales and EBITDA are based on related industry data. We adopted SFAS No. 142 effective January 1, 2002 and prepared an
impairment analysis at December 31, 2004, 2003 and 2002 and noted no impairment existed. See Note 4 to Consolidated Financial Statements.



We provide certain limited warranties covering most of our residential roofing products for periods generally ranging from 20 to 40 years, with lifetime
limited warranties on certain specialty shingle products. We also offer certain limited warranties of varying duration covering most of our commercial roofing products. Most of our specialty building
products and accessories provide limited warranties for periods generally ranging from 5 to 10 years, with lifetime limited warranties on certain products. The reserve for product warranty
claims is estimated on the basis of historical and projected claims activity, as well as other factors. The accuracy of the estimate of additional costs is dependent on both the number and cost of
future claims submitted during the warranty periods. We believe that the reserves established for estimated probable future product warranty claims are adequate. If actual claims differ from these
estimates, adjustments to this reserve may be required.



We accrue environmental costs when it is probable that we have incurred a liability and the expected amount can be reasonably estimated and, review on an ongoing
basis, our estimated environmental liabilities reserve. The amount accrued reflects our assumptions about remedial requirements at the contaminated site, the nature of the remedy, the outcome of
discussions with regulatory agencies and other potential responsible parties at multi-party sites and the number and financial viability of other potentially responsible parties. Adverse decisions or
events, particularly as to increases in remedial costs, discovery of new contamination, assertion of natural resource damages, and the liability and the financial responsibility of our insurers and of
the other parties involved at each site

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and
their insurers, could cause us to increase our estimate of liability in respect of those matters. It is not currently possible to estimate the amount or range of any additional liability.



We maintain defined benefit plans that provide eligible employees with retirement benefits. In addition, while we generally do not provide postretirement medical
and life insurance benefits, we subsidize such benefits for certain employees and certain retirees. The costs and obligations related to these benefits reflect our assumptions related to general
economic conditions (particularly interest rates), expected
return on plan assets and rate of compensation increases for employees. We set the discount rate assumption annually for our retirement-related benefit plans at the measurement dates to reflect the
yield of high-quality fixed-income debt instruments. The expected long-term rate of return on assets is derived from a detailed periodic study conducted by our actuaries and
our financial management. The study includes a review of anticipated future long-term performance of individual asset categories. While the study gives appropriate consideration to recent
plan performance and historical returns, the assumption is primarily a long-term prospective rate. Our discount rate as of December 31, 2004 and 2003 for determining projected
benefit obligations was 6.0% and 6.25%, respectively. A 25 basis points increase or decrease in the discount rate assumption would result in a plus or minus $0.1 million impact on pension
expense and a plus or minus $1.2 million impact on the projected benefit obligation. Our expected long-term rate of return on assets assumption for our retirement plans was 9.5% in
2004 and 2003, respectively. In addition, a 25 basis points increase or decrease in the expected long-term rate of return on assets assumption would result in a plus or minus
$0.1 million impact on pension expense.

Projected
health care benefits additionally reflect our assumptions about health care cost trends. The cost of providing plan benefits also depends on demographic assumptions including
retirements, mortality, turnover and plan participation. If actual experience differs from these assumptions, the cost of providing these benefits could increase or decrease.

Results of Operations

Roofing product sales is our dominant business, typically accounting for approximately 95% of our consolidated net sales. The main drivers of our roofing business
include: the nation's aging housing stock; existing home sales; new home construction; larger new homes; increased home ownership rates; and severe weather and energy concerns. Our roofing business is
also affected by raw material costs, including asphalt and other petroleum-based raw materials, energy, and transportation and distribution costs.

2004 Compared with 2003

We recorded net income in 2004 of $54.9 million compared with net income of $47.2 million for 2003, representing an increase of 16.3%. The reported
net income for 2003 included a $3.7 million after-tax operating gain ($5.7 million pre-tax) from the sale of property in Ontario, California and a
$2.4 million after-tax operating loss ($3.8 million pre-tax) from the write-down of the Albuquerque, New Mexico manufacturing facility. See Notes 6
and 7 to Consolidated Financial Statements. The increase in 2004 net income was primarily the result of higher operating income, partially offset by higher interest expense.

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Net sales for 2004 were $1,773.4 million compared with $1,607.8 million in 2003, representing an increase of 10.3%. Higher net sales in 2004 were
primarily due to higher unit volumes and higher average selling prices of premium residential and commercial roofing products.

Operating
income for 2004 was $156.3 million compared with $136.5 million in 2003, representing an increase of $19.8 million or 14.5%. Operating income for 2003
included a $5.7 million pre-tax operating gain on the sale of property in Ontario, California and a $3.8 million pre-tax operating loss from the
write-down of the Albuquerque, New Mexico manufacturing facility. Higher operating results in 2004 were primarily attributable to an increase in net sales of residential and commercial
roofing products, partially offset by higher raw material costs, including asphalt and other petroleum-based raw materials, and higher selling, general and administrative expenses primarily due to
higher volume related distribution and selling costs, and higher transportation costs, principally due to a rise in fuel costs.

Interest
expense increased to $62.7 million in 2004 from $56.7 million in 2003, primarily due to higher average borrowings, partially offset by a lower average interest
rate. The higher average borrowings in 2004 were primarily due to the issuance, in July 2004, of $200 million 73/4% Senior Notes due 2014 and the issuance, in
November 2004, of an additional $50 million 73/4% Senior Notes due 2014, which we refer to collectively as the 2014 Notes, partially offset by the redemption of the
$100 million 85/8% Senior Notes due 2006, which we refer to as the 2006 Notes, and a reduction in the amount outstanding under the $350 million Senior Secured Revolving
Credit Facility. In connection with entering into these financing transactions, we recorded additional interest expense of approximately $2.2 million, representing the write-off of
the remaining deferred financing costs of the 2006 Notes, the premium paid to exercise the call of the 2006 Notes and other interest related expenses. Other expense, net was $6.1 million for
2004 compared with $6.1 million for 2003.



Net Sales.Net sales of roofing products for 2004 increased to $1,695.0 million from $1,534.3 million for 2003,
representing an increase of $160.7 million or 10.5%. The increase in net sales of roofing products was primarily attributable to higher unit volumes and, to a lesser extent, higher average
selling prices. Roofing product net sales were favorably impacted by an increase in net sales of premium laminate shingles primarily due to higher unit volumes and higher average selling prices. Net
sales of specialty building products and accessories increased by $4.9 million or 6.7% for 2004 to $78.4 million, compared to $73.5 million for 2003.

Gross Margin.Our overall gross margin for 2004 increased to $547.6 million or 30.9% from $473.6 million or
29.5% for 2003. The increase in our gross margin percentage is primarily attributable to an increase in net sales due to an improved sales mix and higher average selling prices, partially offset by
slightly higher manufacturing costs.

Operating Income.Operating income for 2004 increased to $156.3 million or 8.8% of net sales, compared to
$136.5 million or 8.5% of net sales for 2003. Operating income for 2003 included a $5.7 million pre-tax operating gain on the sale of property in Ontario, California and a
$3.8 million pre-tax operating loss from the write-down of the Albuquerque, New Mexico manufacturing facility. The overall increase in operating income for 2004 is
primarily attributable to higher net sales of roofing products driven by higher unit volumes and higher average selling prices, partially offset by higher raw

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material
costs, and higher selling, general and administrative expenses due to higher volume related distribution and selling costs, and higher transportation costs, principally due to a rise in fuel
costs.

2003 Compared with 2002

We recorded net income in 2003 of $47.2 million compared with net income of $32.6 million for 2002, representing an increase of 44.8%. The reported
net income of $47.2 million included a $2.4 million ($3.8 million pre-tax) after-tax operating loss from the write-down of the Albuquerque, New
Mexico manufacturing facility and a $3.7 million ($5.7 million pre-tax) after-tax operating gain from the sale of property in Ontario, California. See Notes 6 and
7 to Consolidated Financial Statements. The increase in 2003 net income was primarily the result of higher operating income together with lower other non-operating expenses, partially
offset by higher interest expense.

Net
sales for 2003 were $1,607.8 million compared with $1,360.7 million in the same period of 2002, representing an increase of 18.2%. Higher net sales in 2003 were
primarily attributable to higher unit volumes and higher average selling prices of premium residential and commercial roofing products.

Operating
income for 2003 was $136.5 million compared with $114.9 million in 2002, representing an increase of $21.6 million or 18.8%. Higher operating results in
2003 were primarily attributable to an increase in net sales of residential and commercial roofing products and the gain from the sale of property in Ontario, California, partially offset by higher
raw material costs, principally asphalt due to higher crude oil prices, together with higher selling, general and administrative expenses due to higher volume related costs and the loss from the
write-down of the Albuquerque, New Mexico manufacturing facility.

Interest
expense increased to $56.7 million in 2003 from $55.0 million for the same period in 2002, primarily due to higher average borrowings partially offset by a lower
average interest rate. Other expense, net was $6.1 million for 2003 compared with $9.0 million for 2002 primarily due to a decline in financing costs in connection with the termination
of the Accounts Receivable Securitization Agreement. See Note 10 to Consolidated Financial Statements.



Net Sales.Net sales of roofing products for 2003 increased to $1,534.3 million from $1,289.4 million for 2002, representing
an increase of $244.9 million or 19.0%. The increase in net sales of roofing products was primarily attributable to higher unit volumes and, to a lesser extent, higher average selling prices.
Roofing product net sales were favorably impacted by an increase in net sales of premium laminate shingles primarily due to higher unit volumes and higher average selling prices. Specialty building
products and accessories increased by $2.2 million or 3.1% for 2003 to $73.5 million, compared to $71.3 million for 2002.

Gross Margin.Our overall gross margin for 2003 increased to $473.6 million or 29.5% from $406.1 million or
29.8% for 2002. The overall increase in our gross margin is primarily attributable to an increase in net sales due to higher average selling prices, partially offset by higher raw material costs,
principally asphalt, due to higher crude oil prices in our roofing products business.

Operating Income.Operating income for 2003 increased to $136.5 million or 8.5% of net sales, compared to
$114.9 million or 8.4% of net sales for 2002. Operating income for 2003 includes a $5.7 million pre-tax operating gain on the sale of property in Ontario, California and a
$3.8 million

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operating
loss in connection with the write-down on our Albuquerque, New Mexico manufacturing facility. The overall increase in operating income for 2003 is primarily attributable to
higher net sales of roofing products driven by higher unit volumes and higher average selling prices, partially offset by higher raw material costs, principally asphalt, and higher selling, general
and administrative expenses due to higher volume related distribution and selling costs.

Liquidity and Financial Condition



Sales of roofing products and specialty building products and accessories in the northern regions of the United States generally decline in the late fall and
winter months due to cold weather. In addition, adverse weather conditions can result in higher customer demand during our peak operating season depending on the extent and severity of the damage from
these severe weather conditions. Due to the seasonal demands of our business together with extreme weather conditions, we generally have negative cash flows from operations during the first six months
of our fiscal year. Our negative cash flows from operations are primarily driven by our cash invested in both accounts receivable and inventories to meet these seasonal operating demands. Generally,
in the third and fourth quarters of our fiscal year, our cash flows from operations become positive for each quarter, as our investment in inventories and accounts receivable no longer continues to
increase, as is customary in the first six months of our fiscal year. Our seasonal working capital needs, together with our debt service obligations, capital expenditure requirements and other
contracted arrangements, adversely impact our liquidity during this period. We rely on our cash on hand and our $350.0 million Senior Secured Revolving Credit facility due November 2006,
which we refer to as our Senior Secured Revolving Credit Facility, to support our overall cash flow requirements during these periods. We expect to continue to rely on our cash on hand and external
financings to maintain operations over the short and long-term and to continue to have access to the financing markets, subject to the then prevailing market terms and conditions.

Net
cash inflow from operating and investing activities was $7.3 million during 2004, including $74.5 million of cash provided by operations, partially offset by the
reinvestment of $67.2 million for capital programs and an acquisition of the Quakertown, Pennsylvania manufacturing facility (see below).

Cash
invested in additional working capital totaled $42.9 million during 2004, reflecting an increase in total accounts receivable of $60.3 million, due to increased
operating performance and the seasonality of our business, a $38.8 million increase in inventories to meet our seasonal operating demands and a $1.5 million increase in other current
assets, partially offset by a $57.7 million increase in accounts payable and accrued liabilities. The net cash used for operating activities also included a $14.8 million net increase in
the payable to related parties/parent corporations, primarily attributable to $30.3 million in current federal income taxes and a $4.0 million increase in amounts due under our
long-term granule supply agreement with an affiliated company, partially offset by $19.5 million in federal income tax payments, paid pursuant to our Tax Sharing Agreement with our
parent corporation. In addition, cash used in operating activities also included a $5.0 million increase in other assets primarily due to the implementation process of the Company's enterprise
resource planning system.

Net
cash provided by financing activities totaled $119.3 million during 2004, including $835.3 million of aggregate proceeds from the issuance of long-term
debt, of which $584.4 million related to 2004 cumulative borrowings under our Senior Secured Revolving Credit Facility and $250.9 million related to proceeds from the issuance of our
2014 Notes. Financing activities also

F-9

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included
$695.7 million in aggregate repayments of long-term debt, of which $584.4 million related to 2004 cumulative repayments under our Senior Secured Revolving Credit
Facility and $100.0 million related to the redemption of our 2006 Notes. In addition, repayments of long-term debt included $8.5 million related to our Nashville, Tennessee
Industrial Development Revenue Bonds, $2.5 million related to our Chester, South Carolina loan obligation, $0.2 million related to our 101/2% Michigan City, Indiana Note
and $0.1 million related to our Shafter, California Industrial Development Revenue Bonds. In addition, financing activities also included $15.0 million in cash dividends paid to our
parent corporation, $5.0 million in financing fees and expenses primarily due to the financing transactions in connection with the issuance of our 2014 Notes and $0.3 million in
distributions and loans to our parent corporation. The payments to our parent corporation are allowable under our Senior Secured Revolving Credit Facility and our 73/4% Senior Notes due
2005, the 8% Senior Notes due 2007, the 8% Senior Notes due 2008, and the 73/4% Senior Notes due 2014, which we refer to collectively as the Senior Notes.



At December 31, 2004, we had total outstanding consolidated indebtedness of $741.3 million, including $52.8 million of demand loans payable
to our parent corporation, of which $152.5 million matures prior to December 31, 2005, and a stockholders' deficit of $2.7 million. We anticipate funding these obligations
principally from our cash on hand, cash flow from operations and/or additional borrowings under our Senior Secured Revolving Credit Facility.

In
August 1999, we entered into a $110 million secured revolving credit facility. In December 2000, we entered into an additional $100 million secured
revolving credit facility to be used for working capital purposes subject to certain restrictions. In December 2002, we consolidated and restated both credit facilities into our
$210 million Consolidated and Restated Credit Agreement, which we refer to as the Credit Agreement. In connection with entering into the additional $100 million secured revolving credit
facility in December 2000, we also issued a $7 million precious metal note, which we refer to as the Precious Metal Note, which bears interest rates similar to the Credit Agreement, to
finance precious metals used in our manufacturing processes. The Credit Agreement, which was initially scheduled to mature in August 2003, was repaid and replaced in July 2003, with a
new senior secured credit facility (see below).

In
July 2003, we entered into a new $350 million Senior Secured Revolving Credit Facility. The initial borrowings under our Senior Secured Revolving Credit Facility were
primarily used to repay amounts outstanding under our Credit Agreement, to repay our $115 million Accounts Receivable Securitization Agreement due December 2004 and to repay our
$7 million Precious Metal Note due August 2003. The Senior Secured Revolving Credit Facility has a final maturity date of November 15, 2006, subject to certain conditions, is
secured by a first priority lien on substantially all of our assets and the assets of our subsidiaries and is guaranteed by all of our current and future subsidiaries. Availability under the Senior
Secured Revolving Credit Facility is based upon eligible Accounts Receivable, Inventory, and Property, Plant and Equipment (collectively the "Collateral"), as defined, in the Senior Secured Revolving
Credit Facility and includes a sub-limit for letters of credit of $100 million. The Senior Secured Revolving Credit Facility bears interest at a floating rate based on the lenders'
Base Rate, the federal funds rate or the Eurodollar rate, each as defined in the Senior Secured Revolving Credit Facility. On May 7, 2004, we amended our Senior Secured Revolving Credit
Facility, which reduced the floating rate of interest as defined in the Senior Secured Revolving Credit Facility. On July 12, July 19, and November 5, 2004, the Senior Secured
Revolving Credit Facility was further

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amended
to allow for the issuance of our 2014 Notes (see below). The Senior Secured Revolving Credit Facility requires mandatory repayments of excess cash, as defined, on the tenth day of each month
and contains a material adverse change clause. We are also required to pay unused commitment fees associated with the Senior Secured Revolving Credit Facility. The Senior Secured Revolving Credit
Facility provides for optional and mandatory reductions in the overall $350 million Senior Secured Revolving Credit Facility commitment, subject to certain conditions as defined in the Senior
Secured Revolving Credit Facility. In addition, the Senior Secured Revolving Credit Facility also provides for optional and mandatory prepayments of borrowings outstanding under the Senior Secured
Revolving Credit Facility, subject to certain conditions. Borrowings outstanding under the Senior Secured Revolving Credit Facility, which are included in long-term debt amounted to
$0 million at December 31, 2004 and 2003.

Under
the terms of the Senior Secured Revolving Credit Facility and the indentures governing our Senior Notes, we are subject to certain financial covenants. These financial covenants
include, among others,



In
addition, if a change of control as defined in the Senior Secured Revolving Credit Facility occurs, the Senior Secured Revolving Credit Facility could be terminated and the loans
under the Senior Secured Revolving Credit Facility accelerated by the holders of that indebtedness. If that event occurred, it would cause our outstanding Senior Notes to be accelerated.

As
of December 31, 2004, after giving effect to the most restrictive of the aforementioned restrictions, we could not have paid dividends or made other restricted payments to our
parent corporation. In addition, at December 31, 2004, we could repay demand loans to our parent corporation amounting to $52.8 million, subject to certain conditions as outlined in the
Senior Secured Revolving Credit Facility and the indentures governing our Senior Notes.

As
of December 31, 2004, we were in compliance with all covenants under the Senior Secured Revolving Credit Facility and the indentures governing our Senior Notes.

In
September 2003, we used proceeds from the Senior Secured Revolving Credit Facility to repay our outstanding 101/2% Senior Notes at maturity, aggregating
$35.0 million plus accrued interest.

On
July 26, 2004, we issued $200.0 million in aggregate principal amount of 73/4% Senior Notes due 2014, at 100.0% of the principal amount. The net proceeds
from the issuance of the 2014 Notes, after deducting initial purchasers' discounts and commissions and offering expenses were approximately $195.9 million. On August 26, 2004, we
exercised a call notice issued on July 26, 2004 and used approximately $101.8 million of the net proceeds to redeem all of our issued and outstanding 2006 Notes, including accrued and
unpaid interest on such notes through the date of redemption. In addition, we used the remaining net proceeds of approximately $94.1 million to reduce amounts

F-11

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outstanding
under our Senior Secured Revolving Credit Facility. The redemption price of the 2006 Notes was 101.438% of the principal amount outstanding and the premium of approximately
$1.4 million was recorded in interest expense in July 2004. In connection with the extinguishment of the 2006 Notes, we expensed the remaining deferred financing fees of approximately
$0.7 million in July 2004 and included this amount in interest expense.

On
November 10, 2004, we issued an additional $50.0 million in aggregate principal amount of our 2014 Notes. The additional 2014 Notes were issued under an indenture dated
July 26, 2004, pursuant to which we previously issued our original $200.0 million of 73/4% Senior Notes due 2014. These additional 2014 Notes rank equally with and formed
a part of a single series with such original 2014 Notes and have the same terms and conditions. The net proceeds from the issuance of the additional 2014 Notes, after deducting the offering expenses
and including the addition of the applicable premium were approximately $50.6 million. We used the net proceeds from the additional 2014 Notes to reduce amounts outstanding under our Senior
Secured Revolving Credit Facility. The premium of approximately $0.9 million is included in long-term debt and will be amortized over the life of the 2014 Notes.

Under
the terms and conditions of the 2014 Notes, the noteholders have the right under the indentures governing such notes to require us to purchase the 2014 Notes at a price of 101% of
the principal amount thereof, plus any accrued and unpaid interest, in the event of a change in control, as defined in the 2014 Notes. Upon the expiration of this right, we would have the option to
purchase the 2014 Notes at a purchase price equal to 100% of the aggregate principal amount, plus the applicable premium, as defined in the 2014 Notes, together with any accrued and unpaid interest.
We also have the option to redeem some or all of the 2014 Notes beginning on August 1, 2009 through August 1, 2012, at specified redemption premiums, as defined in the 2014 Notes.

Our
Senior Notes are secured by a second-priority lien on the assets securing the Senior Secured Revolving Credit Facility for so long as the first-priority lien remains in effect,
subject to certain limited exceptions and have been guaranteed by our subsidiaries that guaranteed the Senior Secured Revolving Credit Facility. In connection with entering the Senior Secured
Revolving Credit Facility, we entered into an Amended and Restated Security Agreement, which grants a security interest in the Collateral in favor of the collateral agent on behalf of the lenders
under the Senior Secured Revolving Credit Facility and the holders of our outstanding Senior Notes. We also entered into an Amended and Restated Collateral Agent Agreement, which provides, among other
things, that we maintain a lockbox and depository control agreement for the benefit of the secured parties and the sharing of proceeds with respect to any foreclosure or other remedy in respect of the
Collateral. As of December 31, 2004,
the book value of the collateral securing the Senior Notes and the Senior Secured Revolving Credit Facility was approximately $1,054.1 million.

In
December 1995, we consummated a $40.0 million sale-leaseback of certain equipment located at our Chester, South Carolina glass mat manufacturing facility, in
a transaction accounted for as a capital lease. The lessor was granted a security interest in certain equipment at the Chester facility. The lease term extended to December 2005, with an early
buyout option in June 2003. In July 2003, we paid the early buyout option of $19.7 million. In addition, in July 2003, we entered into a new $19.7 million Secured
Loan, which we refer to as the Chester Loan, with the proceeds being used to repay the $19.7 million obligation associated with the early buyout option discussed above. The Chester Loan is
secured by a sole security interest in the machinery and equipment, matures in 2010, requires monthly payments of principal and interest commencing in August 2003 and bears a fixed annual
interest rate of 7.41%.

On
December 30, 2004, we redeemed our Nashville, Tennessee Industrial Development Revenue Bonds for $8.5 million. We have three remaining industrial revenue bond issues
outstanding, which bear interest at floating rates. Interest rates on the foregoing obligations ranged between 0.9% and 2.6% during 2004.

See
Note 13 to Consolidated Financial Statements for further information regarding our debt instruments.

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We make loans to and borrow from, our parent corporations from time to time at rates ranging from 4.0% to 6.3% in 2004. During 2001 and on July 1, 2003 and
December 29, 2003, we loaned BMCA Holdings Corporation $2.5, $37.8 and $15.0 million, respectively, and on July 9, 2003 and December 29, 2003, BMCA Holdings Corporation
loaned us $37.8 and $15.0 million, respectively. At December 31, 2004 and 2003, BMCA Holdings Corporation owed us $55.7 and $55.6 million, including interest of $0.4 and
$0.3 million, respectively, and we owed BMCA Holdings Corporation $52.8 million with no unpaid interest. Interest income on our loans to BMCA Holdings Corporation amounted to $2.9, $1.0
and $0.1 million in 2004, 2003 and 2002, respectively. Interest expense on our loans from BMCA Holdings Corporation amounted to $2.8 and $0.9 million in 2004 and 2003, respectively.
Loans payable to/receivable from our parent corporations are due on demand and provide each party with the right to offset of its related obligation to the other party with the right to limitations as
outlined in our Senior Secured Revolving Credit Facility and our Senior Notes. Under the terms of our Senior Secured Revolving Credit Facility and the indentures governing our Senior Notes at
December 31, 2004, we could repay demand loans to our parent corporation amounting to $52.8 million, subject to certain conditions.

We
also make non-interest bearing advances to affiliates, of which no amounts were outstanding at December 31, 2004. In addition, no loans were owed by us to other
affiliates. See Note 17 to Consolidated Financial Statements.

On
February 25, 2004, April 21, 2004 and December 30, 2004, we declared and paid cash dividends, each amounting to $5.0 million, respectively, to our parent
corporation.

On
June 15, 2004, September 15, 2004, and December 15, 2004 we paid $6.4, $9.6 and $3.5 million, respectively, in federal income tax payments to our parent
corporation pursuant to a tax sharing agreement. This amount is included in the change in net receivable from/payable to related parties/parent corporations in the consolidated statement of cash
flows.

On
January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to asbestos claims. See Item 3, "Legal
Proceedings" for further information regarding asbestos-related matters. See Note 5 to the Consolidated Financial Statements.

Our
parent corporations, G-I Holdings and BMCA Holdings Corporation, are essentially holding companies without independent businesses or operations. As a result, they are
presently dependent upon the earnings and cash flows of their subsidiaries, principally our company, in order to satisfy their obligations, including various tax and other claims and liabilities
including tax liabilities relating to Rhône-Poulenc Surfactants & Specialties, L.P. (the "surfactants partnership"), a partnership in which G-I Holdings held an
interest. We do not believe that the dependence of our parent corporations on the cash flows of their subsidiaries should have a material adverse effect on our operations, liquidity or capital
resources. See Notes 5, 9, 13, 17 and 18 to Consolidated Financial Statements.

In
May 2003, we entered into a contract with International Specialty Products Inc., which we refer to as ISP, to purchase substantially all of our colored roofing granules
and algae-resistant granules under a long-term requirements contract, except for the requirements of certain of our roofing plants that are supplied by third parties. In 2004, 2003 and
2002, we purchased in the aggregate approximately $98.2, $77.7 and $73.2 million, respectively, of mineral products from ISP. The amount payable to ISP at December 31, 2004 and 2003 for
such purchases was $12.7 and $8.7 million, respectively, and is included in payable to related parties in the consolidated balance sheets. We believe our long-term

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supply
requirements contract with ISP, taken as a whole, is no less favorable to us than could be obtained from an unaffiliated third party.

Pursuant
to a management agreement, a subsidiary of ISP, provides certain general management, administrative, legal and facilities services to us, including the use of our headquarters
in Wayne, New Jersey. Charges to us by ISP for these services under the management agreement, inclusive of the services provided to G-I Holdings, discussed below, aggregated $5.6, $6.2 and
$6.1 million for 2004, 2003 and 2002, respectively. These charges consist of management fees and other reimbursable expenses attributable to us, or incurred by ISP for the benefit of us. The
amount payable to ISP for management fees as of December 31, 2004 and 2003 was $0.4 and $0.4 million, respectively, and is included in payable to related parties in the consolidated
balance sheets. The management agreement also provides that we are responsible for providing management services to G-I Holdings and certain of its subsidiaries and that G-I
Holdings pay to us a management fee for these services. The aggregate amount paid by G-I Holdings to us for services rendered under the management agreement in 2004, 2003 and 2002 was
approximately $0.8 million, respectively. We also allocate a portion of the management fees payable by us under the management agreement to separate lease payments for the use of our
headquarters. Some of our executive officers receive their compensation from ISP. ISP is indirectly reimbursed for this compensation through payment of the management fee and other reimbursable
expenses payable under the management agreement.

Included
in current liabilities as a tax payable to parent corporation is $3.8 million at December 31, 2004, representing amounts due to G-I Holdings under the
Tax Sharing Agreement. Included in current assets as a tax receivable from parent corporation is $7.0 million at December 31, 2003, representing amounts paid to G-I Holdings
under the Tax Sharing Agreement. See Note 9 to Consolidated Financial Statements.



We use capital resources to maintain existing facilities, expand our operations and make acquisitions. In 2005, we expect to spend approximately
$86.5 million on maintenance and compliance and expansion capital. We expect to generate funding for our capital programs from results of operations and additional borrowings under our Senior
Secured Revolving Credit Facility.



On May 7, 2004, we acquired certain assets of a manufacturing facility located in Quakertown, Pennsylvania from Atlas Roofing Corporation. The acquisition
was accounted for under the purchase method of accounting. Accordingly, the purchase price was allocated to the fair value of the identifiable assets acquired, which consisted almost entirely of
property, plant and equipment. The operating results of the Quakertown manufacturing facility are included in our results of operations from the date of its acquisition. With the acquisition of the
Quakertown manufacturing facility, we have decided not to construct the new shingle manufacturing facility in the Northeast, the anticipated construction of which had been announced on
February 9, 2004.

In
response to current market conditions, to better service shifting customer demand and to reduce costs, we closed four manufacturing facilities in 2000 located in Monroe, Georgia; Port
Arthur, Texas; Corvallis, Oregon; and Albuquerque, New Mexico. In December 2001, we sold the Corvallis, Oregon facility. The sale of this facility did not have a material impact on the results
of operations. In December 2002, we sold the Monroe, Georgia facility. The sale of this facility did not have a material

F-14

---



impact
on the results of operations. As market growth and customer demand improves, we may reinstate production at one or both of the remaining two closed manufacturing facilities in the future. The
effect of closing these facilities was not material to our results of operations.

In
May 2003, we sold property in Ontario, California for cash proceeds of approximately $9.3 million, which resulted in a pre-tax operating gain of
approximately $5.7 million. See Note 6 to Consolidated Financial Statements.



In December 2003, we evaluated the manufacturing facility assets located at our previously closed Albuquerque, New Mexico manufacturing facility. Our
evaluation included a review of the carrying value of all assets and resulted in a pre-tax operating loss of approximately $3.8 million. See Note 7 to Consolidated Financial
Statements.

As
a result of the foregoing factors related to 2004, cash and cash equivalents increased by $126.6 million during 2004 to $129.5 million.



We do not believe that inflation has had an effect on our results of operations during the past three years. However, we cannot assure you that our business will
not be affected by inflation in the future, or by increases in the cost of energy and asphalt purchases used in our manufacturing process principally due to fluctuating oil prices.

During
2004, the cost of asphalt continued to be high relative to historical levels, which is correlated to the increase in crude oil prices. Due to the strength of our manufacturing
operations which allows us to use many types of asphalt together with our ability to secure alternative sources of supply, we do not anticipate that any future disruption in the supply of asphalt will
have a material impact on future net sales, although no assurances can be provided in that regard.

To
mitigate these and other petroleum-based cost increases, we announced and implemented multiple price increases during 2004. We will attempt to pass on future additional unexpected
cost increases from suppliers as needed; however, no assurances can be provided that these price increases will be accepted in the marketplace.



We have contracts with several different asphalt terminal suppliers where asphalt imported from Venezuela or other suppliers is stored prior to its use at our
plants. These asphalt terminals are located at several locations including the Ports of Tampa, Florida and Savannah, Georgia and are used to service our plants at those sites. We are obligated to pay
these suppliers for use of these terminals under these contracts through 2008. Monthly pricing is fixed and includes capital improvements made at each asphalt terminal by its owner. No changes have
been made to these contracts during 2004.

In
connection with the acquisition of the Quakertown, Pennsylvania manufacturing facility on May 7, 2004, we entered into a long-term supply agreement with Atlas
Roofing Corporation, whereby we are obligated to purchase certain minimum amounts of dry felt and other products at fair market value through April 30, 2011. Effective January 31, 2005,
the long-term supply agreement with Atlas Roofing Corporation was modified to reduce our minimum purchase obligation for dry felt and other

F-15

---



products
by fifty percent. Based on the modification to the long-term supply agreement, as of December 31, 2004 our minimum purchase obligation under the Atlas Roofing Corporation
long-term supply agreement aggregated to $11.9 million.

In
December 2004, we entered into a requirements contract with a supplier to purchase certain glass fiber. Under this contract, we are required to purchase specified annual quantities of
glass fiber through 2014. Pricing for the glass fiber under this contract may be adjusted upward or downward relating to various factors including changes in the cost of energy and freight, among
others. Under this requirements contract, we have the right to terminate the contract, if during any two consecutive calender years, we purchase less than a specific percentage of our glass fiber
requirements. As of December 31, 2004, if we were to terminate this contract on or after December 31, 2006, as a result of not having purchased specified quantities of glass fiber during
the prior two-year period, we would be required to pay an amount of not more than $37.3 million to the supplier, although we believe that the actual payment amount would be substantially less
based on the terms of the contract.

We
also have a management agreement with International Specialty Products Inc., which we refer to as the ISP Management Agreement, to provide us with certain management services.
The management fees payable under the ISP Management Agreement are adjusted annually. Based on services provided to us in 2004 under the management agreement, the aggregate amount payable to ISP under
the management agreement for 2005, is not yet available and is estimated to be approximately the same as the $5.6 million paid in 2004. For a further discussion on the ISP Management Agreement
reference is made to Management's Discussion and Analysis of Financial Condition and Results of Operations, "Intercompany Transactions."

At
December 31, 2004, the future cost of our non-cancelable asphalt terminal contracts, the Atlas Roofing Corporation supply agreement and the glass fiber requirements
contract described above are included in the table of contractual obligations under the caption "Purchase Obligations." In addition, we also include in the table of contractual obligations below other
obligations related to long-term debt, which includes accretion of approximately $0.6 million, fixed interest expenses associated with our Senior Notes, other long-term
fixed interest obligations and operating leases.

Payments Due by PeriodContractual Obligations

Total

Less than
1 Year

1-3
Years

4-5
Years

After
5 Years(Millions)Long-term Debt

$
689.1

$
152.7

$
106.0

$
168.6

$
261.8Purchase Obligations


51.3


8.8


37.5


3.7


1.3Operating Leases


81.9


21.9


32.5


26.3


1.2Fixed Interest Expense


274.7


47.2


79.6


51.0


96.9Total

$
1,097.0

$
230.6

$
255.6

$
249.6

$
361.2


We
purchase substantially all of our colored roofing granules and algae-resistant granules under a long-term requirements contract with ISP. The amount of mineral products
purchased each year under the ISP contract is based on current demand and is not subject to minimum purchase requirements. Since the total annual amount of mineral products expected to be purchased
cannot be determined at this time, no amount is included in the above table related to this contract. In 2004, 2003 and 2002, we purchased $98.2, $77.7 and $73.2 million, respectively, of
mineral products from ISP under this contract.

F-16

---



At
December 31, 2004, we have contractual guarantees and commitments as follows:

Expiration per periodContractual Guarantees
and Commitments

Total

Less than
1 Year

1-3
Years

4-5
Years

After
5 Years(Millions)Letters of Credit

$
48.9

$
48.9

$


$


$
Total

$
48.9

$
48.9

$


$


$



At
December 31, 2004, letters of credit of $48.9 million, of which $48.7 million are standby letters of credit and $0.2 million are documentary letters of
credit, are irrevocable obligations of an issuing bank. These letters of credit are guaranteed by us.



At December 31, 2004, we have other obligations as follows:

Other
Obligations

2004
Actual
Spending

2005
Projected
Spending(Millions)Environmental Matters

$
2.5

$
2.2Pension and Other Benefits


0.2


0.2Total

$
2.7

$
2.4


Our
expenditures for environmental compliance capital projects were $2.5 and $1.9 million in 2004 and 2003, respectively. We anticipate that environmental regulations will
continue to be imposed on the roofing industry. Although we cannot predict with certainty environmental expenditures beyond 2004, management believes the estimation in the table above is adequate.

Our
policy for pension plans is to accumulate plan assets that, over the long run, will approximate the present value of projected benefit obligations. In 2004 and 2003, we did not make
any pension contributions. In 2005, based on current actuarial data, we do not expect to make any pension contribution. Actual contributions in 2005 and future years may vary based on a number of
factors including prevailing interest rates and return on plan assets.

Spending
associated with other benefit plans, primarily retiree medical, defined contribution and long-term disability, amounted to $0.2 million and
$0.3 million in 2004 and 2003, respectively. We expect spending to continue at comparable levels in 2005.

F-17

---





At December 31, 2004, we have available sources of liquidity, net of amounts used, as follows:

Expiration per periodAvailable Sources
of Liquidity

Total

Less than
1 Year

1-3
Years

4-5
Years

After
5 Years(Millions)Unused Lines of Credit

$
253.8

$


$
253.8

$


$
Total

$
253.8

$


$
253.8

$


$



We
have a $350 million Senior Secured Revolving Credit Facility, of which $48.9 million of letters of credit were utilized at December 31, 2004. Available sources of
liquidity consisted of $253.8 million of unused lines of credit at December 31, 2004, subject to the borrowing base availability as defined in the Senior Secured Revolving Credit
Facility.



In March 1993, we sold our trade accounts receivable to a trust, without recourse, pursuant to an agreement, which provided for a maximum of
$75.0 million in cash to be made available to us based on Eligible Receivables, as defined, outstanding from time to time. In November 1996, we entered into new
agreements, which provided for a maximum of $115.0 million, pursuant to which we sold the receivables to a special purpose subsidiary of ours, BMCA Receivables Corporation without recourse,
which in turn sold them without recourse. In December 2001, this facility matured and $115.0 million was repaid to settle previous amounts made available to us.

In
December 2001, we entered into a new Accounts Receivable Securitization Agreement, which we refer to as the Securitization Agreement, under which we sold certain of our trade
accounts receivable to BMCA Receivables Corporation, without recourse, which in turn sold them to a third party, without recourse. The agreement provided for a maximum of $115.0 million in cash
to be made available to us based on the sale of Eligible Receivables outstanding from time to time. This agreement, initially scheduled to mature in December 2004, was subject to financial and
other covenants including a material adverse change in business conditions, financial or otherwise and was terminated in July 2003. With the termination of the Securitization Agreement we also
repurchased our undivided interest in the associated receivables. In connection with the termination of the Securitization Agreement in July 2003, we repaid $115.0 million of amounts
outstanding under such agreement. As a result of the termination of the Securitization Agreement, accounts receivable and long-term debt at December 31, 2003 increased by
approximately $105.4 million as compared to prior year. We also liquidated BMCA Receivables Corporation effective August 2003. See Note 10 to Consolidated Financial Statements.

BMCA
Receivables Corporation was not a guarantor under our debt obligations. See Notes 12 and 19 to Consolidated Financial Statements. The effective cost to us varied with LIBOR and is
included in other expense, net and amounted to $0, $1.6 and $5.2 million in 2004, 2003 and 2002, respectively.

F-18

---







In May 2004, the Financial Accounting Standards Board, which we refer to as FASB issued FASB Staff Position No. FAS 106-2 "Accounting
and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Medicare Act"), which we refer to as FSP FAS No. 106-2, which
supersedes FSP FAS No. 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003," which we refer to as FSP
FAS No. 106-1. FSP FAS No. 106-2 provides guidance on accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 to
employers that sponsor postretirement health care plans which provide prescription drug benefits.

FSP
FAS 106-2 applies only to sponsors of single-employer defined benefit postretirement health care plans for which (1) the employer has concluded that
prescription drug benefits available under the plan to some or all participants, for some or all future years, are "actuarially equivalent" to Medicare Part D and thus quality for the subsidy
provided by the Medicare Act, and (2) the expected subsidy will offset or reduce the employer's share of the cost of the underlying postretirement prescription drug coverage on which the
subsidy is based. In addition, FSP FAS 106-2 requires certain disclosures in financial statements regarding the effect of the Medicare Act and the related subsidy on postretirement
health obligations and net periodic postretirement benefit cost.

FSP
FAS 106-2 is effective for the first interim or annual period beginning after June 15, 2004. As of December 31, 2004, we have adopted FSP FAS
No. 106-2 and noted no material impact on the accounting for our postretirement medical and life insurance plan.

In
November 2004, the FASB issued SFAS No. 151 "Inventory Costs," which we refer to as SFAS No. 151, which clarifies the accounting for abnormal amounts of idle
facility expense, freight, handling costs and wasted material (spoilage). SFAS No. 151 amends Accounting Research Bulletin (ARB) No. 43, Chapter 4 "Inventory Pricing," which we refer to
as ARB No. 43, and requires abnormal inventory costs to be recognized as current period charges regardless of whether they meet the "so
abnormal" criterion outlined in ARB No. 43. SFAS No. 151 also introduces the concept of "normal capacity" and requires the allocation of fixed production overheads to inventory based on
the normal capacity of the production facilities. Unallocated overheads must be recognized as an expense in the period in which they are incurred. SFAS No. 151 is effective for costs occurring
in fiscal years beginning after June 15, 2005. As of January 1, 2006, we will adopt the provisions of SFAS No. 151 and do not anticipate any material effect on our consolidated
financial statements.

In
December 2004, the FASB issued a revised SFAS No. 123 "Accounting for Stock-Based Compensation," which we refer to as SFAS No. 123(R), which will require
compensation costs related to share-based payment transactions to be recognized in the financial statements. SFAS No. 123(R) establishes fair value as the measurement objective in accounting
for share-based payment arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees. SFAS
No. 123(R) replaces the original SFAS No. 123 and supersedes Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS No. 123(R)
becomes effective beginning with the first interim or annual reporting period after June 15, 2005. As of December 31, 2004 we currently account for our 2001 Long-Term
Incentive Plan under the accounting prescribed by FASB Interpretation No. 28, "Accounting for Stock Appreciation Rights and Other Variable Stock Option and Award Plans," which we refer to as
FIN 28. Since compensation expense related to our incentive units is currently included in our

F-19

---



consolidated
statements of income, we do not expect SFAS No. 123(R) to have an impact on our consolidated financial statements. See Notes 2 and 15 to Consolidated Financial Statements.

In
December 2004, the FASB issued SFAS No. 153 "Exchanges of Nonmonetary Assets," which we refer to as SFAS No. 153, which replaces the exception from fair value
measurement in APB Opinion No. 29 "Accounting for Nonmonetary Transactions," for nonmonetary exchanges of similar productive assets. SFAS No. 153 replaces this exception with a general
exception from fair value measurement for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity
are expected to change significantly as a result of the exchange. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal reporting periods beginning after June 15,
2005. As of July 4, 2005, we will adopt the provisions of SFAS No. 153 and do not anticipate having any nonmonetary asset exchanges.

In
December 2004, the FASB issued FASB Staff Position 109-1 "Application of SFAS No. 109, Accounting for Income Taxes, related to Tax Deductions Provided to
U.S. Based Manufacturers by the American Jobs Creation Act of 2004", which we refer to as FSP FAS 109-1. FSP FAS 109-1 provides guidance on the application of
SFAS No. 109, which provides tax relief to U.S. domestic manufacturers. FSP FAS 109-1 guidance allows for a tax deduction to be created under the Jobs Creation Act of 2004
for a manufacturing entity which must be accounted for as a special deduction in accordance with SFAS No. 109 and not a reduction in the effective tax rate. In addition, FSP
FAS 109-1 provides the special deduction for a manufacturing entity must be considered when measuring deferred taxes when subject to graduated tax rates and assessing whether a
valuation allowance is necessary under SFAS No. 109. As of December 31,
2004, we adopted FAS FSP 109-1 and noted there was no effect on our 2004 consolidated financial statements and we believe there will be no material effect on our 2005 consolidated
financial statements.



Under the terms of the Senior Secured Revolving Credit Facility, we are only permitted to enter into investments in highly rated commercial paper, U.S. government
backed securities, certain time deposits and hedging arrangements that protect against or mitigate the effect of fluctuations in interest rates, foreign exchange rates or prices of commodities used in
our business. At December 31, 2004 and 2003, we did not have any hedging arrangements. See Note 2 to Consolidated Financial Statements.

*
* *

Forward-looking Statements

This annual report on Form 10-K contains both historical and forward-looking statements. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements within the meaning of section 27A of the Securities Act and section 21E of the Securities Exchange Act of 1934. These
forward-looking statements are only predictions and generally can be identified by use of statements that include phrases such as "believe," "expect," "anticipate," "intend," "plan," "foresee" or
other similar words or phrases. Similarly, statements that describe our objectives, plans or goals also are forward-looking statements. Our operations are subject to certain risks and uncertainties
that could cause actual results to differ materially from those contemplated by the relevant forward-looking statements. The forward-looking statements included herein are made only as of the date of
this annual report on Form 10-K and we undertake no obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances. We cannot assure you
that projected results or events will be achieved.

F-20

---



BUILDING MATERIALS CORPORATION OF AMERICA    SELECTED FINANCIAL DATA

The
following table presents our selected consolidated financial data. The selected historical consolidated financial data for the five fiscal years ended December 31, 2004, 2003,
2002, 2001 and 2000 are derived from our audited consolidated financial statements. The results for the year ended December 31, 2000 include the results of the LL Building Products Inc.
security products business, certain assets of which were sold in September 2000, including net sales of $22.9 million.

Year Ended December 31,2004

2003

2002

2001

2000(Millions)Operating Data:Net sales

$
1,773.4

$
1,607.8

$
1,360.7

$
1,293.0

$
1,207.8Operating income


156.3


136.5
*

114.9
*

97.0
*

63.9
*Interest expense


62.7


56.7


55.0


60.8


54.0Income (loss) before income taxes


87.5


73.7


50.9


29.8


(17.7
)Net income (loss)


54.9


47.2


32.6


18.8


(11.2
)


---

December 31,2004

2003

2002

2001

2000(Millions)Balance Sheet Data:Total working capital

$
157.7

$
140.9

$
105.7

$
105.3

$
149.0Total assets


1,070.4


813.7


763.0


727.0


790.3Long-term debt less current maturities


536.0


545.7


545.8


599.9


674.7Total stockholders' equity (deficit)


(2.7
)

(42.1
)

(31.1
)

(61.6
)

(77.9
)


Year Ended December 31,2004

2003

2002

2001

2000(Millions)Other Data:Depreciation

$
43.9

$
39.4

$
38.7

$
37.2

$
36.4Goodwill amortization











2.0


2.0Software amortization


2.2


2.1


2.0


1.8


0.9Capital expenditures and acquisition


67.2


43.3


34.6


28.1


61.5


F-21

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Board of Directors
Building Materials Corporation of America:

We
have audited the accompanying consolidated balance sheets of Building Materials Corporation of America and subsidiaries as of December 31, 2004 and 2003, and the related consolidated
statements of income, stockholders' equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 2004. In connection with our audits of the
consolidated financial statements, we also have audited consolidated financial statement schedule II on page S-1. These consolidated financial statements and consolidated
financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and consolidated financial
statement schedule based on our audits.

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

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Building Materials Corporation of America and subsidiaries
as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in
conformity with U.S. generally accepted accounting principles. Also in our opinion, the related consolidated financial statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

KPMG LLPShort Hills, New Jersey
March 24, 2005


F-22

---





BUILDING MATERIALS CORPORATION OF AMERICA        CONSOLIDATED STATEMENTS OF INCOME

|                           |                                                     | Year Ended December 31,       |          
|-------------------------- | --------------------------------------------------- | ----------------------------- | ---------
|
|
|Net sales                  |                                                     | $                             | 1,773,389
|                           |                                                     |                               |          
|Costs and expenses, net:   |                                                     |                               |          
|                           | Cost of products sold                               |                               |          
|                           | Selling, general and administrative                 |                               |          
|                           | Loss on write-down of manufacturing facility assets |                               |          
|                           | (Gain) loss on sale of assets                       |                               |          
|                           |                                                     |                               |          
|                           |                                                     | Total costs and expenses, net |          
|                           |                                                     |                               |          
|Operating income           |                                                     |                               | 156,265  
|Interest expense           |                                                     |                               | (62,707  
|Other expense, net         |                                                     |                               | (6,074   
|                           |                                                     |                               |          
|Income before income taxes |                                                     |                               | 87,484   
|Income tax expense         |                                                     |                               | (32,588  
|                           |                                                     |                               |          
|Net income                 |                                                     | $                             | 54,896   
|                           |                                                     |                               |          

The
accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-23

---





BUILDING MATERIALS CORPORATION OF AMERICA        CONSOLIDATED BALANCE SHEETS        (Dollars in thousands, except per share amounts)

|                                                                                    |                                                                                                                                                       | December 31,                         |          
|----------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ---------
|
|
|Assets                                                                              |                                                                                                                                                       |                                      |          
|Current Assets:                                                                     |                                                                                                                                                       |                                      |          
|                                                                                    | Cash and cash equivalents                                                                                                                             |                                      | $        
|                                                                                    | Accounts receivable, trade, less allowance of $1,139 and $1,363, in 2004 and 2003, respectively                                                       |                                      |          
|                                                                                    | Accounts receivable, other                                                                                                                            |                                      |          
|                                                                                    | Tax receivable from parent corporation                                                                                                                |                                      |          
|                                                                                    | Inventories, net                                                                                                                                      |                                      |          
|                                                                                    | Deferred income tax assets, net                                                                                                                       |                                      |          
|                                                                                    | Other current assets                                                                                                                                  |                                      |          
|                                                                                    |                                                                                                                                                       |                                      |          
|                                                                                    |                                                                                                                                                       | Total Current Assets                 |          
|Property, plant and equipment, net                                                  |                                                                                                                                                       |                                      | 364,514  
|Goodwill, net of accumulated amortization of $16,370 in 2004 and 2003, respectively |                                                                                                                                                       |                                      | 63,294   
|Other noncurrent assets                                                             |                                                                                                                                                       |                                      | 33,881   
|                                                                                    |                                                                                                                                                       |                                      |          
|Total Assets                                                                        |                                                                                                                                                       | $                                    | 1,070,351
|                                                                                    |                                                                                                                                                       |                                      |          
|Liabilities and Stockholders' Equity (Deficit)                                      |                                                                                                                                                       |                                      |          
|Current Liabilities:                                                                |                                                                                                                                                       |                                      |          
|                                                                                    | Current maturities of long-term debt                                                                                                                  |                                      | $        
|                                                                                    | Accounts payable                                                                                                                                      |                                      |          
|                                                                                    | Payable to related parties                                                                                                                            |                                      |          
|                                                                                    | Loans payable to parent corporation                                                                                                                   |                                      |          
|                                                                                    | Accrued liabilities                                                                                                                                   |                                      |          
|                                                                                    | Reserve for product warranty claims                                                                                                                   |                                      |          
|                                                                                    |                                                                                                                                                       |                                      |          
|                                                                                    |                                                                                                                                                       | Total Current Liabilities            |          
|                                                                                    |                                                                                                                                                       |                                      |          
|Long-term debt less current maturities                                              |                                                                                                                                                       |                                      | 535,952  
|                                                                                    |                                                                                                                                                       |                                      |          
|Reserve for product warranty claims                                                 |                                                                                                                                                       |                                      | 17,213   
|                                                                                    |                                                                                                                                                       |                                      |          
|Deferred income tax liabilities                                                     |                                                                                                                                                       |                                      | 44,773   
|                                                                                    |                                                                                                                                                       |                                      |          
|Other liabilities                                                                   |                                                                                                                                                       |                                      | 24,155   
|                                                                                    |                                                                                                                                                       |                                      |          
|Commitments and Contingencies                                                       |                                                                                                                                                       |                                      |          
|Stockholders' Equity (Deficit):                                                     |                                                                                                                                                       |                                      |          
|                                                                                    | Series A Cumulative Redeemable Convertible Preferred Stock, $.01 par value per share; 400,000 shares authorized; no shares issued                     |                                      |          
|                                                                                    | Class A Common Stock, $.001 par value per share; 1,300,000 shares authorized; 1,015,010 shares issued and outstanding                                 |                                      |          
|                                                                                    | Class B Common Stock, $.001 par value per share; 100,000 shares authorized; 0 and 15,000 shares issued and outstanding in 2004 and 2003, respectively |                                      |          
|                                                                                    | Loans receivable from parent corporation                                                                                                              |                                      |          
|                                                                                    | Retained earnings                                                                                                                                     |                                      |          
|                                                                                    | Accumulated other comprehensive loss                                                                                                                  |                                      |          
|                                                                                    |                                                                                                                                                       |                                      |          
|                                                                                    |                                                                                                                                                       | Total Stockholders' Equity (Deficit) |          
|                                                                                    |                                                                                                                                                       |                                      |          
|Total Liabilities and Stockholders' Equity (Deficit)                                |                                                                                                                                                       | $                                    | 1,070,351
|                                                                                    |                                                                                                                                                       |                                      |          

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-24

---





BUILDING MATERIALS CORPORATION OF AMERICA        CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                    |                                                                                             | Year Ended December 31,                             |        
|--------------------------------------------------- | ------------------------------------------------------------------------------------------- | --------------------------------------------------- | -------
|
|
|Cash and cash equivalents, beginning of year        |                                                                                             | $                                                   | 2,880  
|                                                    |                                                                                             |                                                     |        
|Cash provided by (used in) operating activities:    |                                                                                             |                                                     |        
|                                                    | Net income                                                                                  |                                                     |        
|                                                    | Adjustments to reconcile net income to net cash provided by (used in) operating activities: |                                                     |        
|                                                    |                                                                                             | Loss on write-down of manufacturing facility assets |        
|                                                    |                                                                                             | (Gain) loss on sale of assets                       |        
|                                                    |                                                                                             | Depreciation                                        |        
|                                                    |                                                                                             | Amortization                                        |        
|                                                    |                                                                                             | Deferred income taxes                               |        
|                                                    |                                                                                             | Noncash interest charges, net                       |        
|                                                    | Increase in working capital items                                                           |                                                     |        
|                                                    | Increase (decrease) in long-term reserve for product warranty claims                        |                                                     |        
|                                                    | Proceeds (repayments) from sale/repurchase of accounts receivable                           |                                                     |        
|                                                    | (Increase) decrease in other assets                                                         |                                                     |        
|                                                    | Increase (decrease) in other liabilities                                                    |                                                     |        
|                                                    | Change in net receivable from/payable to related parties/parent corporations                |                                                     |        
|                                                    | Other, net                                                                                  |                                                     |        
|                                                    |                                                                                             |                                                     |        
|Net cash provided by (used in) operating activities |                                                                                             |                                                     | 74,515 
|                                                    |                                                                                             |                                                     |        
|Cash provided by (used in) investing activities:    |                                                                                             |                                                     |        
|                                                    | Capital expenditures and acquisition of manufacturing facility                              |                                                     |        
|                                                    | Proceeds from sale of assets                                                                |                                                     |        
|                                                    |                                                                                             |                                                     |        
|Net cash used in investing activities               |                                                                                             |                                                     | (67,184
|                                                    |                                                                                             |                                                     |        
|Cash provided by (used in) financing activities:    |                                                                                             |                                                     |        
|                                                    | Proceeds from loans payable to parent corporation                                           |                                                     |        
|                                                    | Proceeds from issuance of long-term debt                                                    |                                                     |        
|                                                    | Repayments of long-term debt                                                                |                                                     |        
|                                                    | Distributions to parent corporation                                                         |                                                     |        
|                                                    | Dividends to parent corporation                                                             |                                                     |        
|                                                    | Loans to parent corporation                                                                 |                                                     |        
|                                                    | Financing fees and expenses                                                                 |                                                     |        
|                                                    |                                                                                             |                                                     |        
|Net cash provided by (used in) financing activities |                                                                                             |                                                     | 119,271
|                                                    |                                                                                             |                                                     |        
|Net change in cash and cash equivalents             |                                                                                             |                                                     | 126,602
|                                                    |                                                                                             |                                                     |        
|Cash and cash equivalents, end of year              |                                                                                             | $                                                   | 129,482
|                                                    |                                                                                             |                                                     |        
|                                                    |                                                                                             |                                                     |        

F-25

---



|Supplemental Cash Flow Information:                                |                                                                                                                                                       |  |   |         |   |   |         |   |   |        
|------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------- | - | - | ------- | - | - | -------
|Effect on cash from (increase) decrease in working capital items*: |                                                                                                                                                       |  |   |         |   |   |         |   |   |        
|                                                                   | Accounts receivable                                                                                                                                   |  | $ | (60,274 | ) | $ | (24,882 | ) | $ | (6,285 
|                                                                   | Inventories, net                                                                                                                                      |  |   | (38,769 | ) |   | (16,478 | ) |   | (17,287
|                                                                   | Other current assets                                                                                                                                  |  |   | (1,497  | ) |   | (1,459  | ) |   | 347    
|                                                                   | Accounts payable                                                                                                                                      |  |   | 27,488  |   |   | 19,630  |   |   | 14,985 
|                                                                   | Accrued liabilities                                                                                                                                   |  |   | 30,160  |   |   | 12,180  |   |   | 7,369  
|                                                                   |                                                                                                                                                       |  |   |         |   |   |        
|                                                                   | Net effect on cash from increase in working capital items                                                                                             |  | $ | (42,892 | ) | $ | (11,009 | ) | $ | (871   
|                                                                   |                                                                                                                                                       |  |   |         |   |   |        
|Cash paid during the period for:                                   |                                                                                                                                                       |  |   |         |   |   |         |   |   |        
|                                                                   | Interest (net of amount capitalized of $1,129, $686 and $435 in 2004, 2003 and 2002, respectively)                                                    |  | $ | 47,468  |   | $ | 52,371  |   | $ | 50,463 
|                                                                   | Income taxes (including federal income taxes paid pursuant to a Tax Sharing Agreement of $19,465, $0 and $1,312 in 2004, 2003 and 2002, respectively) |  | $ | 20,477  |   | $ | 832     |   | $ | 1,900  

---

The
accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-26

---





BUILDING MATERIALS CORPORATION OF AMERICA        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

|                           |                                                           | Capital
Stock and
Additional
Paid-in
Capital               |   | Loans
Receivable
From Parent
Corporation |   | Retained
Earnings
(Accumulated
Deficit) |         | Accumulated
Other
Comprehensive
Loss |         | Comprehensive
Income (Loss) |       
|-------------------------- | --------------------------------------------------------- | ---------------------------------------------------------- | - | ---------------------------------------- | - | --------------------------------------- | ------- | ------------------------------------ | ------- | --------------------------- | ------
|
|Balance, December 31, 2001 |                                                           | $                                                          | 1 |                                          | $ | (2,536                                  | )       | $                                    | (59,104 | )                           | $     
|                           | Comprehensive income year-ended December 31, 2002:        |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Net income                                                 |   |                                          |  |                                         |         |                                     |         |                             | 32,575
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Distributions to parent corporation                        |   |                                          |  |                                         |         |                                     |         |                             | (1,945
|                           |                                                           | Loan to parent corporation                                 |   |                                          |  |                                         |         | (112                                 | )       |                             |      
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|Balance, December 31, 2002 |                                                           | $                                                          | 1 |                                          | $ | (2,648                                  | )       | $                                    | (28,474 | )                           | $     
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           | Comprehensive income (loss) year-ended December 31, 2003: |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Net income                                                 |   |                                          |  |                                         |         |                                     |         |                             | 47,184
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Other comprehensive loss, net of tax:                      |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Minimum pension liability adjustment, net of tax of $3,041 |   |                                          |  |                                         |         |                                     |         |                             |      
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           | Comprehensive income                                      |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           | Distributions to parent corporation                       |                                                            |   |                                         |   |                                         |        |                                      |         | (14                         | )     
|                           | Loans to parent corporation                               |                                                            |   |                                         |   |                                         | (52,939 | )                                    |         |                            |       
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|Balance, December 31, 2003 |                                                           | $                                                          | 1 |                                          | $ | (55,587                                 | )       | $                                    | 18,696  |                             | $     
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           | Comprehensive income (loss) year-ended December 31, 2004: |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Net income                                                 |   |                                          |  |                                         |         |                                     |         |                             | 54,896
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Other comprehensive loss, net of tax:                      |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           | Minimum pension liability adjustment, net of tax of $103   |   |                                          |  |                                         |         |                                     |         |                             |      
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           | Comprehensive income                                      |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|                           | Distributions to parent corporation                       |                                                            |   |                                         |   |                                         |        |                                      |         | (260                        | )     
|                           | Dividends to parent corporation                           |                                                            |   |                                         |   |                                         |        |                                      |         | (15,000                     | )     
|                           | Loans to parent corporation                               |                                                            |   |                                         |   |                                         | (104    | )                                    |         |                            |       
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       
|Balance, December 31, 2004 |                                                           | $                                                          | 1 |                                          | $ | (55,691                                 | )       | $                                    | 58,332  |                             | $     
|                           |                                                           |                                                            |   |                                          |   |                                         |         |                                      |         |                             |       

The
accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

F-27

---





BUILDING MATERIALS CORPORATION OF AMERICA        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Formation of the Company

Building Materials Corporation of America (the "Company") is a leading national manufacturer and marketer of a broad line of asphalt and polymer based roofing
products and accessories for the residential and commercial roofing markets. The Company also manufactures and markets specialty building products and accessories for the professional and
do-it-yourself remodeling and residential construction industries. See Note 16.

The
Company was formed on January 31, 1994 and is a wholly-owned subsidiary of BMCA Holdings Corporation ("BHC"), which is a wholly-owned subsidiary of G-I
Holdings Inc. G-I Holdings Inc. is a wholly-owned subsidiary of G Holdings Inc.

To
facilitate administrative efficiency, effective October 31, 2000, GAF Corporation, the former indirect parent of the Company, merged into its direct subsidiary, G-I
Holdings Inc. G-I Holdings Inc. then merged into its direct subsidiary, G Industries Corp., which in turn merged into its direct subsidiary, GAF Fiberglass Corporation. In
that merger, GAF Fiberglass Corporation changed its name to GAF Corporation. Effective November 13, 2000, GAF Corporation (formerly known as GAF Fiberglass Corporation), merged into its direct
subsidiary, GAF Building Materials Corporation, whose name was changed in the merger to G-I Holdings Inc. G-I Holdings Inc. is now an indirect parent of the
Company and the Company's direct parent is BHC. References below to G-I Holdings means G-I Holdings Inc. and any and all of its predecessor corporations, including GAF
Corporation, G-I Holdings Inc., G Industries Corp., GAF Fiberglass Corporation and GAF Building Materials Corporation.

Effective
as of January 31, 1994, G-I Holdings transferred to the Company all of its business and assets, other than three closed manufacturing facilities, certain
deferred tax assets and receivables from affiliates. The Company recorded the assets and liabilities related to such transfer at G-I Holdings' historical costs. The Company contractually
assumed all of G-I Holdings' liabilities, except (i) all of G-I Holdings' environmental liabilities, other than environmental liabilities relating to the Company's plant
sites and its business as then-conducted, (ii) all of G-I Holdings' tax liabilities, other than tax liabilities arising from the operations or business of the Company
and (iii) all of G-I Holdings' asbestos-related liabilities, other than the first $204.4 million of such liabilities (whether for indemnity or defense) relating to
then-pending asbestos-related bodily injury cases and previously settled asbestos-related bodily injury cases, which the Company contractually assumed and agreed to pay.

Note 2.    Summary of Significant Accounting Policies



The consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.



The preparation of the Company's consolidated financial statements in conformity with U.S. generally accepted accounting principles requires the Company's
management to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an
on-going basis the Company evaluates its estimates including but not limited to those related to doubtful accounts, inventory valuation, product warranty claims, environmental liabilities,
the carrying value of goodwill, the carrying value of long-lived

F-28

---



tangible
and intangible assets, pensions and other postemployment benefits and contingent liabilities. The Company bases its estimates on historical experience and on various other assumptions that
are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from
these estimates under different assumptions or conditions. In the opinion of management, the consolidated financial statements herein contain all adjustments necessary to present fairly the financial
position and the results of operations and cash flows of the Company for the periods presented. The Company does not anticipate any changes in management estimates that would have a material impact on
operations, liquidity or capital resources, subject to the matters discussed in Note 18.



Cash and cash equivalents include cash on deposit and commercial paper purchased with original maturities of three months or less.



Under our new $350 million Senior Secured Revolving Credit Facility (the "Senior Secured Revolving Credit Facility") the Company is limited to entering
into investments in highly rated commercial paper, U.S. government backed securities, certain time deposits and hedging arrangements that protect against or mitigate the effect of fluctuations in
interest rates, foreign exchange rates or prices of commodities used in the Company's business. At December 31, 2004 and 2003 the Company did not have any hedging arrangements.



Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the
amount of credit losses in the Company's existing accounts receivable. The Company determines the allowance based on historical write-off experience, as well as customer operating
performance and payment practices. Consequently, an adverse change in the financial condition of a particular customer could affect the Company's estimate of its bad debts. The Company reviews its
allowance for doubtful accounts periodically. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers.



Inventories are stated at the lower of cost or market. The LIFO (last-in, first-out) method is utilized to determine the cost for certain
asphalt-based products used to produce the Company's products. All other inventories are valued on the FIFO (first-in, first-out) method.



Property, plant and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed on the straight-line method
based on the estimated economic lives of the assets. The Company uses an economic life of 5 to 25 years for land improvements, 10 to 40 years for

F-29

---



buildings
and building equipment and 3 to 20 years for machinery and equipment, which includes furniture and fixtures. Repairs in excess of $5,000 are capitalized if the repair both extends
the useful life of an asset beyond its original estimated useful life and adds to the value of the asset. Interest charges are capitalized during the period of construction as part of the cost of
property, plant and equipment. Capitalized interest amounted to $1.1, $0.7 and $0.4 million for 2004, 2003 and 2002, respectively.



The Company follows the provisions of Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS No. 144"). SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for
long-lived assets to be disposed of. For purposes of recognizing and measuring impairment of long-lived assets, the Company evaluates assets of its facilities because this is
the lowest level of independent cash flows ascertainable to evaluate impairment. The Company reviews long-lived assets to be held and used for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. For long-lived assets to be held and used, an impairment exists when the carrying amount of the asset
exceeds the estimated undiscounted cash flows. Any resulting impairment is measured based on the fair value of the related asset. Fair value is determined based on future projected demand and
estimated discounted cash flows. See Note 7.



Goodwill, which principally arose from acquisitions and from the 1989 management-led buyout of the predecessor company, was being amortized on the
straight-line method over a period of approximately 40 years prior to January 1, 2002. With the adoption of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets," effective as of January 1, 2002, goodwill is no longer subject to amortization over its estimated useful life. However, goodwill is subject to at least
an annual assessment for impairment and more frequently if circumstances indicate a possible impairment. See Note 4.



Unamortized financing fees and expenses of $16.2 and $17.0 million are included in other noncurrent assets in the consolidated balance sheets at
December 31, 2004 and 2003, respectively. Financing fees and expenses are amortized to interest expense over the life of the related debt. In 2004, 2003 and 2002, the Company amortized $5.8,
$4.6 and $4.2 million, respectively, related to such expenses.



Purchased software development costs of $8.7 and $5.1 million, respectively, are included in other noncurrent assets in the consolidated balance sheets at
December 31, 2004 and 2003. These costs are amortized to expense over a 5 year period. In 2004, 2003 and 2002, the Company amortized $2.2, $2.1 and $2.0 million, respectively,
related to such costs.

F-30

---







Revenue is recognized at the time products are shipped to the customer. Products are generally shipped Freight on Board, or FOB shipping point. Title and risk of
loss passes to the customer at the time of shipment.



Accrued freight costs of $13.9 and $12.0 million are included in accrued liabilities in the consolidated balance sheets at December 31, 2004 and
2003, respectively. Shipping and handling costs are included in selling, general and administrative expenses and amounted to $161.2, $131.1 and $102.6 million in 2004, 2003 and 2002,
respectively.



Research and development expenses, which are included in selling, general and administrative expenses, are charged to operations as incurred and amounted to $9.3,
$7.6 and $6.6 million in 2004, 2003 and 2002, respectively.



The Company provides certain limited warranties covering most of its residential roofing products for periods generally ranging from 20 to 40 years, with
lifetime limited warranties on certain specialty shingle products. The Company also offers certain limited warranties of varying duration covering most of its commercial roofing products. Most of the
Company's specialty building products and accessories
provide limited warranties for periods generally ranging from 5 to 10 years, with lifetime limited warranties on certain products. Income from warranty contracts related to commercial roofing
products is recognized over the life of the agreements, and is included in the reserve for product warranty claims, net of the related costs of the warranty, along with the administrative costs
associated with monitoring and settling claims each year. For 2004, 2003 and 2002, administrative costs for residential roofing products amounted to $1.6, $0.9 and $0.7 million, respectively.
The reserve for product warranty claims is estimated on the basis of historical and projected claims activity, as well as other factors. The accuracy of the estimate of additional costs is dependent
on both the number and cost of future claims submitted during the warranty periods. The Company believes that the reserves established for estimated probable future product warranty claims are
adequate.

A
settlement was reached in 1998 in a national class action lawsuit related to a specific alleged product defect related to prior production processes, which provides customers who
purchased asphalt shingles manufactured from 1973 through 1997 the right to receive certain limited benefits beyond those already provided in their existing product warranty.

In
October 1998 G-I Holdings brought suit in the Superior Court of New JerseyMiddlesex County, on our behalf, against certain of its insurers for recovery
of the defense costs in connection with the class action described above and a declaration that the insurers are obligated to provide indemnification for all damages paid pursuant to the settlement of
this class action and for other damages. As of December 31, 2004, this action is pending.

F-31

---



In
November 2002, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 clarifies the requirements for a guarantor's accounting for and disclosures of certain guarantees issued and outstanding.
The provisions of FIN 45 apply to guarantee contracts that contingently require the guarantor to make payments (in cash, financial instruments, other assets, shares of stock or provision of services)
to the guaranteed party for guarantees such as: a financial standby letter of credit; a market value guarantee on either a financial or nonfinancial asset owned by the guaranteed party; and a
guarantee of the collection of the scheduled contractual cash flows from financial assets held by a special-purpose entity. FIN 45 also applies to indemnification contracts and indirect guarantees of
indebtedness of others. The requirements of FIN 45 for the initial recognition and measurement of the liability for a guarantor's obligations are to be applied only on a prospective basis to
guarantees issued or modified after December 31, 2002; however, the Company provides product warranties, which are only subject to the disclosure requirements under FIN 45. The Company has
adopted the disclosure provisions of FIN 45. (See table below.)

The
reserve for product warranty claims consists of the following:

2004

2003(Thousands)Balance, January 1

$
31,972

$
33,287Charged to cost of products sold


23,239


21,955Payments/deductions


(23,098
)

(23,270
)Balance, December 31

$
32,113

$
31,972




Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company is party to a Tax Sharing Agreement. See
Note 9.



The Company, together with other companies, is a party to a variety of proceedings and lawsuits involving environmental matters under the Comprehensive
Environmental Response Compensation and Liability Act, and similar state laws, in which recovery is sought for the cost of cleanup of contaminated sites or remedial obligations are imposed, a number
of which are in the early stages or have been dormant for protracted periods. The Company refers to these proceedings and lawsuits as "Environmental Claims."

F-32

---



The
Company accrues environmental costs when it is probable that it has incurred a liability and the expected amount can be reasonably estimated and, reviews on an ongoing basis, our
estimated environmental liabilities reserve. The amount accrued reflects the Company's assumptions about remedial requirements at the contaminated site, the nature of the remedy, the outcome of
discussions with regulatory agencies and other potential responsible parties at multi-party sites and the number and financial viability of other potentially responsible parties. Adverse decisions or
events, particularly as to increases in remedial costs, discovery of new contamination, assertion of natural resource damages, and the liability and the financial responsibility of the Company's
insurers and of the other parties involved at each site and their insurers, could cause the Company to increase its estimate of liability in respect of those matters. The Company estimates that its
liability as of December 31, 2004, in respect of assumed and other environmental liabilities, is $1.4 million, and expects insurance recoveries of $1.3 million. Insurance
recoveries relate to amounts previously provided for in the consolidated balance sheets. The Company refers to these recoveries as "estimated recoveries." The Company's liability is reflected on an
undiscounted basis. The gross environmental liability is included within accrued liabilities and other liabilities, and the estimated recoveries are included within other noncurrent assets. It is not
currently possible to estimate the amount or range of any additional liabilities.



The Company maintains defined benefit plans that provide eligible employees with retirement benefits. In addition, while the Company generally does not provide
postretirement medical and life insurance benefits, it subsidizes such benefits for certain employees and certain retirees. The costs and obligations related to these benefits reflect the Company's
assumptions related to general economic conditions (particularly interest rates), expected return on plan assets and rate of compensation increases for employees. The Company sets the discount rate
assumption annually for its retirement-related benefit plans at the measurement dates to reflect the yield of high-quality fixed-income debt instruments. The expected long-term
rate of return on assets is derived from a detailed periodic study conducted by the Company's actuaries and its financial management. The study includes
a review of anticipated future long-term performance of individual asset categories. While the study gives appropriate consideration to recent plan performance and historical returns, the
assumption is primarily a long-term prospective rate. The Company's discount rate as of December 31, 2004 and 2003 for determining projected benefit obligations was 6.0% and 6.25%,
respectively. A 25 basis points increase or decrease in the discount rate assumption would result in a plus or minus $0.1 million impact on pension expense and a plus or minus
$1.2 million impact on the projected benefit obligation. The Company's expected long-term rate of return on assets assumption for its retirement plans was 9.5% in 2004 and 2003,
respectively. In addition, a 25 basis points increase or decrease in the expected long-term rate of return on assets assumption would result in a plus or minus $0.1 million impact
on pension expense.

Projected
health care benefits additionally reflect the Company's assumptions about health care cost trends. The cost of providing plan benefits also depends on demographic assumptions
including retirements, mortality, turnover and plan participation. If actual experience differs from these assumptions, the cost of providing these benefits could increase or decrease.

F-33

---





In December 2002, the FASB issued FASB Statement No. 148, "Accounting for Stock-Based CompensationTransition and Disclosure" ("SFAS
No. 148"), an amendment of FASB Statement No. 123 "Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 148 provides alternative methods of transition for
any entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of SFAS No. 123 to require
prominent disclosures about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation. SFAS No. 148 also amends Accounting
Principles Board Opinion No. 28 "Interim Financial Reporting" ("APB No. 28"), to require disclosures about those effects in interim financial information beginning with the Company's
first quarter ended March 30, 2003. The Company currently accounts for its units granted to certain employees under the accounting prescribed by applying FASB Interpretation No. 28,
"Accounting for Stock Appreciation Rights and Other Variable Stock Option and Award Plans" ("FIN 28"), which requires an entity to measure compensation as the amount by which the Book Value (as
defined in the Plan) of the incentive units covered by the grant exceeds the option price or value specified of such incentive units at the date of grant. Changes, either increases or decreases, in
the Book Value of those incentive units between the date of grant and the measurement date result in a change in the measure of compensation for the right or award. The Company expects to continue to
account for its long-term incentive units under the accounting prescribed by FIN 28 and has adopted the additional disclosure provisions of SFAS No. 148. The Company's pro forma net
income under SFAS No. 123 would have been the same as actual net income. See Note 15.



Comprehensive income (loss) and its components in annual and interim consolidated financial statements include net income (loss), unrealized gains and losses from
investments in available-for-sale securities, net of tax effect, and minimum pension liability adjustments, net of tax effect. The Company has disclosed comprehensive income
(loss) in the consolidated statements of stockholders' equity (deficit).

Changes
in the components of accumulated other comprehensive loss for the years 2004, 2003 and 2002 are as follows:

Minimum
Pension
Liability
Adjustment

Accumulated
Other
Comprehensive
Loss(Thousands)Balance, December 31, 2001

$


$
Change for the year 2002





Balance, December 31, 2002

$


$
Change for the year 2003, net of tax of $3,041


(5,178
)

(5,178
)Balance, December 31, 2003

$
(5,178
)
$
(5,178
)Change for the year 2004, net of tax of $103


(175
)

(175
)Balance, December 31, 2004

$
(5,353
)
$
(5,353
)


F-34

---





Financial instruments which potentially subject the Company to a concentration of credit risk principally consist of cash equivalents and trade receivables. The
Company places its temporary cash investments with highly rated U.S. Government instruments, commercial paper of prime quality and certain time deposits. To reduce credit risk, the Company performs
periodic credit evaluations of its customers, but does not generally require advance payments or collateral.



Certain reclassifications have been made to conform to current year presentation.

Note 3. New Accounting Pronouncements

In May 2004, the FASB issued FASB Staff Position No. 106-2 "Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (the "Medicare Act") ("FSP FAS No. 106-2") which supersedes FSP FAS No. 106-1, "Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003," ("FSP FAS No. 106-1"). FSP FAS No. 106-2 provides guidance on
accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 to employers that sponsor postretirement health care plans which provide prescription drug
benefits.

FSP
FAS 106-2 applies only to sponsors of single-employer defined benefit postretirement health care plans for which (1) the employer has concluded that
prescription drug
benefits available under the plan to some or all participants, for some or all future years, are "actuarially equivalent" to Medicare Part D and thus quality for the subsidy provided by the
Medicare Act, and (2) the expected subsidy will offset or reduce the employer's share of the cost of the underlying postretirement prescription drug coverage on which the subsidy is based. In
addition, FSP FAS 106-2 requires certain disclosures in financial statements regarding the effect of the Medicare Act and the related subsidy on postretirement health obligations
and net periodic postretirement benefit cost.

FSP
FAS 106-2 is effective for the first interim or annual period beginning after June 15, 2004. As of December 31, 2004, the Company has adopted FSP FAS
No. 106-2 and noted no material impact on the accounting for its postretirement medical and life insurance plans.

In
November 2004, the FASB issued SFAS No. 151 "Inventory Costs" ("SFAS No. 151") which clarifies the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). SFAS No. 151 amends Accounting Research Bulletin ("ARB") No. 43, Chapter 4 "Inventory Pricing" ("ARB No. 43") and requires
abnormal inventory costs to be recognized as current period charges regardless of whether they meet the "so abnormal" criterion outlined in ARB No. 43. SFAS No. 151 also introduces the
concept of "normal capacity" and requires the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities. Unallocated overheads must be recognized
as an expense in the period in which they are incurred. SFAS No. 151 is effective for costs occurring in fiscal reporting years beginning after June 15, 2005. As of January 1,
2006 the Company will adopt the provisions of SFAS No. 151 and does not anticipate any material effect on its consolidated financial statements.

F-35

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In
December 2004, the FASB issued a revised SFAS No. 123 "Accounting for Stock-Based Compensation," ("SFAS No. 123(R)") which will require compensation costs related
to share-based payment transactions to be recognized in the financial statements. SFAS No. 123(R) establishes fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees. SFAS No. 123(R) replaces the
original SFAS No. 123 and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS No. 123(R) becomes effective beginning
with the first interim or annual reporting period after June 15, 2005. As of December 31, 2004, the Company currently accounts for its 2001 Long-Term Incentive Plan under the
accounting prescribed by FASB Interpretation No. 28, "Accounting for Stock Appreciation Rights and Other Variable Stock Option and Award Plans," ("FIN 28"). Since compensation expense related
to the Company's incentive units is currently included in its consolidated statements of income, the Company does not expect SFAS No. 123(R) to have an impact on its consolidated financial
statements. See Notes 2 and 15.

In
December 2004, the FASB issued SFAS No. 153 "Exchanges of Nonmonetary Assets" ("SFAS No. 153") which replaces the exception from fair value measurement in APB
Opinion No. 29
"Accounting for Nonmonetary Transactions," for nonmonetary exchanges of similar productive assets. SFAS No. 153 replaces this exception with a general exception from fair value measurement for
exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a
result of the exchange. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in fiscal reporting periods beginning after June 15, 2005. As of July 4, 2005, the
Company will adopt the provisions of SFAS No. 153 and does not anticipate having any nonmonetary asset exchanges.

In
December 2004, the FASB issued FASB Staff Position 109-1 "Application of SFAS No. 109, Accounting for Income Taxes, related to the Tax Deductions Provided to
U.S. Based Manufacturers by the American Jobs Creation Act of 2004" ("FSP FAS 109-1"). FSP FAS 109-1 provides guidance on the application of SFAS No. 109,
which provides tax relief to U.S. domestic manufacturers. FSP FAS 109-1 guidance allows for a tax deduction to be created under the Jobs Creation Act of 2004 for a manufacturing
entity which must be accounted for as a special deduction in accordance with SFAS No. 109 and not a reduction in the effective tax rate. In addition, FSP FAS 109-1 provides
the special deduction for a manufacturing entity must be considered when measuring deferred taxes when subject to graduated tax rates and assessing whether a valuation allowance is necessary under
SFAS No. 109. As of December 31, 2004, the Company adopted FAS FSP 109-1 and noted there was no effect on its 2004 consolidated financial statements and the Company believes
there will be no material effect on its 2005 consolidated financial statements.

Note 4. Goodwill

Through December 31, 2001, the Company amortized goodwill on a straight-line basis over the expected useful lives of the underlying assets. In
accordance with the provisions of SFAS No. 142 (see Note 2), "Goodwill and Other Intangible Assets," effective January 1, 2002, goodwill is no longer amortized over its estimated
useful life. However, goodwill is subject to at least an annual assessment for impairment and more frequently if circumstances indicate a possible impairment. This assessment could result in a
material future impairment charge.

F-36

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The
Company evaluated the recoverability of goodwill for its roofing products and specialty building products and accessories reporting units. The Company's methodology included
evaluations using estimated future discounted cash flows, multiples of net sales and multiples of earnings before interest, taxes, depreciation and the amortization of other assets ("EBITDA"). The
Company's analysis was completed for each of the reporting units to which the goodwill relates. If the estimated range of fair values from the methodologies employed are less than the carrying value
of the related reporting unit, impairment losses for goodwill are charged to results of operations. In determining the estimated future discounted cash flows, the Company considered projected future
levels of income, future business trends and market and economic conditions. The Company's analysis related to multiples of net sales
and EBITDA are based on related industry data. The Company adopted SFAS No. 142 effective January 1, 2002 and prepared an impairment analysis at December 31, 2004, 2003 and 2002
and noted no impairment existed.

There
were no changes in the carrying amount of goodwill of $63.3 million for the years ended December 31, 2004, 2003 and 2002. Such goodwill amounts to
$55.6 million for the roofing products reporting unit and $7.7 million related to the specialty building products and accessories reporting unit.

Note 5. Asbestos-related Bodily Injury Claims

In connection with its formation, the Company contractually assumed and agreed to pay the first $204.4 million of liabilities for asbestos-related bodily
injury claims relating to the inhalation of asbestos fiber ("Asbestos Claims") of its parent, G-I Holdings. As of March 30, 1997, the Company paid all of its assumed
asbestos-related liabilities. In January 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to Asbestos Claims. Most
asbestos claims do not specify the amount of damages sought. This Chapter 11 proceeding remains pending.

Claimants
in the G-I Holdings' bankruptcy, including judgment creditors, might seek to satisfy their claims by asking the bankruptcy court to require the sale of
G-I Holdings' assets, including its holdings of BMCA Holdings Corporation's common stock and its indirect holdings of the Company's common stock. Such action could result in a change of
control of the Company. In addition, those creditors may seek to file Asbestos Claims against the Company (with approximately 1,900 alleged Asbestos Claims having been filed against the Company as of
December 31, 2004). The Company believes that it will not sustain any liability in connection with these or any other asbestos-related claims. On February 2, 2001, the United States
Bankruptcy Court for the District of New Jersey issued a temporary restraining order enjoining any existing or future claimant from bringing or prosecuting an Asbestos Claim against the Company. By
oral opinion on June 22, 2001, and written order entered February 22, 2002, the court converted the temporary restraints into a preliminary injunction, prohibiting the bringing or
prosecution of any such Asbestos Claim against the Company. On February 7, 2001, G-I Holdings filed an action in the United States Bankruptcy Court for the District of New Jersey
seeking a declaratory judgment that BMCA has no successor liability for Asbestos Claims against G-I Holdings and that it is not the alter ego of G-I Holdings (the "BMCA
Action"). On May 13, 2003 the United States District Court for the District of New Jersey overseeing the G-I Holdings' Bankruptcy Court withdrew the reference of the BMCA Action
from the Bankruptcy Court, and this matter will be heard by the District Court directly. The BMCA Action is in a pretrial discovery stage and no trial date has been set by the court. As a result, it
is not possible to predict the outcome of this litigation, although the Company believes its claims are meritorious. While the Company cannot

F-37

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predict
whether any additional Asbestos Claims will be asserted against it or its assets, or the outcome of any litigation relating to those claims, the Company believes that it has meritorious
defenses to any claim that it has asbestos-related liability, although there can be no assurances in this regard.

On
or about February 8, 2001, the creditors' committee established in G-I Holdings' bankruptcy case filed a complaint in the United States Bankruptcy Court, District
of New Jersey against G-I Holdings and the Company. The complaint requests substantive consolidation of the Company with G-I Holdings or an order directing G-I
Holdings to cause the Company to file for bankruptcy protection. The Company and G-I Holdings intend to vigorously defend the lawsuit. The plaintiffs also filed for interim relief absent
the granting of their requested relief described above. On March 21, 2001, the bankruptcy court denied plaintiffs' application for interim relief. In November 2002, the creditors'
committee, joined in by the legal representative of future demand holders, filed a motion for appointment of a trustee in the G-I Holdings' bankruptcy. In December 2002, the
bankruptcy court denied the motion. The creditors' committee appealed the ruling to the United States District Court, which denied the appeal on June 27, 2003. The creditors' committee has
appealed the denial to the Third Circuit Court of Appeals, which denied the appeal on September 24, 2004. The creditors' committee filed a petition with the Third Circuit Court of Appeals for a
rehearing of its denial of the creditors' committee's appeal, which was denied by the Court on October 26, 2004.

On
February 27, 2004, the creditors' committee, joined in by the legal representative, filed a motion to modify the preliminary injunction and to seek authority by the bankruptcy
court to avoid, on various grounds, certain liens granted in connection with the financing obtained by the Company in December, 2000. G-I Holdings and the Company have opposed the motion
and a hearing on the motion was held by the bankruptcy court on March 29, 2004. By opinion dated June 8, 2004, the court granted the motion in part and denied it in part. On
July 7, 2004, the creditors' committee filed a claim challenging, as a fraudulent conveyance, the transactions entered into in connection with the Company's formation in 1994, in which
G-I Holdings caused to be transferred to the Company all of its roofing business and assets and in which the Company assumed certain liabilities relating to those assets, including a
specified amount of asbestos liabilities (the "1994 transaction"). In addition, on July 7, 2004, the creditors' committee filed a claim against holders of the Company's bank and bond debt
outstanding in 2000, seeking to avoid the liens granted to them, based on the committee's theory that the 1994 transaction was a fraudulent conveyance. On August 3, 2004, the creditors'
committee filed an amended complaint adding the names of additional alleged bondholders. On July 20, 2004, the creditors' committee appealed the court's decision, issued on June 8, 2004,
seeking the authority to file a lawsuit against the banks and bondholders discussed above, challenging the liens granted to them in 2000 as a fraudulent conveyance and are appealing, among
other things, certain adverse rulings relating to statute of limitation issues. This appeal remains pending before the District Court.

On
August 3, 2004, the creditors' committee filed a motion with the bankruptcy court seeking to impose certain conditions on the redemption of the 85/8% Senior
Notes due 2006 (the "2006 Notes"), or in the alternative, temporarily enjoin the Company from satisfying such redemption. On August 5, 2004, the bankruptcy court, having previously ruled on
June 8, 2004, the redemption could proceed without restriction, refused to impose any conditions on the redemption or to enjoin, on a preliminary basis, the Company from repaying the 2006 Notes
pursuant to a July 26, 2004 call notice, or from purchasing any of its senior notes on the open market. The committee subsequently withdrew its motion as being moot, and the redemption of the
2006 Notes concluded on August 26, 2004.

F-38

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The
Company believes that the claims of the creditors' committee are without merit. However, if the Company is not successful defending against one or more of these claims, the Company
may be forced to file for bankruptcy protection and/or contribute all or a substantial portion of its assets to satisfy the claims of G-I Holdings' creditors. Either of these events, or
the substantive consolidation of G-I Holdings and the Company, would weaken its operations and cause it to divert a material amount of its cash flow to satisfy the asbestos claims of
G-I Holdings, and may render it unable to pay interest or principal on its credit obligations.

For
a further discussion with respect to the history of the foregoing litigation, and asbestos-related matters and other litigation, see Notes 2, 9, 13 and 18.

Note 6. Acquisitions and Property Dispositions

On May 7, 2004, the Company acquired certain assets of a manufacturing facility located in Quakertown, Pennsylvania from Atlas Roofing Corporation. The
acquisition was accounted for under the purchase method of accounting. Accordingly, the purchase price was allocated to the fair value of the identifiable assets acquired, which consisted almost
entirely of property, plant and equipment. The operating results of the Quakertown manufacturing facility are included in the Company's results of operations from the date of its acquisition.

In
May 2003, the Company sold property in Ontario, California for cash proceeds of approximately $9.3 million, which resulted in a pre-tax operating gain of
approximately $5.7 million.

In
December 2002, the Company sold its previously closed Monroe, Georgia manufacturing facility for cash proceeds of approximately $1.7 million, which resulted in a
pre-tax operating loss of approximately $1.8 million. See Note 8.

Note 7. Asset Impairment

In December 2003, the Company evaluated all the assets located at its previously closed Albuquerque, New Mexico manufacturing facility. The Company's
evaluation included a review of the carrying value of all assets and resulted in the recording of a pre-tax impairment loss of $3.8 million, based on an estimate of the net
realizable value of the assets. See Note 8.

Note 8. Manufacturing Facilities Shutdown

In response to current market conditions, to better service shifting customer demand and to reduce costs, the Company closed four manufacturing facilities during
2000 located in Monroe, Georgia; Port Arthur, Texas; Corvallis, Oregon; and Albuquerque, New Mexico. The Company has sold the Corvallis, Oregon and the Monroe, Georgia manufacturing facilities given
the closing of these sites in 2000. See Note 6 regarding disposition of the Monroe, Georgia facility in 2002, and Note 7 for the write-down of Albuquerque, New Mexico
manufacturing facility assets in 2003. As market growth and customer demand improves, the Company may reinstate production at one or both of the two remaining manufacturing facilities in the future.
The effect of closing these facilities was not material to the Company's results of operations.

F-39

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Note 9. Income Taxes (Expense) Benefit

Income tax expense, which has been computed on a separate return basis, consists of the following:

Year Ended December 31,2004

2003

2002(Thousands)Federal:Current

$
(30,334
)
$
(3,207
)
$
Deferred


489


(22,587
)

(17,808
)Total federal


(29,845
)

(25,794
)

(17,808
)State and local:Current


(3,158
)

(1,156
)

(729
)Deferred


415


409


213Total state and local


(2,743
)

(747
)

(516
)Income tax expense

$
(32,588
)
$
(26,541
)
$
(18,324
)


The
differences between the income tax expense computed by applying the statutory Federal income tax rate to pre-tax income, and the income tax expense
reflected in the consolidated statements of income are as follows:

Year Ended December 31,2004

2003

2002(Thousands)Statutory expense

$
(30,619
)
$
(25,804
)
$
(17,815
)Impact of:State and local taxes, net of Federal benefits


(1,783
)

(486
)

(336
)Other, net


(186
)

(251
)

(173
)Income tax expense

$
(32,588
)
$
(26,541
)
$
(18,324
)


The
components of the net deferred tax liabilities are as follows:

December 31,2004

2003(Thousands)Deferred tax liabilities related to:Property, plant and equipment

$
(66,406
)
$
(59,069
)Other


(707
)

(3,075
)Total deferred tax liabilities


(67,113
)

(62,144
)Deferred tax assets related to:Expenses not yet deducted for tax purposes


65,738


58,836Total deferred tax assets


65,738


58,836Net deferred tax liabilities


(1,375
)

(3,308
)Deferred tax assets reclassified to current assets


(43,398
)

(31,188
)Noncurrent deferred tax liabilities

$
(44,773
)
$
(34,496
)


F-40

---



Based
upon the level of historical taxable income and projections for future taxable income over the period in which the Company's deferred tax assets are deductible, the
Company believes that it is more
likely than not that the Company will receive the benefits of these deductible differences at December 31, 2004 and 2003.

As
of December 31, 2004, the Company has included on its consolidated balance sheet in current liabilities a tax payable to parent corporation of $3.8 million, which is
included in payable to related parties, representing amounts due to G-I Holdings under the Tax Sharing Agreement (as defined below). As of December 31, 2003, the Company has
included on its consolidated balance sheet a tax receivable from parent corporation of $7.0 million, representing amounts paid to G-I Holdings under the Tax Sharing Agreement, which
the Company applied against 2004 tax sharing payments due to G-I Holdings.

The
Company and its subsidiaries entered into a tax sharing agreement (the "Tax Sharing Agreement") dated January 31, 1994 and later amended on March 19, 2001, with
G-I Holdings, with respect to the payment of federal income taxes and related matters. During the term of the Tax Sharing Agreement, which is effective for the period during which the
Company or any of its domestic subsidiaries is included in a consolidated federal income tax return for the G-I Holdings' consolidated tax group, the Company is obligated to pay
G-I Holdings an amount equal to those federal income taxes it would have incurred if the Company, on behalf of itself and its domestic subsidiaries, filed its own federal income tax
return. Unused tax attributes will carry forward for use in reducing amounts payable by the Company to G-I Holdings in future years, but cannot be carried back. If the Company ever were to
leave the G-I Holdings' consolidated tax group, it would be required to pay to G-I Holdings the value of any tax attributes to which it would succeed under the consolidated
return regulations to the extent the tax attributes reduced the amounts otherwise payable by the Company under the Tax Sharing Agreement. Under limited circumstances, the provisions of the Tax Sharing
Agreement could result in the Company having a greater liability under the agreement than it would have had if it and its domestic subsidiaries had filed its own separate federal income tax return.
Under the Tax Sharing Agreement, the Company and each of its domestic subsidiaries are responsible for any taxes that would be payable by reason of any adjustment to the tax returns of G-I
Holdings or its subsidiaries for years prior to the adoption of the Tax Sharing Agreement that relate to the Company's business or assets or the business or assets of any of its domestic subsidiaries.
Although, as a member of the G-I Holdings' consolidated tax group, the Company is severally liable for certain federal income tax liabilities of the G-I Holdings' consolidated
tax group, including tax liabilities not related to its business, the Company should have no liability other than liabilities arising from the Company's operations and the operations of its domestic
subsidiaries and tax liabilities for tax years pre-dating the Tax Sharing Agreement that relate to the Company's business or assets and the business or assets of any of its domestic
subsidiaries. The Tax Sharing Agreement provides for analogous principles to be applied to any consolidated, combined or unitary state or local income taxes. Under the Tax Sharing Agreement,
G-I Holdings makes all decisions with respect to all matters relating to taxes of the G-I Holdings' consolidated tax group. The provisions of the Tax Sharing Agreement take
into account both the federal income taxes the Company would have incurred if it filed its own separate federal income tax return and the fact that the Company is a member of the G-I
Holdings' consolidated tax group for federal income tax purposes.

F-41

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On
September 15, 1997, G-I Holdings received a notice from the Internal Revenue Service (the "IRS") of a deficiency in the amount of $84.4 million (after taking
into account the use of net operating losses and foreign tax credits otherwise available for use in later years) in connection with the formation in 1990 of Rhône-Poulenc Surfactants
and Specialties, L.P. (the "surfactants partnership"), a partnership in which G-I Holdings held an interest. G-I Holdings has advised the Company that it believes that it will
prevail in this tax matter arising out of the surfactants partnership, although there can be no assurance in this regard. The Company believes that the ultimate disposition of this matter will not
have a material adverse effect on its business, financial position or results of operations. On September 21, 2001, the IRS filed a proof of claim with respect to such deficiency against
G-I Holdings in the G-I Holdings' bankruptcy. If such proof of claim is sustained, the Company and/or certain of the Company's subsidiaries together with G-I
Holdings and several current and former subsidiaries of G-I Holdings would be severally liable for a portion of those taxes and interest. G-I Holdings has filed an objection to
the proof of claim. If the IRS were to prevail for the years in which the Company and/or certain of its subsidiaries were part of the G-I Holdings Group, the Company would be severally
liable for approximately $40.0 million in taxes plus interest, although this calculation is subject to uncertainty depending upon various factors including G-I Holdings' ability to
satisfy its tax liabilities and the application of tax credits and deductions.

Note 10.    Sale of Accounts Receivable

In March 1993, the Company sold its trade accounts receivable ("receivables") to a trust, without recourse, pursuant to an agreement which provided for a
maximum of $75.0 million in cash to be made available to the Company based on Eligible Receivables, as defined, outstanding from time to time. In November 1996, the Company entered into
new agreements, which provided for a maximum of $115.0 million, pursuant to which it sold the receivables to a special purpose subsidiary of the Company, BMCA Receivables Corporation, without
recourse, which in turn sold them, without recourse. In December 2001, this facility matured and $115.0 million was repaid to settle previous amounts made available to the Company.

In
December 2001, the Company entered into a new Accounts Receivable Securitization Agreement ("the Securitization Agreement") under which the Company sold certain of its trade
accounts receivable to BMCA Receivables Corporation, without recourse, which in turn sold them to a third party, without recourse. The Agreement provided for a maximum of $115.0 million in cash
to be made available to the Company based on the sale of Eligible Receivables outstanding from time to time. This agreement, initially scheduled to mature in December 2004, was subject to
financial and other covenants, including a material adverse change in business conditions, financial or otherwise and was terminated in July 2003. With the termination of the Securitization
Agreement the Company also repurchased its undivided interest in the associated receivables. In connection with the termination of the Securitization Agreement in July 2003, the Company repaid
$115.0 million of amounts outstanding under such agreement. As a result of the termination of the Securitization Agreement, accounts receivable and long-term debt at
December 31, 2003 increased by approximately $105.4 million as compared to prior year. The Company also liquidated BMCA Receivables Corporation effective August 2003.

BMCA
Receivables Corporation was not a guarantor under the Company's debt obligations. See Notes 13 and 19 to Consolidated Financial Statements. The effective cost to the Company varied
with

F-42

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LIBOR
and is included in other expense, net and amounted to $0, $1.6 and $5.2 million in 2004, 2003 and 2002, respectively.

Note 11.    Inventories

At December 31, 2004 and 2003, $33.4 and $19.4 million, respectively, of inventories were valued using the LIFO method. Inventories consist of the
following:

December 31,2004

2003(Thousands)Finished goods

$
119,649

$
89,684Work-in process


13,829


12,499Raw materials and supplies


50,237


39,208Total


183,715


141,391Less LIFO reserve


(8,801
)

(5,431
)Inventories

$
174,914

$
135,960


Note 12.    Property, Plant and Equipment

Property, plant and equipment consists of the following:

December 31,2004

2003(Thousands)Land and land improvements

$
36,015

$
34,635Buildings and building equipment


95,769


88,430Machinery and equipment


489,147


428,284Construction in progress


16,938


25,584Total


637,869


576,933Less accumulated depreciation and amortization


(273,355
)

(234,717
)Property, plant and equipment, net

$
364,514

$
342,216


See
Note 13 regarding the disposition of the Baltimore facility capital lease in 2002 and the Chester machinery and equipment capital lease in 2003. Depreciation expense for 2004,
2003 and 2002 was $43.9, $39.4 and $38.7 million, respectively.

F-43

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Note 13.    Long-Term Debt

Long-term debt consists of the following:

December 31,2004

2003(Thousands)73/4% Senior Notes due 2005

$
149,949

$
149,85885/8% Senior Notes due 2006





99,8538% Senior Notes due 2007


99,791


99,7168% Senior Notes due 2008


154,670


154,58673/4% Senior Notes due 2014


250,859


Borrowings under the Senior Secured Revolving Credit Facility





Industrial revenue bonds with various interest rates and maturity dates to 2029


14,280


22,855Chester Loan


16,317


18,820Other notes payable


2,611


2,509Total


688,477


548,197Less current maturities


(152,525
)

(2,504
)Long-term debt less current maturities

$
535,952

$
545,693


In
December 1996, the Company issued $100 million in aggregate principal amount of 85/8% Senior Notes due 2006 (the "2006 Notes") at 99.502% of the principal
amount. In October 1997, the Company issued $100 million in aggregate principal amount of 8% Senior Notes due 2007 (the "2007 Notes") at 99.254% of the principal amount. In
July 1998, the Company issued $150 million in aggregate principal amount of 73/4% Senior Notes due 2005 (the "2005 Notes") at 99.574% of the principal amount. In
November 1998, the Company issued $155 million in aggregate principal amount of 8% Senior Notes due 2008 (the "2008 Notes") at 99.457% of the principal amount.

In
July 2000, the Company issued $35 million in aggregate principal amount of 101/2% Senior Notes, due 2002 at 97.161% of the principal amount, the maturity
date of which was extended to September 2003 (the "2003 Notes") in connection with the Company entering into a secured revolving credit facility in December 2000 (see below). In
September 2003, the Company used proceeds from the Senior Secured Revolving Credit Facility (see below) to repay these notes at maturity, aggregating $35 million plus accrued interest of
$0.7 million. The Company used the net proceeds from the issuance of the 2003 Notes to repay a $31.9 million bank term loan due 2004 (the "Term Loan") with the remaining net proceeds
used for general corporate purposes. In connection with the extinguishment of the term loan, unamortized deferred financing fees of approximately $0.5 million were included in interest expense.
The redemption price was 105.875% of the principal amount outstanding and the premium of approximately $2.1 million was included in interest expense.

Holders
of the 2005 Notes, the 2006 Notes, the 2007 Notes and the 2008 Notes have the right under the indentures governing such notes to require the Company to purchase these senior
notes at a price of 100% of the principal amount thereof, and the Company has the right to redeem these senior notes at a price of 100% of the principal amount thereof, plus, in each case, the
Applicable Premium (as defined therein), together with any accrued and unpaid interest, in the event of a Change of Control (as defined therein).

F-44

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In
August 1999, the Company entered into a $110 million secured revolving credit facility. In December 2000, the Company entered into an additional
$100 million secured revolving credit facility to be used for working capital purposes subject to certain restrictions. In December 2002, the Company consolidated and restated both
credit facilities into its $210 million Consolidated and Restated Credit Agreement (the "Credit Agreement"). In connection with entering into the additional $100 million secured
revolving credit facility in December 2000, the Company also issued a precious metal note (the "Precious Metal Note"), which bears interest rates similar to the Credit Agreement, to finance
precious metals used in the Company's manufacturing processes. The Credit Agreement, which was initially scheduled to mature in August 2003, was repaid and replaced in July 2003, with a
new senior secured credit facility (see below). The terms of the Credit Agreement provided for a $210 million secured revolving credit facility, the full amount of which was available for
letters of credit, provided that total borrowings and outstanding letters of credit did not exceed $210 million in the aggregate. The Credit Agreement had interest at a floating rate based on
the lenders' Base Rate, as defined, the federal funds rate or the Eurodollar rate.

In
July 2003, the Company entered into a new $350 million Senior Secured Revolving Credit Facility (the "Senior Secured Revolving Credit Facility"). The initial borrowings
under the Senior Secured Revolving Credit Facility were primarily used to repay amounts outstanding under its Credit Agreement, to repay the $115 million Accounts Receivable Securitization
Agreement due December 2004 and to repay the $7 million Precious Metal Note due August 2003. The Senior Secured Revolving Credit Facility has a final maturity date of
November 15, 2006, subject to certain conditions, is secured by a first priority lien on substantially all of the Company's assets and the assets of its subsidiaries and is guaranteed by all of
the Company's current and future subsidiaries. Availability under the Senior Secured Revolving Credit Facility is based upon eligible Accounts Receivable, Inventory, and Property, Plant and Equipment
(collectively, the "Collateral"), as defined, in the Senior Secured Revolving Credit Facility and includes a sub-limit for letters of credit of $100 million. The Senior Secured
Revolving Credit Facility bears interest at a floating rate based on the lenders' Base Rate, the federal funds rate or the Eurodollar rate, each as defined in the Senior Secured Revolving Credit
Facility. On May 7, 2004, the Company amended its Senior Secured Revolving Credit Facility, which reduced the floating rate of interest as defined in the Senior Secured Revolving Credit
Facility. On July 12, July 19 and November 5, 2004, the Senior Secured Revolving Credit Facility was further amended to allow for the issuance of our 2014 Notes (see below). The
Senior Secured Revolving Credit Facility requires mandatory repayments of excess cash, as defined, on the tenth day of each month and contains a material adverse change clause. The Company is also
required to pay unused commitment fees associated with the Senior Secured Revolving Credit Facility. The Senior Secured Revolving Credit Facility provides for optional and mandatory reductions in the
overall $350 million Senior Secured Revolving Credit Facility commitment, subject to certain conditions as defined in the Senior Secured Revolving Credit Facility. In addition, the Senior
Secured Revolving Credit Facility also provides for optional and mandatory
prepayments of borrowings outstanding under the Senior Secured Revolving Credit Facility, subject to certain conditions. Borrowings outstanding under the Senior Secured Revolving Credit Facility,
which are included in long-term debt amounted to $0 million at December 31, 2004 and 2003, respectively.

Under
the terms of the Senior Secured Revolving Credit Facility and the indentures governing our 73/4% Senior Notes due 2005, our 8% Senior Notes due 2007, our 8% Senior
Notes due 2008 and our 73/4% Senior Notes due 2014 (see below) (collectively, the "Senior Notes"), the Company is subject to

F-45

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certain
financial covenants. These financial covenants include, among others, interest coverage, as defined, minimum consolidated EBITDA (earnings before income taxes and extraordinary items increased
by interest expense, depreciation, goodwill and other amortization), limitations on the amount of annual capital expenditures and indebtedness, restrictions on restricted payments, including dividends
and distributions to the Company's parent corporations and on incurring liens, and restrictions on investments and other payments.

In
addition, if a change of control as defined in the Senior Secured Revolving Credit Facility occurs, the Senior Secured Revolving Credit Facility could be terminated and the loans
under the Senior Secured Revolving Credit Facility accelerated by the holders of that indebtedness. If that event occurred it would cause the Company's outstanding Senior Notes to be accelerated.

As
of December 31, 2004, after giving effect to the most restrictive of the aforementioned restrictions, the Company could not have paid dividends or made other restricted
payments to its parent corporation. In addition, at December 31, 2004, the Company could repay demand loans to its parent corporation amounting to $52.8 million, subject to certain
conditions as outlined in the Senior Secured Revolving Credit Facility and the indentures governing the Company's Senior Notes.

As
of December 31, 2004, the Company was in compliance with all covenants under the Senior Secured Revolving Credit Facility and the indentures governing the Senior Notes.

On
July 26, 2004, the Company issued $200.0 million in aggregate principal amount of 73/4% Senior Notes due 2014 (the "2014 Notes"), at 100.0% of the
principal amount. The net proceeds from the issuance of the 2014 Notes, after deducting initial purchasers' discounts and commissions and offering expenses were approximately $195.9 million. On
August 26, 2004, the Company exercised a call notice issued on July 26, 2004 and used approximately $101.8 million of the net proceeds to redeem all of its issued and outstanding
2006 Notes, including accrued and unpaid interest on such notes through the date of redemption. In addition, the Company used the remaining net proceeds of approximately $94.1 million to reduce
amounts outstanding under its Senior Secured Revolving Credit Facility. The redemption price of the 2006 Notes was 101.438% of the principal amount outstanding and the premium of approximately
$1.4 million was recorded in interest expense in July 2004. In connection with the
extinguishment of the 2006 Notes, the Company expensed the remaining deferred financing fees of approximately $0.7 million in July 2004 and included this amount in interest expense.

On
November 10, 2004, the Company issued an additional $50.0 million in aggregate principal amount of its 2014 Notes. The additional 2014 Notes were issued under an
indenture dated July 26, 2004, pursuant to which the Company previously issued its original $200.0 million of 73/4% Senior Notes due 2014. These additional 2014 Notes rank
equally with and formed a part of a single series with such original 2014 Notes and have the same terms and conditions. The net proceeds from the issuance of the additional 2014 Notes, after deducting
the offering expenses and including the addition of the applicable premium were approximately $50.6 million. The Company used the net proceeds from the additional 2014 Notes to reduce amounts
outstanding under its Senior Secured Revolving Credit Facility. The premium of approximately $0.9 million is included in long-term debt and will be amortized over the life of the
2014 Notes.

Under
the terms and conditions of the 2014 Notes, the noteholders have the right under the indentures governing such notes to require the Company to purchase the 2014 Notes at a price of
101% of the principal amount thereof, plus any accrued and unpaid interest, in the event of a change

F-46

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in
control, as defined in the Notes. Upon the expiration of this right, the Company would have the option to purchase the 2014 Notes at a purchase price equal to 100% of the aggregate principal
amount, plus the applicable premium, as defined in the 2014 Notes, together with any accrued and unpaid interest. The Company also has the option to redeem some or all of the 2014 Notes beginning on
August 1, 2009 at specified redemption premiums through August 1, 2012, as defined in the 2014 Notes.

The
Senior Notes are secured by a second-priority lien on the same assets securing the Senior Secured Revolving Credit Facility for so long as the first-priority lien remains in effect,
subject to certain limited exceptions and have been guaranteed by the subsidiaries that guaranteed the Senior Secured Revolving Credit Facility. In connection with these transactions, the Company
entered into an Amended and Restated Security Agreement, which grants a security interest in the Collateral in favor of the collateral agent on behalf of the lenders under the Senior Secured Revolving
Credit Facility and the holders of the Company's outstanding Senior Notes. The Company also entered into an Amended and Restated Collateral Agent Agreement, which provides, among other things, that we
maintain a lockbox and depository control agreement for the benefit of the secured parties and the sharing of proceeds with respect to any foreclosure or other remedy in respect of the Collateral. As
of December 31, 2004, the book value of the collateral securing the Senior Notes and the Senior Secured Revolving Credit Facility was approximately $1,054.1 million. The Company is also
required to pay unused commitment fees associated with the Senior Secured Revolving Credit Facility, as well as the terminated Credit Agreement. For 2004 and 2003 these fees amounted to $1.1 and
$0.8 million, respectively.

In
December 1995, the Company consummated a $40.0 million sale-leaseback of certain equipment located at its Chester, South Carolina glass mat manufacturing
facility, in a transaction
accounted for as a capital lease. The lessor was granted a security interest in certain equipment at the Chester facility. The lease terms extended to December 2005, with an early buyout option
in June 2003. In July 2003, the Company paid the early buyout option of $19.7 million. In addition, in July 2003, the Company entered into a new $19.7 million
Secured Loan (the "Chester Loan"), with the proceeds being used to repay the $19.7 million obligation associated with the early buyout option discussed above. The Chester Loan is secured by a
sole security interest in the machinery and equipment, matures in 2010, requires monthly payments of principal and interest commencing in August 2003 and bears a fixed annual interest rate of
7.41%.

In
December 1994, the Company consummated a $20.4 million sale-leaseback of certain equipment located at its Baltimore, Maryland roofing facility, in a
transaction accounted for as a capital lease. The lessor was granted a security interest in the land, buildings and certain equipment at the Baltimore facility. The lease term extended to
December 2004, with an early buyout option, which the Company exercised in October 2002 in the amount of $9.4 million.

On
December 30, 2004, the Company redeemed its Nashville, Tennessee Industrial Development Revenue Bonds for $8.5 million. The Company has three remaining industrial
revenue bond issues outstanding, which bear interest at short-term floating rates. Interest rates on the foregoing obligations ranged between 0.9% and 2.6% during 2004.

The
Company believes that the fair value of its non-public indebtedness approximates the book value of such indebtedness, because the interest rates on substantially all such
indebtedness are at floating short-term rates or the debt has a relatively short maturity. With respect to the Company's

F-47

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Senior
Notes, the Company has obtained estimates of the fair values from an independent source believed to be reliable. The estimated fair values of the Company's Senior Notes at December 31,
2004 and 2003 are as follows:

December 31, 2004

December 31, 2003Carrying Amount

Fair Value

Carrying Amount

Fair Value(Thousands)2005 Notes

$
149,949

$
152,386

$
149,858

$
153,2302006 Notes








99,853


101,6002007 Notes


99,791


103,284


99,716


99,2172008 Notes


154,670


159,428


154,586


152,2672014 Notes


250,859


253,438








The
aggregate maturities of long-term debt, including accretion of approximately $0.6 million, as of December 31, 2004 for the next five years and thereafter
are as follows:

(Thousands)2005

$
152,7002006


2,8842007


103,1292008


158,4352009


10,094Thereafter


261,825


In
the above table, maturities for the year 2005 include $150.0 million related to the 2005 Notes and $2.5 million related to the Chester Loan. Maturities for the year 2006
include $2.7 million related to the Chester Loan. Maturities for the year 2007 include $100.0 million related to the 2007 Notes and $2.9 million related to the Chester Loan.
Maturities for the year 2008 include $155.0 million related to the 2008 Notes and $3.1 million related to the Chester Loan. Maturities for the year 2009 include $3.4 million
related to the Chester Loan and $6.3 million related to the Fontana, California Industrial Development Revenue Bonds. Thereafter maturities include $250.4 million related to the 2014
Notes, $7.5 million related to the Mount Vernon, Indiana and the Shafter, California Industrial Development Revenue Bonds, $2.1 million related to the 101/2% Michigan
City, Indiana Note and $1.8 million related to the Chester Loan.

Note 14.    Benefit Plans

Eligible, full-time employees of the Company are covered by various benefit plans, as described below.

Defined Contribution Plan

The Company provides a defined contribution plan for certain eligible salaried employees. The Company contributes up to 7% of participants' compensation and also
contributes fixed amounts, ranging from $50 to $750 per year depending on age, to the accounts of participants who are not covered by a Company-provided postretirement medical benefit plan. The
aggregate contributions by the Company were $6.2, $5.9 and $5.5 million for 2004, 2003 and 2002, respectively.

F-48

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The
Company provides a defined contribution plan for certain eligible hourly employees. The Company contributes a discretionary matching contribution ranging between 25% and 100% of each
participant's
eligible contributions each year up to a maximum range of either $500 to $1,500 or 4% to 6% of salary, whichever is greater, for each participant, as defined. Such contributions were $0.5, $0.4 and
$0.4 million for 2004, 2003 and 2002, respectively.

Defined Benefit Plans

The Company provides noncontributory defined benefit retirement plans for certain hourly and salaried employees (the "Retirement Plans"). Benefits under these
plans are based on stated amounts for each year of service. The Company's funding policy is consistent with the minimum funding requirements of the Employee Retirement Income Security Act of 1974.

The
Company's net periodic pension cost for the Retirement Plans included the following components:

Year Ended December 31,2004

2003

2002(Thousands)Service cost

$
1,350

$
1,199

$
998Interest cost


1,906


1,809


1,684Expected return on plan assets


(2,665
)

(2,551
)

(2,906
)Amortization of unrecognized prior service cost


35


35


35Amortization of net losses from earlier periods


281


193


3Net periodic pension cost (benefit)

$
907

$
685

$
(186
)


The
following tables set forth, for the years 2004 and 2003, reconciliations of the beginning and ending balances of the benefit obligation, fair value of plan assets,
funded status and amounts recognized in the consolidated balance sheets related to the Retirement Plans. The Company uses a December 31 measurement date for its retirement plans.

December 31,2004

2003(Thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
(31,388
)
$
(27,243
)Service cost


(1,350
)

(1,199
)Interest cost


(1,906
)

(1,809
)Amendments





(5
)Actuarial losses


(864
)

(1,956
)Benefits paid


1,068


824Benefit obligation at end of year

$
(34,440
)
$
(31,388
)


F-49

---



Change in plan assets:Fair value of plan assets at beginning of year

$
28,681

$
27,275Actual return on plan assets


2,970


2,230Employer contributions





Benefits paid


(1,068
)

(824
)Fair value of plan assets at end of year

$
30,583

$
28,681Reconciliation of funded status:Funded status

$
(3,856
)
$
(2,707
)Unrecognized prior service cost


165


201Unrecognized actuarial losses


8,497


8,219Net prepaid benefit cost recognized in consolidated balance sheets

$
4,806

$
5,713Amounts recognized in consolidated balance sheets:Prepaid benefit cost

$


$
Additional accrued minimum pension liability


(3,856
)

(2,707
)Intangible asset


165


201Accumulated other comprehensive loss


8,497


8,219Net amount recognized in consolidated balance sheets

$
4,806

$
5,713Change in amounts in other comprehensive lossIncrease in additional minimum liability

$
242

$
8,420Increase (decrease) in intangible asset


(36
)

201Increase in other comprehensive loss

$
278

$
8,219


The
accumulated benefit obligation for all defined benefit pension plans was $34.4 and $31.4 million at December 31, 2004 and 2003, respectively.

Information
on actual and future expected benefit payments related to the Retirement Plans follows:

(Thousands)Actual benefit payments2002

$
8362003


8242004


1,068Future expected benefit payments2005

$
1,3922006


1,4502007


1,5662008


1,6522009


1,7562010 through 2014


10,400


F-50

---





Year ended December 31,2005
Expected

2004
Actual

2003
Actual

2002
Actual(Thousands)Employer contributions:Required

$


$


$


$
133Additional discretionary











597Total

$


$


$


$
730


Weighted-average
assumptions:

December 31,2004

2003Discount rate:As of January 1 (for determining net periodic pension cost and projected benefit obligation for years ended December 31)

6.25
%
6.75
%As of December 31 (for determining projected benefit obligation at December 31)

6.00
%
6.25
%Expected return on plan assets

9.50
%
9.50
%Rate of compensation increase

N/A

N/A


The
following table highlights the sensitivity of the Company's pension obligations and expense to changes in assumptions related to the Retirement Plans:

Impact on
Pension
Expense

Impact on
Projected Benefit
Obligation(Thousands)Change in Assumption:25 basis points increase in discount rate

$
-120.0

$
-1,200.025 basis points decrease in discount rate


+120.0


+1,200.025 basis points increase in rate of return on assets


-75.0


N/A25 basis points decrease in rate of return on assets


+75.0


N/A


The
Company sets the discount rate assumption annually for its retirement-related benefit plans at the measurement dates to reflect the yield of high-quality fixed-income
debt instruments. The expected long-term rate of return on assets is derived from a detailed periodic study conducted by the Company's actuaries and the Company's financial management. The
study includes a review of anticipated future long-term performance of individual asset categories. While the study gives appropriate consideration to recent plan performance and
historical returns, the assumption is primarily a long-term prospective rate. The Company's expected long-term rate of return on assets assumption for the Retirement Plans was
9.5% in 2004 and 2003, respectively.

F-51

---



At
December 31, 2004 and 2003, the asset allocations for the Retirement Plans, by asset category, are as follows:

Plan Assets at December 31,2005 Target %

2004 Actual

2003 ActualAsset Category:Equity securities

2545%

28
%
39
%Fixed income securities

4070%

66
%
45
%Cash and equivalents

010%

5
%
15
%Other

010%

1
%
1
%Total



100
%
100
%


With
the assets in the Retirement Plans, the Company invests primarily in market-neutral absolute-return strategies which serve to minimize volatility while providing consistent positive
returns and preserving capital. These investments include both equity and fixed income securities and may incorporate the use of options, futures and other financial instruments. Implementation of
this policy involves investments with outside managers who have expertise in these strategies.

The
Company also provides a nonqualified defined benefit retirement plan for certain key employees. Expense for this plan was not significant for 2004, 2003 and 2002. The liability
related to this plan was $1.0 and $1.0 million at December 31, 2004 and 2003, respectively, and is included within other liabilities.

Postretirement Medical and Life Insurance

The Company generally does not provide postretirement medical and life insurance benefits, although it subsidizes such benefits for certain employees and certain
retirees. Such subsidies were reduced or ended as of January 1, 1997.

Net
periodic postretirement benefit cost included the following components:

Year Ended December 31,2004

2003

2002(Thousands)Service cost

$
157

$
123

$
110Interest cost


291


307


314Amortization of unrecognized prior service cost


(95
)

(95
)

(94
)Amortization of net gains from earlier periods


(258
)

(261
)

(254
)Net periodic postretirement benefit cost

$
95

$
74

$
76


The
following table sets forth, for the years 2004 and 2003, reconciliations of the beginning and ending balances of the postretirement benefit obligation, funded status and amounts
recognized in the

F-52

---



consolidated
balance sheets related to postretirement medical and life insurance benefits. The Company uses a December 31 measurement date for its postretirement medical and life insurance
plan.

December 31,2004

2003(Thousands)Change in benefit obligation:Benefit obligation at beginning of year

$
(4,983
)
$
(5,012
)Service cost


(157
)

(123
)Interest cost


(291
)

(307
)Actuarial gains


167


207Benefits paid, net of participant contributions


159


252Benefit obligation at end of year

$
(5,105
)
$
(4,983
)Change in plan assets:Fair value of plan assets at beginning of year

$


$
Employer contributions


159


252Participant contributions


81


62Benefits paid


(240
)

(314
)Fair value of plan assets at end of year

$


$
Reconciliation of funded status:Funded status

$
(5,105
)
$
(4,983
)Unrecognized prior service cost


(264
)

(359
)Unrecognized actuarial gains


(4,835
)

(4,926
)Net amount recognized in consolidated balance sheets as accrued benefit cost

$
(10,204
)
$
(10,268
)


The
Company's postretirement medical and life insurance plan is unfunded. Benefits are paid from the Company's cash flows from operations as they are incurred. The Company expects to
contribute approximately $0.3 million to the plan in 2005. Information on actual and future expected benefit payments related to the postretirement medical and life insurance plan follows:

(Thousands)Actual benefit payments2002

$
3052003


3142004


240Future expected benefit payments2005

$
3022006


3282007


3542008


3812009


3652010 through 2014


2,240


F-53

---



For
purposes of calculating the accumulated postretirement benefit obligation, the following assumptions were made. Retirees as of December 31, 2004 who were formerly salaried
employees (with certain exceptions) were assumed to receive a Company subsidy of $700 to $1,000 per year. For retirees over age 65, this subsidy may be replaced by participation in a managed care
program. With respect to retirees who were formerly hourly employees, most such retirees are subject to a $5,000 per person lifetime maximum benefit.

Weighted-average
assumptions:

December 31,2004

2003Discount rate:As of January 1 (for determining net periodic pension cost and postretirement benefit obligation for years ended December 31)

6.25
%
6.75
%As of December 31 (for determining postretirement benefit obligation)

6.00
%
6.25
%


|                                      |                            | December 31,                                                                 | 
|------------------------------------- | -------------------------- | ---------------------------------------------------------------------------- | 
|
|Assumed health care cost trend rates: |                            |                                                                              | 
|                                      | Retirees under age 65:     |                                                                              | 
|                                      |                            | Health care cost trend rate assumed for next year                            | 
|                                      |                            | Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 
|                                      |                            | Year that the rate reaches the ultimate trend rate                           | 
|                                      | Retirees age 65 and older: |                                                                              | 
|                                      |                            | Health care cost trend rate assumed for next year                            | 
|                                      |                            | Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 
|                                      |                            | Year that the rate reaches the ultimate trend rate                           | 

The
health care cost trend rate assumption has an affect on the amounts reported. A one-percentage point change in assumed health care cost trend rates would have the
following effects:

Year Ended December 31,2004

2003(Thousands)One-Percentage Point Increase:Increase in aggregate service and interest cost

$


$
1Increase in accumulated post retirement benefit obligation as of December 31


2


10One-Percentage Point Decrease:Decrease in aggregate service and interest cost





(1
)Decrease in accumulated post retirement benefit obligation as of December 31


(1
)

(11
)


Note 15.    2001 Long-Term Incentive Plan and Preferred Stock Option Plan

On January 1, 1996, the Company established the BMCA Preferred Stock Option Plan (the "1996 Plan") to issue options to certain employees to purchase shares
of redeemable convertible preferred stock ("Preferred Stock") of the Company, exercisable at a price of $100 per share. Each share of

F-54

---



Preferred
Stock was convertible, at the holder's option, into shares of common stock of the Company at a formula price based on Book Value (as defined in the option agreement) as of the date of
grant. The options vested rateably over five years and expired after nine years. Dividends would accrue on the Preferred Stock from the date of issuance at the rate of 6% per annum. The Preferred
Stock was redeemable, at the Company's option, for a redemption price equal to $100 per share plus accrued and unpaid dividends. The Preferred Stock, and common stock issuable upon conversion of
Preferred Stock into common stock, was subject to repurchase by the Company under certain circumstances, at a price equal to current Book Value (as defined in the option agreement). The exercise price
of the options to purchase Preferred Stock was equal to the estimated fair value per share of the Preferred Stock at the date of grant. As of December 31, 2004, options to purchase 400,000
shares of Preferred Stock remained available under the 1996 Plan. No options were granted in 2004, 2003 and 2002.

Effective
December 31, 2000, the Company adopted the 2001 Long-Term Incentive Plan, which allowed employees participating in the 1996 Plan to also participate in the
2001 Long-Term Incentive Plan. During 2001, all employees exchanged their preferred stock options for incentive plan units effective as of December 31, 2000. The 2001
Long-Term Incentive Plan authorizes the grant of incentive units ("Incentive Units") to eligible employees. The 2001 Long-Term Incentive Plan is administered by a Committee
appointed by the Board of Directors. The number of Incentive Units granted is determined by the Committee in its sole discretion. Generally, Incentive Units vest cumulatively, in 20% increments over
five years, except that Incentive Units granted in exchange for Preferred Stock Options retain the vested status and vesting schedule of the options exchanged and the Committee, in its sole
discretion, may issue options with any vesting schedule, other than normally provided in the 2001 Long-Term Incentive Plan. Incentive Units generally are exercisable for a period of six
years from the date of grant. The value of Incentive Units is determined at the end of each fiscal quarter based on Book Value (as defined in the plan) at that date less the Book Value as of the date
of grant divided by 1,000,010 and is payable in cash upon exercise. The 2001 Long-Term Incentive Plan will terminate five years after its effective date of December 2000, unless
terminated sooner by the Committee. The Committee, in its sole discretion, may grant incentive units with an Initial Value that is less than the Initial Value of such incentive units as normally
determined under the 2001 Long-Term Incentive Plan. If, after a change in control of the Company, as defined, an employee's employment is terminated by the Company for any reason other
than Good Cause, as defined, as a result of death or permanent disability, or by the employee for Good Reason, as defined, all incentive units will become fully and immediately vested and payable in
cash.

In
2001, employees exchanged an aggregate of 198,559 stock options granted under the 1996 Plan (discussed above) for an aggregate of 81,862 Incentive Units. In addition, 9,800, 20,360
and 29,735 Incentive Units were granted during 2004, 2003 and 2002, respectively. At December 31, 2004, 2003 and 2002, 124,455, 124,782 and 108,674 Incentive Units were outstanding.
Compensation expense for such Incentive Units was $8.2, $5.3 and $3.4 million in 2004, 2003 and 2002, respectively.

Note 16.    Business Segment Information

The Company is a leading national manufacturer and marketer of a broad line of asphalt and polymer based roofing products and accessories for the residential and
commercial roofing markets. The Company also manufacturers and markets specialty building products and accessories for the professional and do-it-yourself remodeling and
residential construction industries. The residential roofing product line primarily consists of premium laminated shingles, strip shingles, and certain

F-55

---



specialty
shingles. Sales of residential roofing products in 2004, 2003 and 2002 were $1,310.3, $1,181.4 and $1,001.0 million and represented approximately 74%, 73% and 74%, respectively, of
the Company's net sales. The Company's commercial roofing product line includes a full line of modified bitumen, asphalt built-up roofing, liquid applied membrane, thermoplastic,
elastomeric, thermoplastic polyolefin, insulation and roofing accessories. Sales of commercial roofing products and accessories in 2004, 2003 and 2002 were $384.7, $352.9 and $288.4 million and
represented approximately 22%, 22% and 21%, respectively, of the Company's net sales. Sales of the specialty building products and accessories products in 2004, 2003 and 2002 were $78.4, $73.5 and
$71.3 million and represented approximately 4%, 5% and 5%, respectively, of the Company's net sales.

The
Company aggregates the residential and commercial product lines into one operating segment since they have similar economic characteristics and are similar in each of the following
areas: (i) the nature of the products and services are similar in that they perform the same functionthe protection and covering of residential and commercial roofs;
(ii) the nature of the production processes are similar; (iii) the type or class of customer for their products and services are similar; (iv) the residential and commercial
products have the same distribution channels, whereby the main customers are wholesalers or distributors; and (v) regulatory requirements are generally the same for both the residential and
commercial product lines. The specialty building products and accessories products did not meet quantitative thresholds in 2004, 2003 and 2002 to be considered as a reportable segment.

Note 17.    Related Party Transactions

Included in the consolidated balance sheets are the following receivable (payable) balances with related parties, which arise from operating and financing
transactions between the Company and its affiliates:

December 31,2004

2003(Thousands)Tax receivable from parent corporation

$


$
7,044Payable to related parties

$
(16,900
)
$
(9,074
)Loans payable to parent corporation

$
(52,840
)
$
(52,840
)Loans receivable from parent corporation, included in Stockholders' Equity (Deficit)

$
55,691

$
55,587


F-56

---





The Company makes loans to, and borrows from, its parent corporations from time to time at rates ranging from 4.0% to 6.3% in 2004. During 2001 and on
July 1, 2003 and December 29, 2003, the Company loaned BMCA Holdings Corporation $2.5, $37.8 and $15.0 million, respectively, and on July 9, 2003 and December 29,
2003, BMCA Holdings Corporation loaned the Company $37.8 and $15.0 million, respectively. As of December 31, 2004 and 2003, BMCA Holdings Corporation owed the Company $55.7 and
$55.6 million, including interest of $0.4 and $0.3 million, respectively, and the Company owed BMCA Holdings Corporation $52.8 and $52.8 million, with no unpaid interest payable
to BMCA Holdings Corporation, respectively. Interest income on the Company's loans to BMCA Holdings Corporation amounted to $2.9, $1.0, and $0.1 million in 2004, 2003 and 2002, respectively and
is included in other expense, net. Interest expense on the Company's loans from BMCA Holdings Corporation amounted to $2.8 and $0.9 million in 2004 and 2003, respectively. Loans payable
to/receivable from any parent corporation are due on demand and provide each party with the right of offset of its related obligation to the other party and are subject to limitations as outlined in
the Senior Secured Revolving Credit Facility and the Senior Notes. Under the terms of the Senior Secured Revolving Credit Facility and the indentures governing the Company's Senior Notes at
December 31, 2004, the Company could repay demand loans to its parent corporation amounting to $52.8 million, subject to certain conditions. The Company also makes
non-interest bearing advances to affiliates, of which no balance was outstanding as of December 31, 2004 and 2003. In addition, no loans were owed by the Company to other
affiliates.

As
of December 31, 2004, the Company has included on its balance sheet in current liabilities a tax payable to parent corporation of $3.8 million, representing amounts due
to G-I Holdings under the Tax Sharing Agreement (see below). As of December 31, 2003, the Company has included on its balance sheet a tax receivable from parent corporation of
$7.0 million, representing amounts paid to G-I Holdings under the Tax Sharing Agreement, which the Company applied against 2004 tax sharing payments due to G-I Holdings.
See Notes 9 and 18.

On
February 25, 2004, April 21, 2004 and December 30, 2004, the Company declared and paid cash dividends, each amounting to $5.0 million, respectively, to our
parent corporation.

On
June 15, 2004, September 15, 2004, and December 15, 2004 the Company paid $6.4, $9.6 and $3.5 million, respectively, in federal income tax payments to our
parent corporation pursuant to a Tax Sharing Agreement. This amount is included in the change in net receivable from/payable to related parties/parent corporations in the consolidated statement of
cash flows.

Mineral Products:The Company and its subsidiaries purchase substantially all of their colored roofing granules and
algae-resistant granules under a long-term requirements contract from ISP, except for the requirements of certain of the Company's roofing plants that are supplied by third parties. In
2004, 2003 and 2002, the Company and its subsidiaries purchased in the aggregate approximately $98.2, $77.7 and $73.2 million, respectively, of mineral products from ISP. The amount payable to
ISP at December 31, 2004 and 2003 for such purchases was $12.7 and $8.7 million, respectively, and is included in payable to related parties in the consolidated balance sheets.

Management Agreements:Pursuant to a management agreement, a subsidiary of ISP, provides certain general management,
administrative, legal and facilities services to the Company, including the use of the Company's headquarters in Wayne, New Jersey. Charges to the Company by ISP for these services under the
management agreement, inclusive of the services provided to G-I Holdings, discussed

F-57

---



below,
aggregated $5.6, $6.2 and $6.1 million for 2004, 2003 and 2002, respectively. These charges consist of management fees and other reimbursable expenses attributable to the Company, or
incurred by ISP for the benefit of the Company. The amount payable to ISP for management fees as of December 31, 2004 and 2003 was $0.4 and $0.4 million, respectively, and is included in
payable to related parties in the consolidated balance sheets. The management agreement also provides that the Company is responsible for providing management services to G-I Holdings and
certain of its subsidiaries and that G-I Holdings pay to the Company a management fee for these services. The aggregate amount paid by G-I Holdings to the Company for services
rendered under the management agreement in 2004, 2003 and 2002 was approximately $0.8 million, respectively. The Company also allocates a portion of the management fees payable by the Company
under the management agreement to separate lease payments for the use of the Company's headquarters. Some of the Company's executive officers receive their compensation from ISP. ISP is indirectly
reimbursed for this compensation through payment of the management fee and other reimbursable expenses payable under the management agreement.

Tax Sharing Agreement:See Note 9.

Note 18.    Commitments and Contingencies

G-I Holdings and BHC are presently dependent upon the earnings and cash flows of their subsidiaries, principally the Company, in order to satisfy
their net obligations, including various tax and other claims and liabilities (net of certain insurance receivables), including tax liabilities relating to the surfactants partnership. See
Note 9. G-I Holdings has advised the Company that it expects to obtain funds to satisfy G-I Holdings' operating expenses from, among other things, distributions from
subsidiaries (principally the Company). See Notes 5, 9 and 17.

On
January 5, 2001, G-I Holdings filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code due to its Asbestos Claims. The Company is
not included in such bankruptcy filing. There are restrictions under the indentures relating to the Senior Notes and the Senior Secured Revolving Credit Facility on payments by the Company to its
parent corporations.

During
the twelve months ending December 31, 2005, the Company expects to make distributions and/or advances to its parent corporations to satisfy the obligations discussed above
for not more than the extent permitted by the Senior Secured Revolving Credit Facility and the Senior Notes. The Company does not believe that the dependence of its parent corporations on the cash
flows of their subsidiaries should have a material adverse effect on the operations, liquidity or capital resources of the Company. See Notes 5, 9 and 13.

At
December 31, 2004, the Company has outstanding letters of credit of approximately $48.9 million under the Senior Secured Revolving Credit Facility, which includes
approximately $11.8 million of standby letters of credit related to certain obligations of G-I Holdings. The fair value of these obligations approximates face value as of
December 31, 2004. See Note 5.

In
June 2001, the Company entered into employment security agreements with certain of its executive officers and key personnel. The agreements have no expiration date, are
supported by irrevocable letters of credit and provide for a single-sum payment consisting of one to three times salary and bonus and related benefits if employment is terminated or a
change in employment responsibilities occurs within a thirty-six month period following the change in control event, as defined.

F-58

---



At
December 31, 2004 the aggregate value of the employment security agreements was $8.7 million, which excludes the cost of medical benefits and any amounts due under the 2001
Long-Term Incentive Plan.

On
or about February 17, 2004, litigation was commenced against the Company in the United States District Court for the Eastern District of Pennsylvania by CertainTeed Corporation
alleging patent infringement in connection with certain of the Company's products representing less than 5% of the Company's net sales. No specific amount of damages have been sought in the
litigation. The Company intends to defend itself vigorously in this matter, has denied CertainTeed's claims and has filed counterclaims against CertainTeed for patent infringement, violations of the
antitrust laws and for trade libel. Although this matter is in its preliminary stages, and there can be no assurances made, the Company believes that the claims filed by CertainTeed Corporation are
without merit and will not have a material adverse effect against it. In addition, although the Company's counterclaims against CertainTeed are in their preliminary stages, the Company believes its
counterclaims are meritorious.

The
Company is a lessee under operating leases principally for warehouses, production machinery and equipment, and transportation and computer equipment. Rental expense on operating
leases was $31.7, $30.3 and $26.4 million for 2004, 2003 and 2002, respectively. Future minimum lease payments for properties which were held under long-term noncancellable leases
as of December 31, 2004 were as follows:

Operating
Leases(Thousands)2005

$
21,8682006


17,8152007


14,7002008


13,2312009


13,050Thereafter


1,208Total minimum payments

$
81,872


Included
in net sales in 2004 were net sales to two customers of 17% and 12%, respectively, in 2003, 16% and 12%, respectively, and in 2002, 13% and 11%, respectively. No other customer
accounted for more than 10% of net sales in 2004, 2003 or 2002.

The
Company includes in other expense, net certain legal fees related to its business. For 2004, 2003 and 2002 the Company included $7.0, $4.9 and $3.1 million, respectively, of
legal fees in other expense, net.

Note 19.    Guarantor Financial Information

At December 31, 2004, all of the Company's subsidiaries, each of which is wholly-owned by the Company, are guarantors under the Company's
$350.0 million Senior Secured Revolving Credit Facility and the indentures governing the Senior Notes. These guarantees are full, unconditional and joint and

F-59

---



several.
In addition, Building Materials Manufacturing Corporation ("BMMC"), a wholly-owned subsidiary of the Company, is a co-obligor on the 8% Senior Notes due 2007.

The
Company and BMMC entered into license agreements, effective January 1, 1999, for the right to use intellectual property, including patents, trademarks, know-how,
and franchise rights owned by Building Materials Investment Corporation, a wholly-owned subsidiary of the Company, for a license fee stated as a percentage of net sales. The license agreements are for
a period of one year and are subject to automatic renewal unless either party terminates with 60 days written notice. Also, effective January 1, 1999, BMMC sells all finished goods to
the Company at a manufacturing profit.

Presented
below is condensed consolidating financial information for the Company, the guarantor subsidiaries and the non-guarantor subsidiary. This financial information
should be read in conjunction with the consolidated financial statements and other notes related thereto. Separate financial statements for the Company, the guarantor subsidiaries and the
non-guarantor subsidiary are not included herein, because the guarantees are full, unconditional and joint and several.

Condensed Consolidating Statement of Income  Year Ended December 31, 2004  (Thousands)

|                                             |                                               | Parent
Company                |           | Guarantor
Subsidiaries |           | Eliminations |           | Consolidated |           
|-------------------------------------------- | --------------------------------------------- | ----------------------------- | --------- | ---------------------- | --------- | ------------ | --------- | ------------ | ----------
|Net sales                                    |                                               | $                             | 1,659,987 |                        | $         | 113,402      |           | $            |          
|Intercompany net sales                       |                                               |                               | 44,710    |                        |           | 1,213,901    |           |              | (1,258,611
|                                             |                                               |                               |           |                        |           |              |           |              |           
|                                             | Total net sales                               |                               |           | 1,704,697              |           |              | 1,327,303 |              |           
|                                             |                                               |                               |           |                        |           |              |           |              |           
|Costs and expenses, net:                     |                                               |                               |           |                        |           |              |           |              |           
|                                             | Cost of products sold                         |                               |           | 1,311,287              |           |              | 1,173,119 |              |           
|                                             | Selling, general and administrative           |                               |           | 299,845                |           |              | 91,484    |              |           
|                                             | Transition service agreement (income) expense |                               |           | 100                    |           |              | (100      | )            |           
|                                             |                                               |                               |           |                        |           |              |           |              |           
|                                             |                                               | Total costs and expenses, net |           |                        | 1,611,232 |              |           | 1,264,503    |           
|                                             |                                               |                               |           |                        |           |              |           |              |           
|Operating income                             |                                               |                               | 93,465    |                        |           | 62,800       |           |              |          
|Equity in earnings of subsidiaries           |                                               |                               | 74,715    |                        |           |             |           |              | (74,715   
|Intercompany licensing income (expense), net |                                               |                               | (68,188   | )                      |           | 68,188       |           |              |          
|Interest expense                             |                                               |                               | (50,523   | )                      |           | (12,184      | )         |              |          
|Other income (expense), net                  |                                               |                               | (6,338    | )                      |           | 264          |           |              |          
|                                             |                                               |                               |           |                        |           |              |           |              |           
|Income before income taxes                   |                                               |                               | 43,131    |                        |           | 119,068      |           |              | (74,715   
|Income tax (expense) benefit                 |                                               |                               | 11,765    |                        |           | (44,353      | )         |              |          
|                                             |                                               |                               |           |                        |           |              |           |              |           
|Net income                                   |                                               | $                             | 54,896    |                        | $         | 74,715       |           | $            | (74,715   
|                                             |                                               |                               |           |                        |           |              |           |              |           

F-60

---





Condensed Consolidating Statement of Income  Year Ended December 31, 2003  (Thousands)

|                                             |                                                     | Parent
Company                |           | Guarantor
Subsidiaries |           | Eliminations |           | Consolidated |           
|-------------------------------------------- | --------------------------------------------------- | ----------------------------- | --------- | ---------------------- | --------- | ------------ | --------- | ------------ | ----------
|Net sales                                    |                                                     | $                             | 1,496,474 |                        | $         | 111,304      |           | $            |          
|Intercompany net sales                       |                                                     |                               | 84,443    |                        |           | 1,106,126    |           |              | (1,190,569
|                                             |                                                     |                               |           |                        |           |              |           |              |           
|                                             |                                                     | Total net sales               |           |                        | 1,580,917 |              |           | 1,217,430    |           
|                                             |                                                     |                               |           |                        |           |              |           |              |           
|Costs and expenses, net:                     |                                                     |                               |           |                        |           |              |           |              |           
|                                             | Cost of products sold                               |                               |           | 1,250,902              |           |              | 1,073,891 |              |           
|                                             | Selling, general and administrative                 |                               |           | 262,167                |           |              | 76,787    |              |           
|                                             | Transition service agreement (income) expense       |                               |           | 100                    |           |              | (100      | )            |           
|                                             | Loss on write-down of manufacturing facility assets |                               |           |                       |           |              | 3,822     |              |           
|                                             | Gain on sale of assets                              |                               |           |                       |           |              | (5,739    | )            |           
|                                             |                                                     |                               |           |                        |           |              |           |              |           
|                                             |                                                     | Total costs and expenses, net |           |                        | 1,513,169 |              |           | 1,148,661    |           
|                                             |                                                     |                               |           |                        |           |              |           |              |           
|Operating income                             |                                                     |                               | 67,748    |                        |           | 68,769       |           |              |          
|Equity in earnings of subsidiaries           |                                                     |                               | 76,333    |                        |           |             |           |              | (76,333   
|Intercompany licensing income (expense), net |                                                     |                               | (63,237   | )                      |           | 63,237       |           |              |          
|Interest expense                             |                                                     |                               | (43,669   | )                      |           | (13,025      | )         |              |          
|Other income (expense), net                  |                                                     |                               | (6,388    | )                      |           | 290          |           |              |          
|                                             |                                                     |                               |           |                        |           |              |           |              |           
|Income before income taxes                   |                                                     |                               | 30,787    |                        |           | 119,271      |           |              | (76,333   
|Income tax (expense) benefit                 |                                                     |                               | 16,397    |                        |           | (42,938      | )         |              |          
|                                             |                                                     |                               |           |                        |           |              |           |              |           
|Net income                                   |                                                     | $                             | 47,184    |                        | $         | 76,333       |           | $            | (76,333   
|                                             |                                                     |                               |           |                        |           |              |           |              |           

F-61

---





Condensed Consolidating Statement of Income  Year Ended December 31, 2002  (Thousands)

|                                             |                                               | Parent
Company                |           | Guarantor
Subsidiaries |           | Eliminations |         | Consolidated |         
|-------------------------------------------- | --------------------------------------------- | ----------------------------- | --------- | ---------------------- | --------- | ------------ | ------- | ------------ | --------
|Net sales                                    |                                               | $                             | 1,247,560 |                        | $         | 113,131      |         | $            |        
|Intercompany net sales                       |                                               |                               | 63,080    |                        |           | 918,979      |         |              | (982,059
|                                             |                                               |                               |           |                        |           |              |         |              |         
|                                             |                                               | Total net sales               |           |                        | 1,310,640 |              |         | 1,032,110    |         
|                                             |                                               |                               |           |                        |           |              |         |              |         
|Costs and expenses, net:                     |                                               |                               |           |                        |           |              |         |              |         
|                                             | Cost of products sold                         |                               |           | 1,032,525              |           |              | 904,098 |              |         
|                                             | Selling, general and administrative           |                               |           | 216,432                |           |              | 73,019  |              |         
|                                             | Transition service agreement (income) expense |                               |           | 100                    |           |              | (100    | )            |         
|                                             | Loss on sale of assets                        |                               |           |                       |           |              | 1,792   |              |         
|                                             |                                               |                               |           |                        |           |              |         |              |         
|                                             |                                               | Total costs and expenses, net |           |                        | 1,249,057 |              |         | 978,809      |         
|                                             |                                               |                               |           |                        |           |              |         |              |         
|Operating income                             |                                               |                               | 61,583    |                        |           | 53,301       |         |              |        
|Equity in earnings of subsidiaries           |                                               |                               | 57,781    |                        |           |             |         |              | (57,781 
|Intercompany licensing income (expense), net |                                               |                               | (52,425   | )                      |           | 52,425       |         |              |        
|Interest expense                             |                                               |                               | (39,007   | )                      |           | (15,987      | )       |              |        
|Other income (expense), net                  |                                               |                               | (9,535    | )                      |           | 544          |         |              |        
|                                             |                                               |                               |           |                        |           |              |         |              |         
|Income before income taxes                   |                                               |                               | 18,397    |                        |           | 90,283       |         |              | (57,781 
|Income tax (expense) benefit                 |                                               |                               | 14,178    |                        |           | (32,502      | )       |              |        
|                                             |                                               |                               |           |                        |           |              |         |              |         
|Net income                                   |                                               | $                             | 32,575    |                        | $         | 57,781       |         | $            | (57,781 
|                                             |                                               |                               |           |                        |           |              |         |              |         

F-62

---





Condensed Consolidating Balance Sheet  December 31, 2004  (Thousands)

|                                                     |                                        | Parent
Company            |          | Guarantor
Subsidiaries |         | Eliminations |         | Consolidated |         
|---------------------------------------------------- | -------------------------------------- | ------------------------- | -------- | ---------------------- | ------- | ------------ | ------- | ------------ | --------
|ASSETS                                               |                                        |                           |          |                        |         |              |         |              |         
|Current Assets:                                      |                                        |                           |          |                        |         |              |         |              |         
|                                                     | Cash and cash equivalents              |                           | $        | 12                     |         | $            | 129,470 |              | $       
|                                                     | Accounts receivable, trade, net        |                           |          | 234,733                |         |              | 15,810  |              |         
|                                                     | Accounts receivable, other             |                           |          | 2,630                  |         |              | 1,196   |              |         
|                                                     | Tax receivable from parent corporation |                           |          |                       |         |              |        |              |         
|                                                     | Inventories, net                       |                           |          | 114,643                |         |              | 60,271  |              |         
|                                                     | Deferred income tax assets, net        |                           |          | 43,398                 |         |              |        |              |         
|                                                     | Other current assets                   |                           |          | 2,311                  |         |              | 4,188   |              |         
|                                                     |                                        |                           |          |                        |         |              |         |              |         
|                                                     |                                        | Total Current Assets      |          |                        | 397,727 |              |         | 210,935      |         
|Investment in subsidiaries                           |                                        |                           | 556,410  |                        |         |             |         |              | (556,410
|Intercompany loans including accrued interest        |                                        |                           | 58,807   |                        |         | (58,807      | )       |              |        
|Due from (to) subsidiaries, net                      |                                        |                           | (309,854 | )                      |         | 309,854      |         |              |        
|Property, plant and equipment, net                   |                                        |                           | 41,356   |                        |         | 323,158      |         |              |        
|Goodwill, net                                        |                                        |                           | 40,080   |                        |         | 23,214       |         |              |        
|Other noncurrent assets                              |                                        |                           | 13,135   |                        |         | 20,746       |         |              |        
|                                                     |                                        |                           |          |                        |         |              |         |              |         
|Total Assets                                         |                                        | $                         | 797,661  |                        | $       | 829,100      |         | $            | (556,410
|                                                     |                                        |                           |          |                        |         |              |         |              |         
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)       |                                        |                           |          |                        |         |              |         |              |         
|Current Liabilities:                                 |                                        |                           |          |                        |         |              |         |              |         
|                                                     | Current maturities of long-term debt   |                           | $        | 149,949                |         | $            | 2,576   |              | $       
|                                                     | Accounts payable                       |                           |          | 53,216                 |         |              | 67,121  |              |         
|                                                     | Payable to related parties, net        |                           |          | 6,625                  |         |              | 10,275  |              |         
|                                                     | Loans payable to parent corporation    |                           |          | 52,840                 |         |              |        |              |         
|                                                     | Accrued liabilities                    |                           |          | 32,020                 |         |              | 61,447  |              |         
|                                                     | Reserve for product warranty claims    |                           |          | 14,900                 |         |              |        |              |         
|                                                     |                                        |                           |          |                        |         |              |         |              |         
|                                                     |                                        | Total Current Liabilities |          |                        | 309,550 |              |         | 141,419      |         
|Long-term debt less current maturities               |                                        |                           | 405,530  |                        |         | 130,422      |         |              |        
|Reserve for product warranty claims                  |                                        |                           | 16,553   |                        |         | 660          |         |              |        
|Deferred income tax liabilities                      |                                        |                           | 44,773   |                        |         |             |         |              |        
|Other liabilities                                    |                                        |                           | 23,966   |                        |         | 189          |         |              |        
|                                                     |                                        |                           |          |                        |         |              |         |              |         
|Total Liabilities                                    |                                        |                           | 800,372  |                        |         | 272,690      |         |              |        
|Total Stockholders' Equity (Deficit)                 |                                        |                           | (2,711   | )                      |         | 556,410      |         |              | (556,410
|                                                     |                                        |                           |          |                        |         |              |         |              |         
|Total Liabilities and Stockholders' Equity (Deficit) |                                        | $                         | 797,661  |                        | $       | 829,100      |         | $            | (556,410
|                                                     |                                        |                           |          |                        |         |              |         |              |         

F-63

---





Condensed Consolidating Balance Sheet  December 31, 2003  (Thousands)

|                                                     |                                        | Parent
Company            |          | Guarantor
Subsidiaries |         | Eliminations |        | Consolidated |         
|---------------------------------------------------- | -------------------------------------- | ------------------------- | -------- | ---------------------- | ------- | ------------ | ------ | ------------ | --------
|ASSETS                                               |                                        |                           |          |                        |         |              |        |              |         
|Current Assets:                                      |                                        |                           |          |                        |         |              |        |              |         
|                                                     | Cash and cash equivalents              |                           | $        | 8                      |         | $            | 2,872  |              | $       
|                                                     | Accounts receivable, trade, net        |                           |          | 173,945                |         |              | 14,286 |              |         
|                                                     | Accounts receivable, other             |                           |          | 5,115                  |         |              | 749    |              |         
|                                                     | Tax receivable from parent corporation |                           |          | 7,044                  |         |              |       |              |         
|                                                     | Inventories, net                       |                           |          | 87,399                 |         |              | 48,561 |              |         
|                                                     | Deferred income tax assets, net        |                           |          | 31,188                 |         |              |       |              |         
|                                                     | Other current assets                   |                           |          | 2,434                  |         |              | 2,568  |              |         
|                                                     |                                        |                           |          |                        |         |              |        |              |         
|                                                     |                                        | Total Current Assets      |          |                        | 307,133 |              |        | 69,036       |         
|Investment in subsidiaries                           |                                        |                           | 476,695  |                        |         |             |        |              | (476,695
|Intercompany loans including accrued interest        |                                        |                           | 30,582   |                        |         | (30,582      | )      |              |        
|Due from (to) subsidiaries, net                      |                                        |                           | (335,690 | )                      |         | 335,690      |        |              |        
|Property, plant and equipment, net                   |                                        |                           | 40,769   |                        |         | 301,447      |        |              |        
|Goodwill, net                                        |                                        |                           | 40,080   |                        |         | 23,214       |        |              |        
|Other noncurrent assets                              |                                        |                           | 13,126   |                        |         | 18,863       |        |              |        
|                                                     |                                        |                           |          |                        |         |              |        |              |         
|Total Assets                                         |                                        | $                         | 572,695  |                        | $       | 717,668      |        | $            | (476,695
|                                                     |                                        |                           |          |                        |         |              |        |              |         
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)       |                                        |                           |          |                        |         |              |        |              |         
|Current Liabilities:                                 |                                        |                           |          |                        |         |              |        |              |         
|                                                     | Current maturities of long-term debt   |                           | $        |                       |         | $            | 2,504  |              | $       
|                                                     | Accounts payable                       |                           |          | 43,331                 |         |              | 49,518 |              |         
|                                                     | Payable to related parties             |                           |          | 1,969                  |         |              | 7,105  |              |         
|                                                     | Loans payable to parent corporation    |                           |          | 52,840                 |         |              |       |              |         
|                                                     | Accrued liabilities                    |                           |          | 23,511                 |         |              | 39,585 |              |         
|                                                     | Reserve for product warranty claims    |                           |          | 14,900                 |         |              |       |              |         
|                                                     |                                        |                           |          |                        |         |              |        |              |         
|                                                     |                                        | Total Current Liabilities |          |                        | 136,551 |              |        | 98,712       |         
|Long-term debt less current maturities               |                                        |                           | 404,297  |                        |         | 141,396      |        |              |        
|Reserve for product warranty claims                  |                                        |                           | 16,407   |                        |         | 665          |        |              |        
|Deferred income tax liabilities                      |                                        |                           | 34,496   |                        |         |             |        |              |        
|Other liabilities                                    |                                        |                           | 23,012   |                        |         | 200          |        |              |        
|                                                     |                                        |                           |          |                        |         |              |        |              |         
|Total Liabilities                                    |                                        |                           | 614,763  |                        |         | 240,973      |        |              |        
|Total Stockholders' Equity (Deficit)                 |                                        |                           | (42,068  | )                      |         | 476,695      |        |              | (476,695
|                                                     |                                        |                           |          |                        |         |              |        |              |         
|Total Liabilities and Stockholders' Equity (Deficit) |                                        | $                         | 572,695  |                        | $       | 717,668      |        | $            | (476,695
|                                                     |                                        |                           |          |                        |         |              |        |              |         

F-64

---





Condensed Consolidating Statement of Cash Flows  Year Ended December 31, 2004  (Thousands)

|                                                                                                   |                                                                | Parent
Company |          | Guarantor
Subsidiaries |   | Consolidated |        
|-------------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | -------------- | -------- | ---------------------- | - | ------------ | -------
|Cash and cash equivalents, beginning of year                                                       |                                                                | $              | 8        |                        | $ | 2,872        |        
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Cash provided by (used in) operating activities:                                                   |                                                                |                |          |                        |   |              |        
|Net income (loss)                                                                                  |                                                                |                | (19,819  | )                      |   | 74,715       |        
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                                                                |                |          |                        |   |              |        
|                                                                                                   | Depreciation                                                   |                |          | 3,749                  |   |              | 40,171 
|                                                                                                   | Amortization                                                   |                |          |                       |   |              | 2,237  
|                                                                                                   | Deferred income taxes                                          |                |          | (904                   | ) |              |       
|                                                                                                   | Noncash interest charges                                       |                |          | 5,034                  |   |              | 1,398  
|(Increase) decrease in working capital items                                                       |                                                                |                | (67,242  | )                      |   | 24,350       |        
|Increase (decrease) in long-term reserve for product warranty claims                               |                                                                |                | 146      |                        |   | (5           | )      
|(Increase) decrease in other assets                                                                |                                                                |                | 187      |                        |   | (5,179       | )      
|Increase (decrease) in other liabilities                                                           |                                                                |                | 37       |                        |   | (11          | )      
|Change in net receivable from/payable to related parties/parent corporations                       |                                                                |                | (24,176  | )                      |   | 39,046       |        
|Other, net                                                                                         |                                                                |                | (160     | )                      |   | 941          |        
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Net cash provided by (used in) operating activities                                                |                                                                |                | (103,148 | )                      |   | 177,663      |        
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Cash provided by (used in) investing activities:                                                   |                                                                |                |          |                        |   |              |        
|                                                                                                   | Capital expenditures and acquisition of manufacturing facility |                |          | (27,360                | ) |              | (39,824
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Net cash used in investing activities                                                              |                                                                |                | (27,360  | )                      |   | (39,824      | )      
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Cash provided by (used in) financing activities:                                                   |                                                                |                |          |                        |   |              |        
|                                                                                                   | Proceeds from issuance of long-term debt                       |                |          | 835,340                |   |              |       
|                                                                                                   | Repayments of long-term debt                                   |                |          | (684,465               | ) |              | (11,241
|                                                                                                   | Distributions to parent corporation                            |                |          | (260                   | ) |              |       
|                                                                                                   | Dividends to parent corporation                                |                |          | (15,000                | ) |              |       
|                                                                                                   | Loan to parent corporation                                     |                |          | (104                   | ) |              |       
|                                                                                                   | Financing fees and expenses                                    |                |          | (4,999                 | ) |              |       
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Net cash provided by (used in) financing activities                                                |                                                                |                | 130,512  |                        |   | (11,241      | )      
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Net change in cash and cash equivalents                                                            |                                                                |                | 4        |                        |   | 126,598      |        
|                                                                                                   |                                                                |                |          |                        |   |              |        
|Cash and cash equivalents, end of year                                                             |                                                                | $              | 12       |                        | $ | 129,470      |        
|                                                                                                   |                                                                |                |          |                        |   |              |        

F-65

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Condensed Consolidating Statement of Cash Flows  Year Ended December 31, 2003  (Thousands)

|                                                                                                   |                                                                              | Parent
Company                             |         | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiaries |          | Consolidated |  
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------------------------ | ------- | ---------------------- | ------ | --------------------------- | -------- | ------------ | -
|Cash and cash equivalents, beginning of year                                                       |                                                                              | $                                          | 60      |                        | $      | 96,113                      |          | $            | 
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Cash provided by (used in) operating activities:                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Net income (loss)                                                                                  |                                                                              |                                            | (29,149 | )                      |        | 76,333                      |          |              | 
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                                                                              |                                            |         |                        |        |                             |          |              |  
|                                                                                                   |                                                                              | Loss on write-down of manufacturing assets |         |                        |       |                             |          | 3,822        |  
|                                                                                                   |                                                                              | Gain on sale of assets                     |         |                        |       |                             |          | (5,739       | )
|                                                                                                   |                                                                              | Depreciation                               |         |                        | 2,714  |                             |          | 36,687       |  
|                                                                                                   |                                                                              | Amortization                               |         |                        |       |                             |          | 2,096        |  
|                                                                                                   |                                                                              | Deferred income taxes                      |         |                        | 25,086 |                             |          |             |  
|                                                                                                   |                                                                              | Noncash interest charges                   |         |                        | 3,900  |                             |          | 1,426        |  
|                                                                                                   | (Increase) decrease in working capital items                                 |                                            |         | (50,562                | )      |                             | 4,768    |              |  
|                                                                                                   | Increase (decrease) in long-term reserve for warranty claims                 |                                            |         | (1,528                 | )      |                             | 213      |              |  
|                                                                                                   | Proceeds (repayments) from sale/repurchase of accounts receivable            |                                            |         | (105,388               | )      |                             |         |              |  
|                                                                                                   | Increase in other assets                                                     |                                            |         | (775                   | )      |                             | (2,951   | )            |  
|                                                                                                   | Increase in other liabilities                                                |                                            |         | 1,485                  |        |                             | 1        |              |  
|                                                                                                   | Change in net receivable from/payable to related parties/parent corporations |                                            |         | 206,087                |        |                             | (174,849 | )            |  
|                                                                                                   | Other, net                                                                   |                                            |         | (49                    | )      |                             | 471      |              |  
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Net cash provided by (used in) operating activities                                                |                                                                              |                                            | 51,821  |                        |        | (57,722                     | )        |              | 
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Cash provided by (used in) investing activities:                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|                                                                                                   | Capital expenditures                                                         |                                            |         | (7,358                 | )      |                             | (35,962  | )            |  
|                                                                                                   | Proceeds from sale of assets                                                 |                                            |         |                       |        |                             | 9,315    |              |  
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Net cash used in investing activities                                                              |                                                                              |                                            | (7,358  | )                      |        | (26,647                     | )        |              | 
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Cash provided by (used in) financing activities:                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|                                                                                                   | Proceeds from loan payable to parent corporation                             |                                            |         | 52,840                 |        |                             |         |              |  
|                                                                                                   | Proceeds from issuance of long-term debt                                     |                                            |         | 407,676                |        |                             | 19,731   |              |  
|                                                                                                   | Repayments of long-term debt                                                 |                                            |         | (442,676               | )      |                             | (28,398  | )            |  
|                                                                                                   | Distributions to parent corporation                                          |                                            |         | (14                    | )      |                             |         |              |  
|                                                                                                   | Loans to parent corporation                                                  |                                            |         | (52,939                | )      |                             |         |              |  
|                                                                                                   | Financing fees and expenses                                                  |                                            |         | (9,402                 | )      |                             | (205     | )            |  
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Net cash used in financing activities                                                              |                                                                              |                                            | (44,515 | )                      |        | (8,872                      | )        |              | 
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Net change in cash and cash equivalents                                                            |                                                                              |                                            | (52     | )                      |        | (93,241                     | )        |              | 
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  
|Cash and cash equivalents, end of year                                                             |                                                                              | $                                          | 8       |                        | $      | 2,872                       |          | $            | 
|                                                                                                   |                                                                              |                                            |         |                        |        |                             |          |              |  

F-66

---





Condensed Consolidating Statement of Cash Flows  Year Ended December 31, 2002  (Thousands)

|                                                                                                   |                                                                              | Parent
Company           |         | Guarantor
Subsidiaries |        | Non-
Guarantor
Subsidiary |         | Consolidated |  
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------------------ | ------- | ---------------------- | ------ | ------------------------- | ------- | ------------ | -
|Cash and cash equivalents, beginning of year                                                       |                                                                              | $                        | 133     |                        | $      | 46,254                    |         | $            | 
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Cash provided by (used in) operating activities:                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Net income (loss)                                                                                  |                                                                              |                          | (25,206 | )                      |        | 57,781                    |         |              | 
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |                                                                              |                          |         |                        |        |                           |         |              |  
|                                                                                                   |                                                                              | Loss on sale of assets   |         |                        |       |                           |         | 1,792        |  
|                                                                                                   |                                                                              | Depreciation             |         |                        | 2,523  |                           |         | 36,132       |  
|                                                                                                   |                                                                              | Amortization             |         |                        |       |                           |         | 2,047        |  
|                                                                                                   |                                                                              | Deferred income taxes    |         |                        | 17,594 |                           |         |             |  
|                                                                                                   |                                                                              | Noncash interest charges |         |                        | 3,634  |                           |         | 1,342        |  
|                                                                                                   | (Increase) decrease in working capital items                                 |                          |         | (14,250                | )      |                           | 15,227  |              |  
|                                                                                                   | Increase (decrease) in long-term reserve for product warranty claims         |                          |         | (4,423                 | )      |                           | 69      |              |  
|                                                                                                   | Proceeds from sale of accounts receivable                                    |                          |         | 5,718                  |        |                           |        |              |  
|                                                                                                   | (Increase) decrease in other assets                                          |                          |         | 835                    |        |                           | (759    | )            |  
|                                                                                                   | Decrease in other liabilities                                                |                          |         | (784                   | )      |                           | (6      | )            |  
|                                                                                                   | Change in net receivable from/payable to related parties/parent corporations |                          |         | 18,697                 |        |                           | (18,084 | )            |  
|                                                                                                   | Other, net                                                                   |                          |         | (23                    | )      |                           | 227     |              |  
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Net cash provided by operating activities                                                          |                                                                              |                          | 4,315   |                        |        | 95,768                    |         |              | 
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Cash provided by (used in) investing activities:                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|                                                                                                   | Capital expenditures                                                         |                          |         | (2,109                 | )      |                           | (32,454 | )            |  
|                                                                                                   | Proceeds from sale of assets                                                 |                          |         |                       |        |                           | 1,722   |              |  
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Net cash used in investing activities                                                              |                                                                              |                          | (2,109  | )                      |        | (30,732                   | )       |              | 
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Cash provided by (used in) financing activities:                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|                                                                                                   | Repayments of long-term debt                                                 |                          |         |                       |        |                           | (15,177 | )            |  
|                                                                                                   | Distributions to parent corporation                                          |                          |         | (1,945                 | )      |                           |        |              |  
|                                                                                                   | Loan to parent corporation                                                   |                          |         | (112                   | )      |                           |        |              |  
|                                                                                                   | Financing fees and expenses                                                  |                          |         | (222                   | )      |                           |        |              |  
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Net cash used in financing activities                                                              |                                                                              |                          | (2,279  | )                      |        | (15,177                   | )       |              | 
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Net change in cash and cash equivalents                                                            |                                                                              |                          | (73     | )                      |        | 49,859                    |         |              | 
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  
|Cash and cash equivalents, end of year                                                             |                                                                              | $                        | 60      |                        | $      | 96,113                    |         | $            | 
|                                                                                                   |                                                                              |                          |         |                        |        |                           |         |              |  

F-67

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BUILDING MATERIALS CORPORATION OF AMERICA        SUPPLEMENTARY DATA (UNAUDITED)        Quarterly Financial Data (Unaudited)

|                           |  | 2004 by Quarter |       | 2003 by Quarter |  
|-------------------------- |  | --------------- | ----- | --------------- | -
|
|
|Net sales                  |  | $               | 392.0 |                 | $
|Cost of products sold      |  |                 | 274.0 |                 |  
|                           |  |                 |       |                 |  
|Gross profit               |  | $               | 118.0 |                 | $
|                           |  |                 |       |                 |  
|Operating income           |  | $               | 31.9  |                 | $
|                           |  |                 |       |                 |  
|Interest expense           |  | $               | (14.2 | )               | $
|                           |  |                 |       |                 |  
|Income before income taxes |  | $               | 16.9  |                 | $
|Income tax expense         |  |                 | (6.3  | )               |  
|                           |  |                 |       |                 |  
|Net income                 |  | $               | 10.6  |                 | $
|                           |  |                 |       |                 |  

F-68

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SCHEDULE II

BUILDING MATERIALS CORPORATION OF AMERICA        VALUATION AND QUALIFYING ACCOUNTS

|                                                                            |                                        | Year Ended December 31, 2004
|--------------------------------------------------------------------------- | -------------------------------------- | ----------------------------
|
|
|Valuation and Qualifying Accounts Deducted from Assets To Which They Apply: |                                        |                             
|                                                                            | Allowance for doubtful accounts        |                             
|                                                                            | Allowance for discounts                |                             
|                                                                            | Reserve for inventory market valuation |                             
|                                                                            | Reserve for product warranty claims    |                             
|                                                                            |                                        |                             

|                                                                            |                                        | Year Ended December 31, 2003 |  
|--------------------------------------------------------------------------- | -------------------------------------- | ---------------------------- | -
|
|
|Valuation and Qualifying Accounts Deducted from Assets To Which They Apply: |                                        |                              |  
|                                                                            | Allowance for doubtful accounts        |                              | $
|                                                                            | Allowance for discounts                |                              |  
|                                                                            | Reserve for inventory market valuation |                              |  
|                                                                            | Reserve for product warranty claims    |                              |  
|                                                                            |                                        |                              |  

|                                                                            |                                        | Year Ended December 31, 2002 |  
|--------------------------------------------------------------------------- | -------------------------------------- | ---------------------------- | -
|
|
|Valuation and Qualifying Accounts Deducted from Assets To Which They Apply: |                                        |                              |  
|                                                                            | Allowance for doubtful accounts        |                              | $
|                                                                            | Allowance for discounts                |                              |  
|                                                                            | Reserve for inventory market valuation |                              |  
|                                                                            | Reserve for product warranty claims    |                              |  

---

Notes:

S-1

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